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The Importance of Strategic Planning

Every successful business has a plan and knows where it is heading in the future. Setting a plan with goals, target dates, and a purpose should be finalized before embarking on a business. Taking the time on an ongoing basis to review the company's past performance, and predict its future performance, gives it a road map to follow.

Without strategic planning , which is knowing the current state of your business and where you want it to go, most businesses will fail. A strategic plan allows you to see what is important, how to get there, the pitfalls to avoid, and the noise to ignore. Below we discuss some of the reasons why strategic planning is important and how to implement it.

Key Takeaways

• Strategic planning is crucial for a business as it creates a map for a business to follow and course correct when need be.
• The first part of a strategic plan is the business plan, which outlines the purpose of the business, budgets, goals, and the mission statement.
• Making time to evaluate your business on an ongoing basis will allow you to determine how well your results are adhering to your plan. This will allow you to make adjustments or double-down on how the business is being run.
• Communicating your strategic plan to your employees is critical so that everyone is on the same page and working towards the same goals.
• Reviewing and following up on your business will highlight strengths and weaknesses in your business so that you can continue with what works well and eliminate what is hindering the growth of your business.

The very first strategic planning most businesses do is a business plan . When you first start your business, you will likely have prepared a mission statement , a budget, and a marketing and promotion plan. The business plan is a good first step, but it needs to be reviewed and updated as the business continues and grows. If you shove it in a drawer and let dust gather on it, it won't serve as the foundation of your business, as it was meant to.

A business plan serves as the blueprint for a company's success, providing a comprehensive roadmap that outlines its objectives, strategies, and tactics for achieving growth and profitability. In some cases, a business plan is also necessary for attracting external funding and support from an outside investor or bank.

How you go about conducting strategic planning will depend on many variables, including the size of your business, the time frame included, and your personal preferences. The most common style of plan is goals-based. In this type of plan, you set goals for the business (financial and non-financial) and map out the steps needed to meet those goals.

For example, if your goal is to have $100,000 in revenues next year, the steps to get there might include bringing in five new clients a month and attending three trade shows. Whatever the goals you set for your business, they should be concrete and measurable so that you know when you reach them. Another method of strategic planning is mission-based.

When you first started your business, you likely developed a mission or values statement, outlining the purpose of your company and its overall reason for being. A mission-based strategic plan ties each part of the plan into the mission, to ensure that the company is always operating in the service of that mission.

For example, if your mission statement is to be recognized as a leader in the financial services sector and to help families become financially independent, your strategic plans should address how you will meet those goals.

It can be difficult to find the time to plan your business. Other, more pressing priorities, like trying to bring in revenue , may grab your attention; however, carving out time regularly will help you keep on top of your business.

Blocking off a few hours a day or week to focus on your plan should be part of your business operations. During that time, you can examine the prior week's financial performance and update any marketing initiatives to make sure that your business is on track with your initial plan. If it's not, then you'll need to make adjustments to get back on track.

Regardless of how often you plan, make sure that you set it in stone in your day planner. Block off the time and don't let anything else get in the way. Turn off your cell phone and, if at all possible, go somewhere away from your office to plan in order to minimize distractions.

As a business owner, you will most likely have employees. It is critical to inform them of your strategic plan so that they are on the same page and working towards the same goal as you.

Including your staff in your strategic plan will instill a feeling of responsibility in their jobs that will help ensure productivity.

For example, if you have a sales team and your strategic plan involves bringing in five new clients a month, your sales team needs to be aware of this so that they know the goal to achieve. If they don't, perhaps they would be under the assumption that bringing in two new clients a month is excellent, when in actuality, it is only 40% of your goal. Without clear communication to your employees, your business will be a boat set adrift without any course to follow.

A critical part of the planning process is reviewing your previous plan and comparing it to your actual results. Were you able to bring in five new clients last month? If not, why not? Tweak the plan going forward to account for changes in your business or the general economic climate. The more experience you get with the planning process and with the operational side of your business, the more accurately you will be able to plan.

Once you have had your business running for a while and block out time to follow up on your strategic plan, you will be able to determine where the strengths and weaknesses in your business lie. This would allow you to correct course, perhaps changing your business plan and goals slightly to focus on your strengths, while allowing you to eliminate your weakness, making your business stronger and increasing the likelihood of achieving your goals.

Why Is Strategic Planning Important for Businesses?

Strategic planning is crucial for businesses because it provides a roadmap for achieving long-term objectives, identifying opportunities, and mitigating risks. It helps align organizational resources, activities, and goals, ensuring that everyone is working towards a common vision.

What Are the Key Benefits of Strategic Planning?

The key benefits of strategic planning include improved decision-making, enhanced resource allocation, increased organizational alignment, better risk management, and the ability to seize opportunities for growth and innovation.

What Are the Risks of Not Having a Strategic Plan in Place?

Without a strategic plan, organizations may struggle to maintain focus, allocate resources efficiently, or adapt to changing circumstances. They may miss opportunities for growth or become vulnerable to competitive threats. Companies with a strategy may be more likely to face challenges in sustaining long-term success.

What Are Some Best Practices for Effective Strategic Planning?

Best practices for effective strategic planning include involving key stakeholders in the process and conducting thorough environmental scans to fully understand all aspects of a company that will be impacted. This can be done through a SWOT analysis. Once your strategy is in place, set clear and measurable objectives, regularly monitor progress, and don't be afraid to realign the strategy with new information as it comes available.

