Action Planning For The Small
ship captain would dare leave port without a Navigation Plan. Likewise, the
successful voyage of a business over time requires a similar instrument. It is called The
The Strategic Plan is
the process by which we can envision the future and develop the necessary procedures and
operations to influence and achieve that future. It is the life-support
system that, if followed, assures your business a successful future.
10 absolutes of a Strategic Action Plan:
a clear vision and translate it into a meaningful mission statement.
This step should locate the
firm's present position in the marketplace as well as suggest its future direction. The
mission statement's focus should be on creating a competitive advantage for the firm by
identifying a new, better, or different way to satisfy customer needs. This bottom-up
approach for defining the scope of the business operation should include identifying
segments of the market to target as customer bases as well as positioning the company (and
its goods and services) to reach these market segments most effectively.
A sound mission statement need
not be lengthy to be effective. It should, however, answer certain key questions.
1. What are the basic beliefs
and values of the organization? What do we
2. Who are the company's target
customers, and what are they like?
3. What needs and wants do they
satisfy when they buy from us?
4. How can we better satisfy
these needs and wants?
5. What constitutes value to the
customer? How can we offer our customers
6. What are the firm's basic
products and services?
7. In which markets (or market
segments) will we choose to compete?
8. What will happen to those
markets over the next few years?
9. What are our major strengths
and competitive ad vantages?
10. What are our primary
11. What external opportunities
and threats do we face?
12. Who are the key stakeholders
in our company and what affect do they
have on it?
13. What is our desired public
By answering such basic
questions, the company will have a much clearer picture of what it is and what it wants to
the Company's Driving Force and Identify Its Market Position
When choosing a driving
force, a Business Owner must consider several key issues.
1. How many competitors will we
2. How broad will our customer
3. How vulnerable would our
business be to sudden changes in economic, social, or political conditions?
4. To what extent does this
focus build on skills that we already have?
5. How will this focus affect
our financial structure?
your companys strengths and weaknesses.
Having identified the firm' s
driving force and desired position in the market, the business owner can turn their
attention to assessing company strengths and weaknesses. Building a successful competitive
strategy demands that a business magnify its strengths and overcome or compensate for its
weaknesses. Strengths are positive internal factors that contribute to the accomplishment
of objectives; weaknesses are negative internal factors that inhibit the accomplishment of
objectives. Identifying strengths and weaknesses helps the owner understand her business
as it exists (or will exist).
One very effective technique for
taking this strategic inventory is to prepare a balance sheet of company strengths and
weaknesses. The positive side should reflect important skills, knowledge, or resources
that contribute to the firm's success. The negative side should record honestly key
limitations that detract from the company's ability to compete.
1.Specific skills of
1.Lacking in skills
2.What do we know
about our business or
of the firm
3.Resources the firm
is lacking--e.g. cash
This balance sheet should
analyze all key performance areas of the business: personnel, finance, production,
marketing, product development, organization, and others. This analysis should give owners
a more realistic perspective of their businesses. It will point out foundations on which
they can build future strengths and obstacles that they must remove for business progress.
This exercise can help owners move from their present positions to future actions.
the environment for significant Opportunities and Threats facing your Business.
Once entrepreneurs have taken an
internal inventory of company strengths and weaknesses, they must turn to the external
environment to identify any opportunities and threats that might have a significant impact
on the business.
Opportunities are positive
external options the firm could employ to accomplish its objectives. The number of
potential opportunities is limitless, so managers must analyze only factors significant to
the business (probably two or three at most). For example, the owner of a small restaurant
concluded that he faced two realistic opportunities: opening a second shop across town or
buying a franchised outlet from a national company. When identifying opportunities, the
owner must pay close attention to new potential markets. Are competitors overlooking a
niche in the market?
Threats are negative external
forces that inhibit the firm's ability to achieve its objectives. Threats to the business
can take a variety of forms, such as new competitors entering the local market, a
government mandate regulating a business activity, an economic recession, rising interest
rates, and technological advances making a company's product obsolete. The owner must
prepare a plan for shielding his business from such threats.
the Key Factors for success in your business.
Every business is characterized
by a set of controllable variables that determine the relative success of market
participants. Identifying these variables and manipulating them is how a small business
gains a competitive advantage Such factors lead to what are often dramatic differences in
performance levels within the same business. Companies that understand these key success
factors tend to be leaders of the pack, while those who fail to recognize them become
For example, the restaurant
business is characterized by several key success factors, including the following.
tight cost control (labor,
15-18 percent of sales, and food costs, 35-40 percent of sales)
trained, dependable in-store
close monitoring of waste
careful site selection (the
maintenance of food quality
friendly and attentive service
These controllable variables
determine the ability of any given restaurant to compete. Restaurants lacking these key
success factors are not likely to survive, while those who build strategies with these
factors in mind will prosper.
In a recent national survey,
small business owners cited competition as the single biggest challenge facing their
companies in the next decade. Another survey, from the Conference Board, found that 68
percent of the companies believed it was "very important" to monitor
How can a small business owner
gather competitive information?
1. Devote a specific time for
managers and companies to evaluate the competition. A monthly meeting designed to share
information is ideal.
2. Create an intelligence file
on key competitors. This helps keep the information organized in a useful manner.
3. Check industry and trade
publications for information on competitors. Articles can be a tremendous source of
4. Listen to customers and sales
people. "Customers and salespeople are our best sources of information," says
one successful small business owner "We listen to our customers and act on what we
5. Attend industry trade shows,
exhibits, and conferences, You can learn a great deal from competitors' booths at such
6. Read the local papers where
major competitors are located.
