Understanding strategic plans on business, stages, components, and benefits
Every business must have a strategic plan. Many businesses try to operate without a specified plan might surprise you. Research from Onstrategy shows that 86% of executive teams spend less than one hour per month to discuss strategies, and 95% ordinary workers do not understand their organizational strategies.
While if you are a new entrepreneur who has many details to think about, compiling a strategic plan is the first thing you have to do.
Experienced business leaders often emphasize the importance of strong strategic plans and well designed.
Without the right plan, you can lose new opportunities, and may even prevent your own growth.
Let’s discuss in depth what a strategic plan on the business, the stage in doing so, the components and benefits you will get.
What is a strategic plan
Strategic planning is the art of making certain business strategies, implementing it, and evaluating the results of the implementation of the plan, with respect to the purpose or long-term desire of the company as a whole.
This is a concept that focuses on integrating various departments (such as accounting and financial, marketing, and human resources) in the company to achieve its strategic goals. Strategic planning terms are basically identical to strategic management.
The concept of strategic planning initially became popular in the 1950s and 1960s, and was liked in the corporate world until the 1980s, which ultimately lost momentum. However, the enthusiasm for strategic business planning was revived in the 1990s and strategic planning remained relevant in modern business.
The process is in business
In the simplest terms, strategic planning processes are methods used by organizations to develop plans to achieve overall long-term goals.
This process is different from the project planning process, which is used to determine the scope and assign tasks for each project, or mapping strategy, which helps you determine your mission, vision, and goals.
Wider Strategic Planning Process – This helps you create a road map whose strategic purpose should you try to achieve and initiatives which are less helpful business. Strategic planning process steps are described below.
Strategic Planning Stages
1. Determine your strategic position
This phase of preparation will determine the success for all future work. You need to know where you are to determine where you have to go and how you will get there.
Involve the right stakeholders from the start, taking into account internal and external sources. Identify the main strategic problem by talking to executives in your company, attracting customer insights, and collecting industrial and market data to get a clear picture of your position on the market and in your customers’ minds.
It’s also good for reviewing or making a mission and vision statement if you don’t have it on your company to give yourself and your team is a clear picture of what your business success is.
In addition, you must review your company’s core value to remind yourself of how your company will try to achieve this goal.
To start, use industrial and market data, including customer insight and current / future requests, to identify problems that need to be addressed.
Documenting your organization’s internal strengths and weaknesses, along with external opportunities (the way your organization can grow to meet the needs that are currently not fulfilled by the market) and the threat (your competition).
As a framework for your initial analysis, use the SWOT diagram. With input from executives, customers, and external market data, you can quickly categorize your findings as strength, weakness, opportunities, and threats (SWOT) to clarify your current position.
2. Prioritize your goals
After you identify your current position on the market, it is time to determine the goal that will help you achieve your goals. Your goal must be in line with your company’s mission and vision.
Prioritize your goals by asking important questions such as:
- Which of the input data or initiative you get that will have the biggest impact on the company’s mission / vision and increase our position on the market?
- What type of impact is the most important (for example Customer Acquisition vs. Revenue)?
- How is the competition?
- Which initiative is the most urgent?
- What do you need to do to achieve your goals?
- How do you measure the progress of the plan and determine whether we achieve our goals?
The aim must be different and measurable to help you achieve a long-term strategic goal and the initiative described in the first step. Potential targets can be in the form of updating website content, increasing email opening levels, and new prospects that are being prepared.
Smart targets are useful for determining time lines and identifying resources needed to achieve goals, and the main performance indicators (KPI) so that your success can be measured.
3. Develop a plan
Now it’s time to make a strategic plan to succeed in achieving your goals. This step requires determining the tactics needed to achieve your goals and determine the timeline and clear responsibility communication.
Strategy mapping is an effective tool to visualize your entire plan. Working from top to bottom, strategy maps make it easy to see business processes and identify gaps for improvement.
A truly strategic choice usually involves exchanges in opportunity costs. For example, your company might decide not to provide a lot of funds for customer support, so it can put more funds to create an intuitive user experience.
Be prepared to use your values, mission statements, and priorities set to say “no” on the initiative that will not increase your long-term strategic position.
4. Run and manage the plan
After you have a plan, you are ready to apply it. First, communicate the plan to the organization by distributing relevant documentation. Then, the work actually starts.
Change your wider strategy into a concrete plan by mapping your process. Use the KPI dashboard to communicate the team’s responsibilities clearly. This detailed approach describes the process of completion and ownership for each step of the road.
