Business Plans and Goals: Crucial to Business Growth
As I’ve worked with small businesses over the years, I’ve noticed that many business owners resist documenting a formal business plan and embracing concrete long-term strategies. We’ve all been exposed to messages endorsing the value of a business plan and goal-setting–so what are the obstacles preventing owners from harnessing these valuable tools?
Most small businesses operate on a day-by-day basis driven by two common mentalities: “We’re doing it this way because we’ve always done it this way” and “I’m too busy, I don’t have time to examine the big picture.”
Additionally, some owners may feel they’ve got their plans, goals and strategies clearly outlined in their heads, and don’t need to write it out. They may believe time spent formalizing strategies and business plan is time lost, perceiving little value in documenting goals, strategies, and even financial measurables like budget and cash flow. It’s no surprise that a growing small manufacturing company may focus its attention on technical aspects of the business like equipment operators, product quality, and production/operations supporting personnel, or that a service companies may focus on sales activities as its main driver.
However, it’s crucial to have the important big-picture elements of your business written out in order to communicate them effectively to the rest of your organization, and to have greater personal clarity about them as well.
There’s no denying that this is challenging. It requires stepping back from a day-to-day perspective, formulating business strategies from assorted “higher altitude” perspectives, and connecting them into one cohesive business plan to serve as a measurable blueprint for success. It’s hard to know where to start.
The first step is to recognize what strategies are part of a solid business plan. The following list should help you start the process. Brainstorm these categories and write down bullet points:
Main Strategy: Express one-year, two-year, and three-year goals in terms of production, revenue and growth.
Sales Strategy: Define the means and resources necessary to achieve the revenue level stated in Main Strategy.
Marketing Strategy: This should support sales activities; create a brand and market recognition; and establish a communication channel with current customers and prospects.
Growth Strategy: Plan the introduction of new products and the addition of new features to existing products.
Product Differentiation Strategy: Define your businesses market position with respect to your main competitors. A product differentiation strategy is crucial to small businesses, so target a clear competitive advantage over the competition, such as superior quality or service.
Pricing Strategy: Strategic pricing is essential. Consider charging higher prices for a new product/service, particularly during its introductory phase.
HR Strategy: Include hiring strategy; corporate culture; promotions strategy; and employee recognition strategy.
Acquisition Strategy: A small company with extra capital may purse a competitive advantage by purchasing another company, or purchasing product lines from another company.
Exit Strategy: Look to the future, considering the possibility of reducing or eliminating your stake in the business and ideally making a substantial profit.
Does this sound like a big job? It is–with a big payoff over time. It’s crucial to company growth.
Now that you’ve defined your goals and milestones, consider engaging professional help to achieve them. Someone with skill and experience can help to guide the company into uncharted territories and reduce the risk of making mistakes. Options include:
Hire a professional consultant. Seek someone who has experience with building and implementing business strategies in your industry. It won’t be cheap, but the right person is worth the money.
Hire a consulting firm. This is the most expensive option, but the potential payoff is great. It’s crucial to engage a firm which listens closely to your needs and experience and crafts solutions appropriate to your specific circumstances.
Find a mentor. This is a very effective way to achieve positive results. Check your professional and personal social networks for current or former executives–professionals in your field who enjoy helping others. Offer her or him a paid position as a board member or advisor to the president, or offer equity in the company in exchange for mentoring services.
In conclusion, don’t under-value the benefits of a sound business plan and carefully considered, concretely expressed goals. For the greatest shot at successfully growing your company, you’ll need to take charge of your own destiny by recognizing the limits of your own expertise and getting skilled help.