Many small businesses starting up think of strategic or long-term planning as something that is only undertaken by large businesses.
The successful businesses that survive and prosper are those that meet their customers’ needs by offering benefits to them at prices which not only cover the costs of providing the features but also generate a profit. Your task is to effectively match the business’s competences (that is, its knowledge, expertise and experience) and resources with the opportunities created by the market place. In other words, businesses should be market driven.
Too many businesses think they can provide a product, but are unsure of whether it is really needed. The starting point for any business is therefore to outline a mission, or purpose, and define goals.
Purpose defines ‘what the business does’. All businesses have a purpose. For some, it is simply to make money. Others define their purpose in terms of activities and customers. Some also incorporate a values statement. Many of the most successful businesses are driven by an ideology which covers both their purpose and their values and which provides inspiration and guidance for the business. Defining a purpose is a pre-requisite for effective planning.
The goals, or ‘vision’, define ‘where the business is going’. They may be defined in terms of growth or comparisons with competitors, or even about social investment. For most businesses it is the vision that drives the business forward.
In setting goals for your business you need to satisfy three groups of people: owners, staff and customers. Each will have their own expectations:
- The owners will be looking for a return on their capital locked up in the business. This may be yours (and your partners') but you should still be aiming for a better return than you would achieve if the money was, say, in the bank or building society. If you have external investors, they will be looking for capital appreciation and evidence that their investment is being well managed.
- Staff will be looking for realistic rewards for their efforts, career opportunities and an environment in which they are happy to work.
- Customers will be looking for a product or service which fulfils need and which represents good value for money.
To be successful, a business needs to have some idea of how it is going to achieve its goals. Many businesses do this by setting out shorter-term objectives. The objectives should be action focused and must be accomplished within the resources available. The goals and objectives can be elaborated into a business plan together with the analysis of the market place, an indication of the resources that will be required and the way in which those resources will be deployed.
“The mission of Levi Strauss is to sustain profitable and responsible commercial success by marketing jeans and selected casual apparel under the Levi brand.”
Levi Strauss & Co
Strategy “converts what you want to do into accomplishment.”
Now move on to: Preparing the Plan