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Simple Small Business Strategic Planning Tool
The document outlines a small business strategy development process. It begins with understanding the current situation, analyzing internal and external factors, deciding on a strategy, and taking action. A SWOT analysis and consideration of goals, objectives, strategies, and action items are key parts of the planning process. Regular monitoring and updates are needed as strategies can fail due to a lack of focus, inaccurate information, or not adapting to changes.
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Simple Small Business Strategic Planning Tool
- 1. Small Business Strategy Development Process Understand Understand Analyze Analyze Decide Act Decide Act
- 2. Art Helmstetter “Large andSmall Business” Managing Director, B2B Planner Ltd. Small Business Development Director Global Planning and Marketing Quaker Chemical Corporation Strategic Planning Business Management 25 consecutive years achieving profit goals Started up four businesses Two start ups survive today Grew two other businesses from 0 to over $25 MM Education MBA, BS & MS Engineering,
- 3. “If you don'tknow where you are going, any road will get you there.” Lewis Carrol, Alice in Wonderland “I can't change the direction of the wind, but I can adjust my sails to reach my destination.” Jimmy Dean
- 4. Strategy Development Agenda • The case for strategy development. • Why small businesses don’t plan. • Need to respond to a rapidly changing world • A planning model for today • Key Elements of Planning – Internal Factors – External Factors – SWOT Analysis • Planning Tools and Templates • The Simple Steps Model
- 5. The Brutal Facts 1.Nothing you do will 100% guarantee success 2. Planning can greatly improve your chance of success 3. Not planning WILL greatly increase your chance of failure This is confirmed by the large number of companies without business plans that fail within 5 years
- 6. Definition of Strategy Development A business’s process of • defining its strategy and direction, • and making decisions on allocating its resources including its capital and people. Keep It Simple by answering three questions: • "What do we do?" • "For whom do we do it?" • "How do we beat the competition?”
- 8. We Live ina “Hyper” World • Hyper-competitive market – Global competition – Excess capacity in the US • Hyper-Speed of Change – Accelerating technology development – Digital speed of operation • Hyper-Uncertainty – Changing economy – Changing government intervention
- 9. Why Businesses Don’t DoA Strategic Plan? What’s Your Reason? No one makes you “Too expensive” Takes too much time Can’t get the information Don’t know how Doesn’t work Is not fun
- 10. Planning Is NOTa Do It Yourself Process • You don’t do it often • You need a process • It takes time • You need perspective and objectivity • It takes research
- 11. Who Can Help? • Advisory Committee • Trained Staff Member • SCORE Mentor • Sole Practitioner • Large Consultant But YOU must OWN the process!
- 12. A Plan Isthe Conclusion of Strategy Development Strategic Thinking What Might Happen Options Strategic Decision Making What Will We Do Decisions Strategic Planning Business How Will We Do It Plan
- 13. Alternate Business PlanningModels Serial Planning Model For Stable Conditions Business Strategic Plan Budget Plan
- 14. Alternate Business PlanningModels Dynamic Planning Model for Changing Conditions Both models use similar elements and analyses, but the process is very different.
- 15. Alternate Business PlanningModels Dynamic Planning Model for Changing Conditions Customer External Behavior Factors Strategic Thinking and Analysis Business Plan Internal and Budget Capabilities Both models use similar elements and analyses, but the process is very different.
