What is Strategic Planning?

Do you have a vision for the future of your business, but are unsure about the path to achieve it? Does your business chug along each day/week/year doing the same thing but with no real direction? Do you have an idea of what you want to achieve, and how to get there but with little accountability? If you’ve answered yes to any of these questions, then your business could benefit from having a strategic plan. What exactly am I referring to as a strategic plan?  This blog is intended to help you understand more about strategy and why it is beneficial for all businesses of varying sizes to conduct strategic planning activities.

In the world of business, strategic planning is a vital process that sets the direction for an organisation and helps it achieve its goals. In simple terms, it is a process of creating a goal, a plan to achieve the goal and how you will ensure your plan is achieved.  In more sophisticated terms it involves defining a company's vision, mission, and objectives, as well as creating strategies and action plans to reach those objectives and how to measure the performance.

An effective strategic plan will help any organisation focus its energy, resources and efforts towards its overall mission and objectives. The 5 key components of strategic planning that you need to understand are:

1. Vision and Mission: The first step in strategic planning is defining your business vision and mission. The vision statement outlines the business's long-term aspirations and goals, while the mission statement defines your purpose and reason for existence.  I’ll give you an example.  The Vision Statement for Google is “to provide access to the world's information in one click”.  It is a long-term aspiration to make information accessible easily around the world.  Google’s Mission Statement however is to “organize the world's information and make it universally accessible and useful.”  You get the feeling that they are aligned and go hand in hand, don’t you?

2. SWOT Analysis: A SWOT analysis is a critical part of strategic planning that involves assessing your business’s strengths, weaknesses, opportunities, and threats. This analysis helps identify internal and external factors that may impact the ability to achieve your objectives.  Think about this, if you don’t have a thorough understanding of the market or industry that you are operating in, you may move in the wrong direction and make poor business decisions.  A SWOT will help you to unpack the real factors that heavily influence your business.

3. Goals and Objectives: Strategic planning involves setting specific, measurable, achievable, relevant, and time-bound (SMART) goals and objectives. These goals essentially provide a roadmap for your business to help guide you in the right direction to achieve your mission and measure progress toward your vision.

4. Strategies and Action Plans: Once the goals and objectives are defined, the next step involves developing strategies and action plans to achieve them. Strategies outline the broad approaches your business will take to leverage its strengths, address weaknesses, seize opportunities and mitigate threats (these are from your SWOT Analysis). An example of a strategy may be that you wish to form partnerships with other businesses to extend customer reach or market presence.  Action plans, however, detail the specific steps, responsibilities, and timelines for implementation, for example, which strategic partnership exactly are you aiming for, who is going to reach out to them, when, and how.

5. Monitoring and Evaluation: A lot of the time this is where I see businesses fall over.  They invest energy and enthusiasm in the first four steps but can easily fall short when it comes to implementing the plans.  The most common reason for failure is time constraints, too much of business as usual (BAU) to do, and not enough time to focus on taking action towards the goals. What I see a lot of here is a misalignment of what people think they should be doing day to day with what they could be doing towards achieving the plan and this can be due to team members not understanding the plan, buying into the plan, and seeing what the real benefit is to themselves and ultimately the business. 

Let me give you an example, if one of your goals is to be more innovative and the strategy is to improve efficiency and streamline processes, then your team must understand what’s in it for them.  When the finance team works towards alleviating a 3-way manual reconciliation between systems because they can see that it will reduce mind-numbing work each month and open up greater value-add opportunities for themselves, there will be an automatic alignment between what their working on and the broader strategy.

This is where monitoring and evaluation is important, it is imperative that you understand what action is being taken and hold yourself and your team to account for taking steps towards the plan and if no action is taken, there needs to be deep conservations about it, do you need to iterate or is there a resourcing issue or what else needs to change in order to achieve the desired outcomes?

 What then are the most obvious benefits of strategic planning:

·  Clarity and Focus: Strategic planning helps businesses clarify their purpose, direction, and priorities, ensuring that everyone is working towards a common goal.

·  Alignment: By aligning activities with the business's mission and objectives, strategic planning ensures that resources are used efficiently and effectively.

·  Adaptability: Strategic planning enables businesses to anticipate and respond to changes in the external environment, increasing their ability to adapt and thrive in a dynamic market.

·  Decision Making: Strategic planning provides a framework for making informed decisions and prioritising initiatives based on their strategic importance.

· Performance Improvement: By setting clear goals and monitoring progress, strategic planning helps organisations improve their performance and achieve better results.

 To finish up, strategic planning is a powerful tool that can help you navigate challenges, seize opportunities, and achieve long-term success. By investing time and effort in the process, your business can create a roadmap for growth, innovation, and sustainability in an increasingly competitive and complex business environment.  Let CFO Group Australia help you with your strategic planning needs. Our CFOs are experienced and well-equipped to run your business through a strategic planning process and help keep you accountable for achieving your goals. Contact us.