New research from Barclays reveals that a shocking 23% of SMEs in the UK don’t have a strategy or strategic plan in place to support their business growth.
Less than half (47%) of the UK’s small businesses have a formal business plan in place that is written down or recorded, while the remaining 25% have an informal, verbal plan.
So, do you have a strategic plan in place for your start-up?
No? Well, in a small new business, you’re often focusing so hard on the day-to-day, you just have to let the bigger picture take care of itself.
Or maybe you’re worried that the deliberation and planning that accompany careful strategizing will delay commercialisation and instead you’re just keen to jump on the first practical route to market.
But without a clear vision and a well-thought-out strategy for achieving your ultimate business goals, how will you know if your hard work is progressing you to the success you need? In fact, how will you truly know your business at all?
So, if you’re at the start of your business journey and wondering if a strategic plan is worth the effort, this article is for you.
What is strategic planning?
Strategic planning is the process of documenting and establishing a direction of your small business—by assessing both where you are and where you’re going. The strategic plan gives you a place to record your mission, vision, and values, as well as your long-term goals and the action plans you’ll use to reach them.
There are many reasons for creating a strategic plan for your business – and this article makes no claims to be exhaustive. Here, though, are some of the key considerations to get you thinking:
It will keep you focused on your vision
This is really the essence of start-up strategic planning. As a founder, you’ll likely be pulled in several directions at once, whether it’s chasing an investment, trying to close a key account, or hiring a new team member. Then there are the problems you encounter as a new business and your efforts to contend with these.
All the above can divert you from what your company stands for and are aiming towards. Without a plan to refer to, you run the risk of derailing your business by jumping at opportunities that aren’t aligned to your bigger vision or being side-tracked by problem solving.
It will help you identify your business’ strengths and weaknesses
In the strategic planning process, you’ll examine and analyse your entire business. You’ll identify what your business does well and where it still needs to improve. This process gives you and your employees an opportunity to improve in the future and become a durable business by minimising risks.
Finance may depend on it
Today, many lenders and investors won’t ask for a strategic or business plan. A pitch deck will usually do the job. However, not all sources of finance are the same and unfortunately, it’s usually when you’re least prepared that your strategic plan will be required.
Even if no one requests your plan, you can still expect to be asked a range of in-depth questions relating to your business. When it comes to knowing, and communicating with authority, the details of your business, your strategic plan can be the best kind of preparation and resource.
It’s not only for raising funds
Aside from investors, you may be required to provide your strategic plan when securing:
- Early Team Members: As your start-up grows, additional team members may be required. If finances are tight, you may need to offer equity instead of competitive salaries. Talented people may only join you on those terms if they can see a plan that clearly maps out a managed process to future business success.
- Early Suppliers: If your business sells products, securing the right suppliers is critical. Some companies may refuse to supply you unless they can meet a minimum order or they can see a strategy that plans to quickly increase their order size.
- Early Partners: In the early stages of your start-up, partnerships with other businesses can drive brand awareness and growth. Established companies may be reluctant to partner with you, though, if they can’t clearly see how it will benefit them either in the short or longer term.
It will help to ensure your sustainability
Developing a strategic plan forces you to look beyond the present to a bigger future. Without a strategic plan, you risk chasing short-term gains that may slow progress towards those future landmark goals.
A strategic plan ensures that those big goals are constantly the target, and that the sustainability of your business is firmly locked into the mindset of those operating within it.
It will motivate every hire you make
Start-ups, more than any other business, need to hire people that are truly passionate about what the company is striving towards. Free coffee & ‘Pizza Fridays’ will only go so far when it comes to motivating the team to work through the night to get that system release finished.
To ensure the passion and output from your people that all founders crave, benchmark every new hire against your strategy and vision.
It will provide continuity
Talking of staff, recent trends in recruitment have seen people moving between companies at a faster pace than ever before.
A strategic plan means there will always be an understanding of where the company is heading and how it will get there, regardless of how many people leave and are replaced.
It will increase productivity
Involving your employees in the strategic planning process also means they receive a sense of accountability that can increase productivity. Whether they contributed to the process or were informed of the business’s goals and objectives after the strategic plan was created, they’ll be more likely to want to help you achieve those targets
It will help you adapt to market changes
Whatever changes are occurring in your sector or market, a solid strategy gives you a birds-eye view on your business objectives and helps you evaluate how you can capitalise on new opportunities and avoid possible threats.
It will help you to manage your financial resources
Since strategic planning also includes financial planning and pricing products or services, it helps you to better understand your margins and where you are financially at any given time.
Still think you don’t need a strategic plan?
This article only scratches the surface of why a strategic plan is a big positive for your start-up. If you’re still sceptical, we’d urge you to dig a little deeper.
With a strategic plan at the core of your business, you’ll be both more confident and more persuasive to investors, employees, and partners when you can demonstrate your idea’s potential, validating the underlying assumptions and strength of the idea itself.
And the reality is, if you’ve started a company, you already have a strategic plan. Yes, it may only be in your head, but it’s there. So, go the extra mile, write it up and prepare to enjoy the benefits outlined above, along with many more we haven’t covered here.