- 16. Elements of Strategy Formulation Vision Analysis Mission Segment Market ation Research SWOT
- 17. Traditional Market Research • Market Size • Growth Potential • Customer Needs and Wants Buyer Behavior Preferences • Competitive Intelligence
- 18. Simplified Market Research Focus onyour “addressable” microcosm Focus on YOUR customers What do your customers really buy from you? Buyer Behavior Preferences Find the common characteristics Can you sell your customers different things? Who do your customers compete with? Can you sell to them? Focus on YOUR competitors
- 19. Customers: Who Buys fromYou Demography Occasional Geography Buyers Where Does Your business come from? Repeat Consumers Buyers Businesses
- 20. Customers: Segmentation Dividing the market into groups Product they use How they use product When and where used Use a segmentation dimension Industrial Commercial Consumer Identify underserved, high value groups Income Career or Industry Current Product Use Use common elements to select products and marketing
- 21. Simplified Competitor Research Focus on YOUR market Google ‘em Visit their website Search in directory listings BUT ALWAYS BE ETHICAL! Yellow pages digital and print. Google and Yahoo local Angie’s List Check out their reviews Talk to their customers, employees, suppliers and competitors
- 22. Supply or ValueChain Determine your position in the value chain How far are you from the final user Produce Make Assemble Sell Service Raw Material Parts Product Product Product
- 23. Five Forces of CompetitiveIntensity New Entrants Supplier Competitive Buyer Power Rivalry Power Product Technology
- 24. Focus Your Actions Based on your SWOT Internal External Strengths Opportunities Manufacturing New Markets Positives Innovation New Application Marketing/sales New Technology Weaknesses Threats Barriers Cost Competition Marketing/sales Economy Staff skills New Technology
- 25. Focus Your SWOTon the “Make or Break” Issues
- 26. Focus Your Actions Basedon your SWOT Internal Factors Strengths Weaknesses Opportunities Threats Confront Avoid External Factors Exploit Search
- 27. Actions To Grow Market • Increase reach in existing Expansion • Find new markets Product • New business w/customers Expansion • New products • Products Innovation • Application • Processes
- 28. Actions to Improve Performance/Efficiency • Credit Policy Financial • Pricing • Capital investment Operations • Improve processes • ERP systems IT • Web based sales, marketing • Rewards & recognition HR • Capability building
- 29. FOCUS on 1-2Goals Goal 1: Strategy 1: Implement the Timeline: Team ________________________________________________________________ ________________________________________________________________ Action Items: _________________________________________________________________________________________________________ Timeline: _________________________________________________________________________________________________________ Timeline: TASK WHO BY WHEN Resources needed ____________________________________________________________________________ ____________________________________________________________________________ Enabling factors/barriers ____________________________________________________________________________ ____________________________________________________________________________ RESULTS: __________________________________________________________________________________________________________________ ______________________________________________________________________________
- 30. Eight Strategic Measures to Monitor and Update 1. Executive Summary 8. Champions 2. Goals 7. Time Lines 3. Objectives 6. Outcomes/Results 4. Strategies 5. Action items 32
- 31. Why Strategies Fail • LACK OF STRATEGIC FOCUS 33
- 32. Why Strategies Fail • LACK OF STRATEGIC FOCUS • Inaccurate or biased intelligence gathering • Failure to identify weaknesses and threats • The strategy is a poor fit between the external environment and an organizations' resources • Overly optimistic about resources and abilities • Inadequate support of others • Lack of discipline to follow the plan • Not making timely adjustments when needed 34
- 33. Focus on theFuture • Commit to writing a strategy and plan. • Use a proven process, and • An experienced person to facilitate the process. • Meet with that person monthly to follow up on the strategy and plan
- 34. Now Go fora Ride Steer Pedal Balance Look Ahead
- 35. Thank You! Understand Analyze Decide Act
- 36. Focus Your StrategyWith SCORE’s Simple Steps
- 37. Current Situation Traditional Model Maturity Start-up Initial Rapid Growth Expansion Stability Yesterday’s Paradigm Slow Pace (Years) Survival Decline Many Opportunities Subtle Impact Specialization (Isolation) Agriculture Based Economy Product Based Economy Services Based Economy Worksheet Current Situation (Position)
