Having a strategic plan is crucial for business success. Strategic plans allow businesses to anticipate changes, adjust tactics, and ensure they are reaching goals. The best performing companies actively use and update strategic plans as part of regular business operations. Outsiders now view strategic plans as one of the most important factors in evaluating a business's risk level and management capabilities. Developing a strategic plan helps businesses strengthen operations and allows employees to better understand and contribute to the company's objectives.

1. To Win, Strategy is Fundamental
by Tom Stocker
Your financial statements plans to build annual tactical plans and use
are the most important their financial results to measure their
measure of the success of effectiveness. This proactive approach
your business. allows them to anticipate when conditions
Unfortunately you can’t change and make necessary adjustments to
run your business on just their tactics in order to reach their strategic
financial statements goals. Those that are good at the process
because they are a don’t wait for their financial results. They
lagging indicator. Getting timely financial keep moving forward and use the results as
statements is very important, but your an affirmation of their progress.
financial statements are still only the score.
You can’t change them; only react to what Unfortunately, a very disturbing fact is not
already happened. all companies have them. The less
sophisticated or informal your company is,
Your financial statements should be the the less likely you use strategic planning.
indicator that confirms what you already And even if you do have a plan, is it written
know. Having and using a strategic plan is down, how often is it used, updated, shared
more important to driving your business, or followed? I see many business and
especially in the current economic strategic plans in my work. Unfortunately,
environment. What makes your strategic many are done poorly. Many are more
plan so important is that it is the roadmap tactical than strategy, unclear and the
vital for you to reach your goals and it financial projections, (if there are any);
reduces business risk; very important to you don’t reflect the same results as the words.
and outsiders alike.
Not having a strategic plan is analogous to
Consider this; you see strategies unfold in jumping in your car to go somewhere far
every sporting event you watch. The teams away you’ve never heard of before without
that win the most are the best prepared. You consulting a map, planning a route or even
will not find a team in a championship game taking a map or GPS with you. (And if you
that hasn’t spent countless hours building are a guy, you WON’T ask for directions
their game plan beforehand. They didn’t get along the way). It would be a whole lot
there by chance. They are able to anticipate easier, faster and cheaper if you planned first
and adjust to conditions that affect their and took a map or GPS with you.
planned tactics as the game progresses.
Obviously the team with the best execution You probably built a business plan when
of their planned tactics wins. you first started your business to get funding
or because an advisor suggested you needed
Like the best professional sports teams, “A” to. You may not have thought about the
companies of all sizes use strategic planning internal benefits it provided, but it helped
as part of their normal business process. focus your thinking about what you wanted
They actively use and update their strategic to do and what the results would look like
10 Larkspur Road, East Greenwich, RI 02818 401-451-9799 www.OwnersEdgeLLC.com

2. for the next three years or so. It helped you track financially before this recession, your
prioritize and provided a basis to measure current and future plans only make that
your success. I suspect as you started outsider more comfortable that internal
executing, whether you looked at your plan business risk is under control. But if the
again or not, it subconsciously influenced outsider is someone not familiar with you or
your actions as conditions changed or your business, your strategic plan becomes
progress didn’t happen as you would have significantly more important for them to
liked. understand your thinking and to trust your
ability.
Recently, there has been a fundamental shift
in outsiders’ perspectives on what is most Internally, strategic plans will help make
important in order to understand how your business stronger and your personal
healthy and risky your business is, whether workload significantly easier. When your
you are talking about your banker, investor, employees are part of the planning process
potential acquirer, vendor or customer. they understand the roadmap and goal. As a
They all want to know how risky your result they can help devise the tactics to
business is. Until September 2008 strategic reach the goal and can help make new or
plans rarely emerged in the top five additional goals that can enhance your
evaluation factors. Since that time a new company’s value. Unfortunately, this is a
order has emerged. Comfort with the ready, willing and able resource many
management team is now at the very top, private business owners do not take
followed by the strategic business plan. advantage of. (If you do not have these
resources, that is a serious and different
What does this mean to you? A lot. problem).
Confidence in your management team is
important for obvious reasons. Have they Whether you don’t have a strategic plan,
been through a downturn before and what have one that is out of date or keep it under
were the results? Does the outsider know lock and key, reconsider that decision. You
and trust them? What is the team’s plan to are the coach and owner, and like
drive the business forward? Is the plan professional sports teams, a coach without a
credible? plan can’t prepare, won’t attract top talent,
build a winning team and can’t win. The
If the outsider evaluating you believes in score will always reflect that.
your team and that you were on the right
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About the author; Tom is the Managing Director of Owner’s Edge, LLC, a strategic planning advisory and consulting firm for small and mid-
market businesses. Contact Tom directly at 401-451-9799 or tstocker@OwnersEdgeLLC.com.
Owner’s Edge, LLC is a business advisory and consulting firm specializing in helping business owners work on their businesses. The Firm
works with both growing and underperforming small to mid-market companies. For more information about how we can help you drive
operational excellence visit our website at www.OwnersEdgeLLC.com.
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Additional articles written by Mr. Stocker can be found on our website in the “publications” page: www.ownersedgellc.com/pages/pubs.php.
Owner’s Edge, LLC 10 Larkspur Road, East Greenwich, RI 02818 401-451-9799 www.OwnersEdgeLLC.com