Prepare routine reviews with individual contributors and their superiors and specify check-in points to make sure you are on the right track.
5. Review and revise the plan
The final stage of the plan is to review and revise – giving you the opportunity to reevaluate your priorities and repair directions based on success or failure in the past.
Every three months, determine which KPI has filled with your team and how you can continue to fulfill it, adjust your plan as needed. Every year, it is important to reevaluate your priorities and strategic positions to ensure that you remain on the path of success in the long term.
Track your progress using a balanced score card to provide a comprehensive understanding of your business performance and implement strategic goals.
Over time you might find that your mission and vision need to change – Annual evaluation is the right time to consider these changes, prepare a new plan, and apply again.
Component in a strategic plan
1. Mission, Vision, and Aspiration
Mission statements are your overall formula and last long about why your company is there and what it expects it.
This includes the purpose you want to achieve and outline how you intend to fulfill it. A strategic plan requires a clear statement about the purpose of your company, the reason for its existence in the first place.
Why did you form this company, and what do you want to achieve by developing it and offering products or services to the public?
2. Core values or core values
With your mission and vision statement, then you will usually focus on drawing the core value statement.
Your core values stated that the “necessity” and “should” of the main company – the important principles needed to guide leaders and employees in daily decision making and long-term.
Experts usually do not recommend the application of these values from top to bottom to the company. Instead, try to hone existing values as part of your corporate culture.
You might already know what the core value is. Adding important components to articulate it on paper helps strengthen it in the minds of all stakeholders.
3. Strength, weakness, opportunity and threat
SWOT analysis about strength, weakness, opportunities, and threats is an overview of your current company situation, of these four major perspectives. It represents the portrait of the path that is open to you and the trap you might face, as well as assets that you can use to help you along the way.
Your plan must also include checks of your competitive advantage – your unique selling value – which puts you in front of the field in your market.
4. Operational goals, strategies, and tactics
Your long-term target represents what you need to concentrate to realize your vision. This goal usually has a horizon of several years or more.
Under “General Strategy”, you will group the entire means that you will use to achieve your goals, and thus, your vision. With this, you can then set short-term priorities and performance initiatives detailing resources “Who, what, and when” that you will use to achieve it.
And to be more specific to operational problems, you need to browse and answer questions about how you intend to achieve your goals.
5. Measurement and funding flow
You need to enter a tool to track the output and performance of your company to the target scheduled regularly.
You also need financial analysis that takes into account past performance and projection. The numbers in your strategic plan do not need to be detailed, but they need to help you – and prospective investors – get a general description of your financial resources.
The benefits of a good strategic plan for business
The volatility of the business environment causes many companies to adopt reactive strategies than proactive strategies.
However, reactive strategies can usually only be run for the short term, although the strategy may require a lot of resources and time to execute it.
Strategic planning helps companies prepare proactively and handle problems with more long-term views. They allow companies to start influence rather than just responding to the situation.
Among the main benefits obtained from strategic planning are as follows:
1. Help form a better strategy by using a logical and systematic approach
This is often the most important benefit. Several studies show that the strategic planning process itself has contributed significantly to improve the company’s overall performance, regardless of the success of certain strategies.
2. Improve communication between employers and employees
Communication is very important for the success of the strategic planning process. It starts through participation and dialogue between managers and employees, which shows their commitment to achieving organizational goals.
Strategic planning also helps managers and employees show commitment to organizational goals.
This is because they know what the company does and the reason behind it. Strategic planning makes organizational goals and objectives to become real, and employees can easier to understand the relationship between their performance, company success, and compensation.
As a result, both employees and managers tend to become more innovative and creative, which encourage further company growth.
3. Empower individuals working in the organization
Increased dialogue and communication at all stages of the process of strengthening the sense of the effectiveness and interests of employees in the success of the company as a whole.
For this reason, it is important for companies to decentralize the strategic planning process by involving lower level managers and employees throughout the organization.
A good example is Walt Disney Co., which dissolves its separate strategic planning department, to establish a planning role to each Disney business division.
More and more companies use strategic planning to formulate and apply effective decisions. Although planning requires a lot of time, energy and money, a strategic plan that is well thought out efficiently encourages company growth, achieving goals, and employee satisfaction.
When you continue to implement a strategic planning process, repeat every step regularly, you will start making measurable progress to achieve your company’s vision.
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