Home ยป The Importance of Strategic Planning for Small Businesses

The Importance of Strategic Planning for Small Businesses

For someone to be successful in today’s modern way of running a business, many things are required, as it is not as easy as some may think. Namely, imagine that there is a big jigsaw puzzle, and even if one small piece is missing, it would not be complete nor look great, yeah?

Well, the same is with businesses, especially small ones, as the market is so competitive that even one small mistake, one small overlooked thing, can have devastating effects. The devil is in the details, but it’s precisely here where you can make a difference and gain the most, and the only thing needed for that is planning, detailed and thorough planning.

The purpose of strategic planning

Source: forbes.com

It all starts from an idea, but in order to get to that point when we can actually realize that idea, we need to implement strategic planning. For someone unfamiliar with what this stands for, the first thought, when they hear or read these terms, is about something complicated and time-consuming.

Now, we are not going to say that this isn’t entirely true, but when you plan in advance, the whole purpose of doing so is to learn the steps that will take you to that desired goal. Besides that, since these types of plans are usually made for more extended periods (most often as a five-year plan), they allow you to follow the progress and see if some further action is needed in case the company is falling behind in the predictions.

It’s all about efficiency and productivity, and strategic planning is there to help us with that, so now, when we learn a thing or two about it, let’s get into details and explain what strategic planning is all about.

What is strategic planning?

For starters, the essence of strategic planning is about defining a company’s direction and strategy, but it can be further adjusted so that it is used as a control mechanism that keeps up with the implementing the strategy itself. Of course, it’s not about creating some unachievable goals, as then the strategy will be of no use, and setting real and achievable goals is where this strategy can help a lot.

You can use it as a tool for your day-to-day decisions and evaluating the progress on a daily basis, but also use it as a quartal or annual evaluation tool. It can also be a great tool to evaluate the current rate of progress and the company’s value, and in case someone wants to sell their company in the future, it can show you precisely what’s needed to increase the company’s value the most.

Various types of strategic planning

Source: theglobeandmail.com

It is crucial to mention that strategic planning has two types, and both of them are important if we want to run a successful business. These types are long-term and short-term objectives, and without setting one of them, we cannot set another, which is why we need to be detailed and precise. What is also important after setting the objectives is to inform the team and make sure that they all understand the goals.

Knowing the objectives is great for inspiring the whole team to work together and finish all necessary assignments, and since they work as a team, they can always help each other if there are some difficulties. Finishing the short-term objectives gives a sense of accomplishment to every team member, which is a great reason to celebrate and a great motivation to continue doing a great job.

Long-term objectives and their role

We cannot run any business if we do not have goals and a vision of how everything should be, and because of that, we need to have some long-term objectives or, better said, goals for the future. Planning the future is never easy because we can never know how things will turn out, and it is crucial to make different plans for different situations to know exactly how to react when it is necessary.

Setting the precise goals can be pretty difficult, but we need to make a plan with an objective, general time frame, schedule, and other important aspects, and even if we do not fulfill all of them, we can always adjust it or make a new one based on the current progress at that moment. Once we set long-term objectives, we are ready to set the short-term ones based on them and specify the milestones in the near future that can help us achieve the long-term objectives.

Short-term objectives and their role

Source: bizj.us

As we mentioned before, you cannot set the short-term objectives without setting the long-term ones, and they are here to help you reach the company goals. It is crucial to sync them because it is the only way to keep progressing in the right direction and make the desired progress.

That means setting more specific goals, sorting them by importance, and trying to fulfill the urgent ones first. Although it may sound complicated, it is much easier to be detailed and specific when setting short-term objectives because we can look at them like smaller milestones we need to fulfill to reach the final goal. It does not mean that we should have a daily plan, but we need to set the one for the next month, quartal, and year and try to do everything we planned in time.

Noticing the employees is crucial because they are the only ones that can help our company grow, and the more they are familiar with goals, plans, and strategies, the easiest it will be for them to do their job.

The bottom line

So, as you can see, even though strategic planning can take some time, its importance surpasses everything else, and by not having one, you leave it all to chance as you will not have a good insight into where the company is heading. As for usage, it’s all about personal preferences, but even if you are unsure whether your small businesses need a day-to-day guide or an annual one, consulting the experts in this field like Local Founders can be of great help.

Lili Davis