Strategic planning isn’t just an option for small businesses today; it’s essential. Given the uncertain direction of some trends and the rapid pace of change in others, every small business needs some kind of roadmap by which to navigate these shifting scenarios, and metrics to accurately gauge the progress.
But while most small businesses know they have to plan, few know how to do it correctly.
Writing in American Express OPEN Forum, management consultant Les McKeown says that while he’s seen virtually every type of strategic planning process, “many times, those involved in the process place too much importance in the resulting plans, and far too little in the planning process itself.”
McKeown, president and CEO of Predictable Success, explains that the point of planning is “to develop an understanding of what’s likely to happen in the future, and to be fully prepared for most circumstances.”
To make planning a powerful, vibrant process in and of itself—and get better plans as a result—McKeown suggests the following:
Embrace the process. “See the planning process itself (not the resulting plan) as the main thing,” he says. “Invest time to do it right. Get the right people in the room. Ask a great facilitator to help you. Roll around in the process. Luxuriate in it. Get good at it.”
Plan to scenarios, not data points. McKeown believes that most people produce plans with a specific outcome in mind, or a “bad, better, best” range of projections. “Sadly, life doesn’t play out in single data points—it plays out in scenarios,” he says. “When you’re planning, start by putting together four or five likely scenarios as well as a few unlikely scenarios for your business next year.”
For example, consider what might happen if a key cost rises in a down market, a main customer starts buying from the competition, or you outgrow your existing store capacity. “Plan against these, and rehearse your likely responses, so when one of them does happen, you know precisely how you’re going to respond,” McKeown says.
Bring the accountants in at the end. Most people start with the numbers—say, a 10-percent growth rate—and work backward, something that rarely happens. “Make your scenario-based plans first, then have the accountants work up the numbers,” McKeown advises. “When you see the results, you might need to go back and re-plan your responses to some of the scenarios, but that’s a good thing.”
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