The importance of suitable business plans in running a company or organization is indisputable. They provide tactical financial projections and expenses needed to run the business.
But there is additional planning that companies can tackle to help with future success. These long-term, or strategic, plans are visionary, and they define a business’ future development by identifying specific growth initiatives for the company’s ultimate physical appearance, size, activities, products, customers, markets and more.
When it comes to strategic planning, your best asset is your ability to look into the future and make predictions.
How we define our own future through strategic thinking, planning and execution is how we create a competitive advantage, notes Elizabeth Holm, president of Prism Strategic Services, Inc. in Minnesota.
Prism develops strategic processes for its representative industries, including the automotive service equipment industry.
“Our success today is a function of the opportunities we identified and captured in the past; our success tomorrow will be a function of the opportunities we recognize and pursue today,” she says.
So, take heed of a few suggestions when trying to predict your business’ future growth.
Understand your limits
One of the strategies for long-range planning is to realize your business’ size and what it can accomplish in a given time period.
For example, a sensible outlook is about five years — although that might even be too long.
“Realistically, you’re not going to be able to plan in any kind of detail more than a couple of years,” says Ed Doherty, a counselor with SCORE, a national network of entrepreneurs and executives who provide free business counseling to small business owners.
Size also affects the number of initiatives that can be taken on at one time, Holm says.
“Organizations large and small frequently struggle with choosing those initiatives that are most im-portant to their future and end up accomplishing very little on a large number of initiatives,” she explains. “It is far better to take on a smaller number of initiatives and leverage them to their maximum advantage than spread limited resources so thin that they cannot make meaningful progress on any front.”
Identify trends, make predictions
Business owners must look at current trends in the economy, population and industry to determine what steps to take in the future.
“Look at the demographics and whether they will change,” Doherty says. “Will there be more people in the area? There is an increasing number of people age 50 and above. You have to pay attention to those factors.”
Another example is predicting what impact new fuel sources and the influx of hybrid cars will have on consumer driving habits.
Business owners, he adds, need to think about what environmental factors affect their business now and if they will continue to affect the business in the future.
Cover your bases
Although long-term plans include financial projections, they are less concrete. The meat of the plan is the specific growth initiatives. Long-term plans should include:
A vision statement describing the business three to five years in the future.
Four to six high-level strategic objectives, which, upon achievement, will result in arriving at the desired vision.
Three to six objective elements per each strategic objective. An objective element describes a specific idea.
Action plans — one per objective element — that details exactly what actions will be taken to address the objective element, including schedules, required resources, budgets, contingencies and dependencies.
A strategic financial projection that details the anticipated revenue resulting over the course of the plan. This includes the financial resources required to implement the initiatives.
Dig for information
Information on population predictions, demographics and economic data can help in your efforts to plan for the future. There are numerous places to search for this information; one important factor is that straight population count doesn’t tell the whole story — it’s crucial to know what segments of the market are growing, says Bonnie Algera, co-founder of Pseudonym, Inc., which helps manage brands and business identities.
“For instance, nationwide, retiree and Hispanic markets are expanding much faster than the population as a whole. So, if an automotive parts dealer in Smallville, Kansas saw stagnant population growth overall, he shouldn’t despair because chances are one or more market segments is growing that he could successfully target,” she explains. Algera offers some resources to reference:
- Local governments/city halls — provide population predictions.
- The Census Bureau at www.census.gov — offers straight population predictions and demographic projections on age, race and sex for the nation. It also conducts economic censuses every five years (the last one was in 2002).
- Bureau of Labor Statistics at www.bls.gov — provides employment statistics and economic data that is useful for understanding a target market.
Review, review, review
The final, and probably most valuable, tip for continued success in any future business situation is to review your plan as often as possible. Strategic plans should generally be three to five years in duration, creating a timeframe that is long enough to allow for the incorporation of challenging initiatives while still being short enough to feel within the organization’s grasp, Holm says.
For more information on devising a strategic plan, visit these consulting resources online at www.prismstrategic.com, www.knowyourbrand.net or www.score.org.