7. Study competitors'
literature. Sales, product, and service brochures offer valuable information on rivals'
strategies and how they position themselves in the market.
8. Buy competitors' products.
Purchasing rivals' products and taking them apart-benchmarking-is a rich source of
9. Obtain credit reports on
competitors. Companies like Dun & Bradstreet make standard credit reports available to
10. Avoid ethical dilemmas.
Unethical means of gathering information-bribery, payoffs, wiretaps may produce short-term
benefits, but in the long term, these owners and their companies lose-often dramatically.
One business owner who regularly monitors his competitors' actions says, "What we do
here is not covert in nature; it's more a matter of keeping your ear to the ground."
company goals and objectives.
Goals are the broad, long range
attributes the business seeks to accomplish; they tend to be general and sometimes even
abstract. Goals are not intended to be specific enough for a manager to act on, but simply
state the general level of accomplishment sought. Addressing these broad issues will help
you focus on the next phase, developing specific, realistic objectives.
Objectives are more detailed,
specific targets of performance. Common objectives concern profitability, markets,
productivity, growth, efficiency, financial resources, physical facilities, organizational
structure, employee welfare, and social responsibility. Because some of these objectives
might conflict with one another, the manager must establish priorities. Which objectives
are most important? Which are least important? Arranging objectives in a hierarchy
according to their priority can help the small business manager resolve conflicts when
Well written objectives have the
They are S M A R T
Strategic Options and select the appropriate strategies.
By now, the small business owner
should have a clear picture of what their business does best and what its competitive
advantages are. Similarly, they should know their firm's weaknesses and limitations as
well as those of its competitors. The next step is to evaluate strategic options and then
prepare a game plan designed to accomplish the business's objectives.
A strategy is a road map of the
actions the owner develops to achieve the firm's mission, goals, and objectives. In other
words, the mission, goals, and objectives spell out the ends, and the strategy defines the
means for reaching them. Strategy is the master plan that covers all of the major parts of
the organization and ties them together into a unified whole.
Obviously, the number of
strategies from which the small business owner can choose is infinite. When all the
glitter is stripped away, however, three broad-based, generic strategies remain.
1. cost leadership
Cost leadership. Although most
companies today claim that customer service and satisfaction are their first priority, a
recent survey indicates otherwise. Nearly 75 percent of the respondents said that
"the only way to survive is on price competition." These companies are prime
candidates for a cost leadership strategy.
There are many ways to build a
low-cost strategy, but the most successful cost leaders know where they have cost
advantages over their competitors, and they use these as the foundation for their
Differentiation. A company
following a differentiation strategy seeks to build customer loyalty by positioning its
goods or service in a unique or different fashion. In other words, the firm strives to be
better than its competitors at something that customers value. There are many ways to
create a differentiation strategy, but the key concept is to be special at something that
is important to the customer If a small company can either improve the product's (or
service's) performance, reduce the customer's cost and risk of purchasing it, or both, it
has the potential to differentiate.
Focus. A focus strategy
recognizes that not all markets are homogeneous. In fact, within any given market, there
are many different customer segments, each having different needs, wants, and
characteristics. The primary idea of this strategy, is to select one (or more) segment(s),
identify, customers' special needs, wants, and interests, and approach them with a good or
service designed to excel in meeting these needs, wants, and interests. Focus strategies
build on differences among market segments.
Strategic Plans into Action Plans.
No strategic plan is complete
until it is put into action. The small business manager must convert strategic plans into
operating plans that guide the company on a daily basis and become a visible, active part
of the business. The small business does not benefit from a strategic plan sitting on a
shelf collecting dust.
Controlling projects and keeping
them on schedule means the owner must identify and track performance indicators.
The source of these indicators
is the operating data from the companys normal business activity:
As conditions change, the
manager must make corrections in performances, policies, strategies, and objectives to get
performance back on track. A practical control system is also economical to operate.
Most small businesses have no
need for a sophisticated, expensive control system.
The system should be so
practical that it becomes a natural part of the management process.
Planning for profit is
generally more useful than hoping for profit. With a little planning you can sometimes
make your own luck.
Planning can include what you
are going to do for the next minute, hour, day, week month or year and beyond.
Strategic Planning is the formal
process of defining what you or your organization would like to be then devising a way to
The plan will vary for each
business but the process is the same.
In order for a plan to be
successful it is important for the people that are going to carry out the action plans
understand the mission statement. They must know the goals of the organization and on what
criteria success is going to be evaluated. Commitment to the process is significantly
improved if those carrying out the action plans are involved in the planning process.
A strategic plan allows an
organization to focus on what they want to achieve. It reduces the risk of allocating
resources to areas that do not fit with the mission statement and the goals of the
||Before small business owners can
build a comprehensive set of strategies, they must first establish business goals and
objectives, which give them targets to aim for and provide a basis for evaluating company
Without them, the owner
cannot know where the business is going or how well it is performing.
The following conversation
between Alice and the Cheshire Cat, taken from Lewis Carol's Alice In Wonderland,
illustrates the point.
"Would you tell me please,
which way I ought to go from here?" asked Alice. "That depends a good deal on
where you want to get to," said the Cat. "I don't much care where . . . ,"
said Alice. "Then it doesn't matter which way you go," said the Cat.
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