- 38. Current Situation Emerging Model Development Defense Start-up Offense Decline Compete Survival Grow Recovery Expansion Tactical Strategic Shaped Shaping Today’s Paradigm Hectic Pace (Months) Few Opportunities Volatile Impact Diversification (Collaboration) Experienced Based Society
- 39. Welcome to theExperience Driven Economy Experience Loyal Consumers (Unprecedented Consumer Mix) Digital Customers (Connected, Online and Influenced) Interactive Communications (Not Just One-way Advertising) Customer Relationships Experience (Not Just a Sale) Driven Economy Hectic Pace (Immediate not prolonged) Limited Opportunities (To Succeed or Fail) Volatile Impact (Business Outcomes) Diversification (Not specialization) Collaboration (Not isolation)
- 40. Small Business Size,Scope and Type of Business Entrepreneur 1-5 Business Change Cycles At each of these levels, Vertical businesses go through Market Business significant transition in Group 6-25 several key areas. Vertical Local Employees Business Company Neighborhood Organization Segment 26-125 Investment Doctor’s Revenues National Cash flow Office Regional Expenses Corporation Offerings 126-500 Hospital Facilities Healthcare Virtual Resources Global Systems Enterprise Processes 500 Above NAICS Classification Code: www.census.gov/epcd/www/naics.html
- 41. Current Situation Development –Start Up Need (Pending motive) Desire (Feasibility) Ability (Qualification) Timing (Opportunity) Action (Start-up) Simple Steps to Starting a Business Establish a viable for-profit business or non-profit organization
- 42. Simple Steps toStarting a Business - Start-up Track Step 1: Awareness Advantage SCORE . . . (Concept/Interest) Integrated Business Performance Solutions Simple Steps Workshop Series Step 2: Awareness Integrated or Segmented Track (Personal Qualification) Scheduled (Open) Workshops Combined Track Step 3: Evaluation (Business Feasibility) Aligned Mentoring Business Start-up Coaching Step 4: Commitment SCORE Resources (Network) (Decision/Funding) Step 5: Implementation (Preparation/Launch) Worksheet Worksheet Business Development Qualification and Decision Process Feasibility Guide
- 43. Current Situation Recovery –Tactical Shaped by Marketplace Disrupted by Industry Majority and Laggards Declining or Survival Involuntary Disruption Simple Steps to Business Recovery Need to move the business out of the current situation
- 44. Simple Steps toRecovery Defense Track- Tactical Step 1: Awareness (External Perspectives) Advantage SCORE . . . Integrated Business Performance Solutions Step 2: Discovery Simple Steps Workshop Series (Internal Insights) Integrated or Segmented Track Step 3: Evaluation Scheduled (Open) Workshops (Sustainable Business Model) Combined Track Isolate Challenges Aligned Mentoring Business Recovery Coaching Step 4: Commitment (Solution Recommendations) SCORE Resources (Network) Prioritize Initiatives Step 5: Implementation (Execute and Management) Step 6: Measurement (Measure Results and Repeat) Worksheet Business Recovery
- 45. Current Situation Voluntary Transition Shaping Marketplace Disrupting Industry Innovators/Early Adaptors Competing Aggressively Steady Growth Voluntary Evolution Simple Steps to Business Expansion Want to move the business to the next level
- 46. Simple Steps toExpansion Offense - Strategic Step 1: Awareness (External Perspectives) Advantage SCORE . . . Integrated Business Performance Solutions Step 2: Discovery (Internal Insights) Simple Steps Workshop Series Integrated or Segmented Track Step 3: Evaluation Scheduled (Open) Workshops (Sustainable Business Model) Combined Track Isolate Challenges Aligned Mentoring Step 4: Commitment Business Expansion Coaching (Solution Recommendations) Prioritize Initiatives SCORE Resources (Network) Step 5: Implementation (Execute and Management) Step 6: Measurement Worksheet (Measure Results and Repeat) Business Transition
- 47. Common Concepts – DifferentExecution Development Defense Offense Start-up Track Recovery Track Expansion Track Entrepreneur (BP) DNA Business Operations DNA Business Performance DNA Leadership Priorities (Balance) Leadership Balance (Priorities) Leadership Balance (Priorities) Start-up Leadership Alignment Recovery Leadership Alignment Transition Leadership Alignment Development Process (5 Steps) Recovery Process (6 Steps) Transition Process (6 Steps) Development Challenges Survival Challenges Growth Challenges Start-up Problems Survival Problems Competitive Needs Start-up Needs Recovery Needs Growth Opportunities Start-up Opportunities Build Business Model Fix Business Model Expand Business Model Business Performance Priorities Business Performance Priorities Business Performance Priorities Business Operations Priorities Business Operations Priorities Business Operations Priorities Foundation (Scheduled) Initiatives Tactical (Immediate) Initiatives Strategic (Planned) Initiatives Evaluate External Forces Manage External Forces Leverage External Forces Resource Identification Resource Allocation Resource Commitment Development Funding Sources Recovery Funding Sources Expansion Funding Sources
- 48. A Sustainable OrganizationModel External versus Internal Balance External Forces of Business Targeted Marketplace (Geographic Segment) Change The Demand Side Targeted Consumer Stakeholders - Society Communities Community, (Consumers) (Customer Segments) Media and Other Economy Communities (Money) Innovation The Supply Side Business Business Supply Chain (Technology) Performance Operations Partner, Alliance Marketplace Strategies Strategies Professional (Commerce) Communities Front-office Back-office Events (Environment) Policy Leadership (Stake Holder) DNA (Standards) Leadership Allocation (Self) or Balance (Team Leadership Lifecycle Alignment
- 49. Advantage SCORE .. . From Challenges to Solutions Today’s volatile business climate is a lot like a tennis match, challenges come at you pretty fast. Whether you are winning, losing or just starting out in business, SCORE can help you match point and win. Regardless of business size, scope, type, or current situation, seasoned SCORE professionals leverage integrated solutions with years of life/work experience to Volatile Business give you an “advantage” in today’s Climate challenging business environment. The fastest tennis serve on record for men is 156MPH and 139MPH for women
Editor's Notes
- #2 Welcome to our workshop today.The words at the bottom of the page are a simplified version of the process to use to produce a strategic plan. You need to understand your business’s situation and capabilities, analyze the implications of this situation, decide what goals and objectives you will have for your business,and what actions will you take to achieve these goals.So let’s get going.
- #3 I have spent a major part of my career planning for growth and profitability. I have spent the rest of my career producing higher profits. I like profits. In fact I love profits, even other people’s profits.Profits are the tangible results of producing value as judged by the market.I think there is only one reason I like planning: and that is to produce profits.Now you know who I am and why we are here.Since we have a manageable size here I would like to know who you are. If we could take 30-60 seconds eachPlease state your name and company’s name, if you have a strategy, is it written, when you last reviewed it, and who formulated it.
- #4 I want to pose three questions to start our discussion.Who here is planning to retire.?Who is planning to retire over 5 years from now?Who is working with a broker or planner on that plan?You have a strategic plan and are using a planner.The catch is, if you own a business, and plan to retire, you are depending on your business to be successful to fulfill your strategic plan to retire. Do you have a similar strategic plan for your business to be successful? If not, you don’t have a retirement plan.I really like what Jimmy Dean says. Is the wind always blowing at your back? It feels like it is always blowing in your face. But if you have the understanding of sailing, you can move forward even into the wind.
- #5 Today we are going to take a practical look at why you should plan, why you may not have a formal written plan, why your really need a plan, selecting a process to do your plan development, and an example SCORE uses to develop plans for clients.We will also give you some materials to help you with your planning.
- #6 Everyone in business needs someone to bounce things off of.If you don’t have a Board of Directors or Advisors, or an experienced Mentor, you should consider engaging SCORE or another person or company who can provide you with perspective and objectivity.
- #7 Unfortunately, as much as I like planning, it is not a silver bulletBut it is something that will lower your risk and increase your opportunities.I believe that it is more important for a small company to have good planning because you are more vulnerable to events than a large company who have more resources to respond with.
- #8 So let’s get to the meat of the issue.Strategy Development is not a complicated concept, it is about providing products and services to customers that they need and will pay for, and how you will differentiate your products, services, and company to beat the competition.If these questions were answered do you think you have a decent plan?So let’s talk for a minute about diirection – Who does not want to grow your business Who does not want to lose their business Suppose you make a decision to grow your business that risks you losing it? Or that took twice the people that you now have Would you still want to grow your business?So your plan needs to look at HOW you will achieve your goals
- #9 Before you can create a strategic plan, you need to start thinking strategically.This means stepping back from the chaos and noise of day to day crisis and looking at what is important.Strategic thinking should help to simplify how your business interacts with the world. It quite simply allows you to focus on those things that will result in your business being successful.
- #10 I don’t have to tell you that things are moving fast, and seem to be accelerating.There is no new normal.No matter how hard you paddle if you are headed upstream, you will go nowhere.The idea is to understand your market, competition and capabilities to determine how you can paddle downstream and use the current to push you along.It will NEVER be easy, but you can make it easier.
- #11 But why don’t small businesses in particular plan –It may seem strange, but you don’t HAVE to, until you HAVE to and then it’s too late!A lot of the clients that come into SCORE have waited until to late to come to us, and if they had come a year earlier when the warning signs first appeared, we might have helped them. There are a number of other reasons, but they all boil down to the fact that I think you simply don’t understand how to do it efficiently and effectively. This is definitely a case where one size does not fit all. Your process should fit your company as well as your plan does.
- #12 THE best way to overcome most of the barriers to planning is to find someone to focus on this as their top priority while you continue to focus on your business. You will be surprised at how effectively this can be done if you pick the right person and process to coordinate the plan.One of the key items for you to evaluate in selecting the person to do this is the process they will use. There is no reason to reinvent the wheel, but you do have to be careful not to try to put a bicycle wheel on a Mack truck. This is a key decision that 80% of companies don’t even think about. They typically go with whatever process the guy they pick happens to use.
- #13 The good news is that you can find someone who has experience facilitating strategic planning in a number of places to match your budget and your needs. There are ways to do it at no additional cost, a small cost or a huge cost. I would like to talk to you if you want to do this.I have worked on plans that cost $100,000, and others that have cost $1,000. Both were good plans.However you choose to do the planning process, YOU have to own the process and everyone you are working with needs to clearly understand you are absolutely committed to executing the plan.
- #14 Plan development consists of three primary process steps.Thinking about possibilities and identifying your realistic options.Making informed decisions about what you will do. And finallyDefining how you will do it: the who, what and when of it.
- #15 Traditional planning has been linear and periodic, happening once per year, or every two or three years, and was static, since things changed in fairly predictable ways. However, as we have said, that is not the world that we live in today. We need a dynamic model that is interactive, and continually be evaluated and adjusted, even though the core strategy may stay the same.
- #16 A dynamic model monitors the important changes occurring internally and externally, analyzes the implications using the focal point of strategic thinking, and drives decisions to adapt to key changes. This seems complicated, but can be integrated into you business management thinking, and become part of your company culture. It MUST become part of company culture in today‘s marketplace.
- #17 A dynamic model monitors the important changes occurring internally and externally, analyzes the implications using the focal point of strategic thinking, and drives decisions to adapt to key changes. This seems complicated, but can be integrated into you business management thinking, and become part of your company culture. It MUST become part of company culture in today‘s marketplace.
- #18 Hopefully you have a vision and mission. I am not going to discuss this, but if you don’t have them you should, even if the company is only you, you need to know where you want to go and be able to explain it to you customers, employees, and your banker. It is your elevator speech. In this presentation we are going to focus on the mechanics of understanding your situation, analyzing your options, and deciding on an action plan.
- #19 Traditional market research is intimidating, and done by trolls in the marketing department.And although the topics are the same, in a small company it needs to be done differently.
- #20 Small companies need to focus on their “real” world of customers and competitors. A cleaning service in Dayton is not going to sell to customers in California. And this is a place where that thing called “social networking” will be used by successful companies to understand their market on a real time basis. If you do it right, social media is a conversation with people who are important to you, and to whom you need to be important either personally or professionally. If you make it easy for your customers to talk to you, and to know that you will listen and respond, they will tell you more than you would ever believe. This is another what? Focal Point. Why?Because this group is made up of customers who already buy your products. They accept your value proposition. And they may have friends who would too.!
- #21 Market research is an intimidating thought – one best left to marketing experts. However, if you can’t afford a brilliant marketing expert like me, what can you do?A good way to do market research yourself is to identify your customer characteristics, and then finding other customers who are like them, especially in buyer behavior.An example I use is to think about what your customer is buying from you is a Honda accord that a 17 year old boy is buying and a 35 year old mother is buying. Are they buying the same thing? What can you tell me about these customersOne is male and young, and one is female, not so young, with a child. What would you expect their buying behavior to be? How would you make your sales pitch to them? The key question about them is how many of each of these categories buy your cars now?As you can see, this line of reasoning allows you to gain insight useful to determine target markets and your marketing approach
- #22 What have been doing here is segmenting customer groups.Segmentation provides you with a what? A “focal point”.And the gold standard of segmentation is a group who are underserved, and provide high value. This group provides you with the best what? Return on invested time and money, or profit. And we all know that I just lover profit. Segmentation helps you be very specific in how you find and get customer.
- #23 Another aspect market research is to study the competition.Again, if you are creative you can do it yourself using tools available to you on the internet.Also, talk to people about them. Find out the same things you find out from your customers about you.Then compare why people buy from them instead of you or visa versa.
- #24 Another key strategic question to ask yourself is where you operate in the value chain.This has a large impact on how you focus you business on research, production, or sales, or customer service
- #25 You have to get a couple of things right in strategy development and this is one of them.This tells you whether you need to be a leader or follower.Or if you are in a no win situation where businesses come and go all of the time.The company that I used to work for sold to GM and bought raw materials from Exxon… so how much power did we have in the horizontal axis of this diagram?The implication is that our primary cost and price to the customer were very constrained. So our strategy had to address this, and it did very well. When GM went bankrupt the company got all of their money within 90 days, and GM was on a 15 day payment schedule.So this is a very powerful concept which works in the real world in determining what how you can compete in a given market situation.
- #27 Here is another critical item in your strategic analysis.Your SWOT is the foundation for your strategic analysis/In this process you take what you found out about your external situation and match it up to the internal characteristics of your business. The important thing about the internal characteristics is which are critical strengths and weaknesses.You can then look at the opportunities and threats you see and determine how you can counter them.We have provided you with a list as a handout that can help you do your SWOT. I would like you to pick up to three strengths and weaknesses from the list, no more, or others you feel you have.And then do the same thing for opportunities and threats.I would like you to take this back and discuss it with people at your company, or an advisor to confirm you thoughts.
- #28 Once you have your SWOT you can use it to match Opportunities to strengths and Threats to weaknesses which will increase your probability of success and minimize the risk to your business.
- #29 When you have a good SWOT, you use it to stack the deck in your favor.Don’t play those games where your probability to lose is high – avoid.Play those games where your probability to win is high – Exploit.Apply your strengths to threats to overcome themApproach opportunities carefully where you have weaknessesI would prefer a diagonal on this chart because the business world is more risky than in the past.So another consideration with your SWOT is the amount of risk you feel you business can take.
- #30 So how can you identify opportunities to grow based on your SWOTThe possible areas to consider are market expansion, product expansion, and innovation.I would like to say something about innovation. We think of it as new software or materials, but people innovate every day in business to make things work better. But it tends to be random. If you can focus innovation in target areas defined by your strategy, the innovation will have a larger impact on business success.
- #31 We can also look at areas to increase efficiency and that way strengthen weaknesses or reduce costs, or improve service;In the SCORE model we call this the back office functions
- #32 The key to achieving results in your plan is to --- what?FOCUS that’s right. Especially for a small business it is critical that you only take on one or two goals at a time or you will get overwhelmedI would like you to take a minute to think about THE most important goal or two that you should consider for your business right now.
- #36 Bob Talty from SCORE likens running a business to riding a bicycle. You pedal like hell to move forward.Keep your balance so you don’t fall.steer to avoid obstacles, butMost importantly you do what? look ahead t o see what’s comingAnd the faster you are going the further ahead you need to look.So the keys to success are Have it in writingUse a proven processUse an experienced facilitatorAnd finally, follow up often – which means not only monitoring progress, but checking assumptions, monitoring your customers and competitors for changes, SCORE has experienced mentors who can help you develop your strategy and plan and work with you through it’s execution.
- #37 Remember two things about how planning is like riding a bikeIt’s not as hard as it looksAnd you never forget how once you do it.
- #38 It’s really not as hard as it looks.Have you ever noticed the only old guy in these pictures is standing up.