Thursday, October 9, 2008

Strategic Planning - Ugh! Is it REALLY Necessary?

The words Strategic Plan makes most business owners cringe. They conjure up images of hours upon hours of work and pages of writing. School all over again! But they know in their gut they should have one.

The fact is, the vast majority of small and medium businesses don’t. It’s not too surprising then that an equal number of small and medium businesses struggle to grow or flat out fail.

Ok, I’ll admit that was a cheap shot designed to get your attention. But sadly it is true too.

Here’s an interesting fact, according to bankruptcy lawyers, the top three reasons companies fail are: (3) they are undercapitalized (run out of cash), (2) they fail to adapt to a changing market (stubborn), and (1) the management team was in complete denial (out of touch with the marketplace).

Funny thing is that everyone of these issues would be addressed during the building of a comprehensive Strategic Plan.

I bet some of you are saying to yourself, “But I haven’t failed, in fact my company is growing and I don’t have a Strategic Plan.”

 But at what cost? How many different directions did you have to go before you found a path that worked? And will staying on that path continue to work?

They say not having a Strategic Plan is like being on a sailboat in the wide expanses of the ocean without a rudder. Yes, the winds of the marketplace will blow you somewhere. But is it where you wanted to be and how much capital and time did it take you to get there?

This still doesn’t apply to you?

Try this.  Where do you see your business in three years? Have your management team/employees bought into this vision? Can you answer these question in a measurable way?

Who are your competitors and what are they planning? How will this affect your future growth?

Properly done, a sound strategic plan will address these issues and provide you with a common framework for decision making in the organization. It will also prove to be an invaluable resource for making personnel decisions, allocating resources and capital, creating partner alliances, and building a strong organizational. But more importantly it will give you peace of mind - allowing you to sleep better knowing you have a documented plan in place for the most important part of your life - other than your family.

A well written Strategic Plan should fit on just one page. Yes, I said one page. Not a volume. After all, if you won’t refer to it periodically and your team can’t grasp it because it is too cumbersome then it is of no use.

Ideally, the process of building a Strategic Plan should involve a trusted adviser from outside your company (industry) to bring both a different perspective as well as challenge your perceptions of your company’s strengths and weaknesses and that of your competitors. I remind you again of the number one reason for failure - “the management team was in complete denial”. I refer to this as, "drinking your own bathwater."

Don’t have the time or are questioning the ROI of such an undertaking? Think about all of those "experiments" you tried to spur growth - the bad hires, the poor marketing decisions, the new products/services that failed.  How much time/money did that consume? A Strategic Plan keeps you from making bad business decisions and on a predictable well thought out growth path.  And if you need more incentive, the peace of mind alone, of knowing where your company is headed and how you will get there, is worth the investment.

There are folks out there that can help. Seek them out. The future of your company is too important not to.

Want to learn about what it will take to build your growth plan? Visit The first coffee is on us.

About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement.