Last updated on May 13th, 2019 at 02:28 pm
While it has often been reported that some of the most successful companies in the world wholeheartedly embrace annual strategic business planning, it also has been frequently estimated that less than 10% of small business owners use a strategic business plan as an aid in the development of their company.
This doesn’t mean that most business owners don’t have a vision for their company’s development. Nor does it mean that most small business owners execute with whimsy and with the use of poor strategies. What it does mean is that far too often, business owners fail to maximize the performance of their company because they fail to exploit the benefits that can be achieved by intentionally developing, releasing and directing the power of a focused team.
Business advisors, educators, executive coaches, management consultants, bankers and venture capitalists write and speak about the importance of strategic business plan development. With that in mind, why is it that so many small business owners shy away from implementing organized strategic planning activities?
In my opinion, at least part of the answer to this question lies in the fact that there are a variety of myths about strategic planning which tend to circulate throughout the business world through articles in management journals, in newspapers directed toward business owners, in management seminars and from the comments made by numerous, well-intentioned advisors.
Many business owners "shelve" the introduction of an annual strategic planning process because they have repeatedly heard one or more of these myths and accepted them as truths.
Myth No. 1
Building a strategic business plan means paying a consultant a large amount of money to lead a strategic planning process each and every year.
Fact: Experienced and successful business owners tend to agree that it makes sense to have an outside advisor involved in the development of a strategic business plan. However, there are a wide variety of experienced and qualified consultants and advisors available in the marketplace. Most tend to charge standard market rates for their time either on an hourly fee basis, or a project fee basis.
Factors influencing costs include the size and type of business, the structure of the planning process and the type of involvement requested or required. The approach of many of these advisors is to help business owners develop a structured process that can be led by the owner or another important member of the management team.
Myth No. 2
A solid strategic plan must be built through a time-consuming process involving participation of most, if not all employees of a company.
Fact: The best strategic plans are usually built from input received through open and honest communication between the leaders of the company and those who are directly involved in the management of the achievement through corporate processes.
There is the need for these people to allocate the time in their work schedules to participate in annual strategic planning activity much in the same manner that it is expected that they participate in other important meetings. At the end of the day, a strategic business plan becomes a road map to keep meetings focused; to evaluate corporate achievement; and to assure that all stakeholders understand management’s vision for growth and development of the company. Strategic planning should provide for a clear return on the dollars invested to support it.
Myth No. 3
The most important end product of a strategic planning process is the strategic business plan document.
Fact: While a strategic business plan is an essential document to attract banking partners and to keep them informed of anticipated needs for financing, the most important end product of strategic planning activity is the process itself and the potential it has to contribute to team building, better day-to-day decision making and realistic corporate goal attainment. That’s why so many successful companies engage in an annual strategic planning process.
Myth No. 4
Following a good strategic business plan assures corporate success.
Fact: The strategic business plan document is an important management tool, but it is only as good as quality of information it contains and the ability of management to use it effectively. The existence of a solid plan does not relieve management or employees from the responsibility of using sound judgment in its decision making each and every day. The strategic business plan is nothing more than a snapshot of a company at a given point in time, management’s best thoughts about what the future may bring and what another snapshot might reveal after time passing. The hard work and tough decisions begin when the plan document is completed.
Myth No. 5
The best strategic business plans are built solely upon facts and hard data through a formal and analytical process.
Fact: The best strategic business plans communicate clearly the vision of the principals in a company, together with the strategies to implement to accomplish a corporate mission. The strategic planning process should be designed to provide for inherent creativity. Facts and hard numbers are used to verify its validity.
Myth No. 6
For a strategic plan to be valuable, it should be created shortly before the new fiscal year of a company.
Fact: A strategic planning process can be implemented at any time in any company.
While most companies embracing strategic planning engage in the process on an annual basis with a measure of regularity with respect to the calendar, this practice is more for practical reasons. Every company has a life of its own, and the timing of the initiation of its strategic planning process should reflect the principals’ best judgment and taking into consideration a host of factors.
Richard Hellan is president of Hellan Associates, an executive and business coaching firm in Milwaukee. He can be reached at 414-967-9012.
April 16, 2004, Small Business Times, Milwaukee, WI