Planning out the future of your business is the best way to ensure success. Creating an initial plan and communicating that plan to your employees will ensure that everyone is working towards the same goal.

Taking out time to review your business's results and comparing them to your plan will help ensure that the right policies and procedures continue whereas those that are not benefiting the company will be removed. It may seem awkward and difficult at first to create a strategic plan, but with practice, you will be able to move your business in the right direction.

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What Is Business Strategy & Why Is It Important?

• 20 Oct 2022

Every business leader wants their organization to succeed. Turning a profit and satisfying stakeholders are worthy objectives but aren’t feasible without an effective business strategy.

To attain success, leaders must hone their skills and set clear business goals by crafting a strategy that creates value for the firm, customers, suppliers, and employees. Here's an overview of business strategy and why it's essential to your company’s success.

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What’s a Business Strategy?

Business strategy is the strategic initiatives a company pursues to create value for the organization and its stakeholders and gain a competitive advantage in the market. This strategy is crucial to a company's success and is needed before any goods or services are produced or delivered.

According to Harvard Business School Online's Business Strategy course, an effective strategy is built around three key questions:

• How can my business create value for customers?
• How can my business create value for employees?
• How can my business create value by collaborating with suppliers?

Many promising business initiatives don’t come to fruition because the company failed to build its strategy around value creation. Creativity is important in business , but a company won't last without prioritizing value.

The Importance of Business Strategy

A business strategy is foundational to a company's success. It helps leaders set organizational goals and gives companies a competitive edge. It determines various business factors, including:

• Price: How to price goods and services based on customer satisfaction and cost of raw materials
• Suppliers: Whether to source materials sustainably and from which suppliers
• Employee recruitment: How to attract and maintain talent
• Resource allocation: How to allocate resources effectively

Without a clear business strategy, a company can't create value and is unlikely to succeed.

Creating Value

To craft a successful business strategy, it's necessary to obtain a thorough understanding of value creation. In the online course Business Strategy , Harvard Business School Professor Felix Oberholzer-Gee explains that, at its core, value represents a difference. For example, the difference between a customer's willingness to pay for a good or service and its price represents the value the business has created for the customer. This difference can be visualized with a tool known as the value stick.

The value stick has four components, representing the value a strategy can bring different stakeholders.

• Willingness to pay (WTP) : The maximum amount a customer is willing to pay for a company's goods or services
• Price : The actual price of the goods or services
• Cost : The cost of the raw materials required to produce the goods or services
• Willingness to sell (WTS) : The lowest amount suppliers are willing to receive for raw materials, or the minimum employees are willing to earn for their work

The difference between each component represents the value created for each stakeholder. A business strategy seeks to widen these gaps, increasing the value created by the firm’s endeavors.

Increasing Customer Delight

The difference between a customer's WTP and the price is known as customer delight . An effective business strategy creates value for customers by raising their WTP or decreasing the price of the company’s goods or services. The larger the difference between the two, the more value is created for customers.

A company might focus on increasing WTP with its marketing strategy. Effective market research can help a company set its pricing strategy by determining target customers' WTP and finding ways to increase it. For example, a business might differentiate itself and increase customer loyalty by incorporating sustainability into its business strategy. By aligning its values with its target audiences', an organization can effectively raise consumers' WTP.

Increasing Firm Margin

The value created for the firm is the difference between the price of an item and its cost to produce. This difference is known as the firm’s margin and represents the strategy's financial success. One metric used to quantify this margin is return on invested capital (ROIC) . This metric compares a business's operating income with the capital necessary to generate it. The formula for ROIC is:

Return on Invested Capital = Net Operating Cost After Tax (NOCAT) / Invested Capital (IC)

ROIC tells investors how successful a company is at turning its investments into profit. By raising WTP, a company can risk increasing prices, thereby increasing firm margin. Business leaders can also increase this metric by decreasing their costs. For example, sustainability initiatives—in addition to raising WTP—can lower production costs by using fewer or more sustainable resources. By focusing on the triple bottom line , a firm can simultaneously increase customer delight and margin.

Increasing Supplier Surplus & Employee Satisfaction

By decreasing suppliers' WTS, or increasing costs, a company can create value for suppliers—or supplier surplus . Since increasing costs isn't sustainable, an effective business strategy seeks to create value for suppliers by decreasing WTS. How a company accomplishes this varies. For example, a brick-and-mortar company might partner with vendors to showcase its products in exchange for a discount. Suppliers may also be willing to offer a discount in exchange for a long-term contract.

In addition to supplier WTS, companies are also responsible for creating value for another key stakeholder: its employees. The difference between employee compensation and the minimum they're willing to receive is employee satisfaction . There are several ways companies can increase this difference, including:

• Increasing compensation: While most companies hesitate to raise salaries, some have found success in doing so. For example, Dan Price, CEO of Gravity Payments, increased his company's minimum wage to $80,000 per year and enjoyed substantial growth and publicity as a result.
• Increasing benefits: Companies can also decrease WTS by making working conditions more desirable to prospective employees. Some offer remote or hybrid working opportunities to give employees more flexibility. Several have also started offering four-day work weeks , often experiencing increased productivity as a result.

There are several ways to increase supplier surplus and employee satisfaction without hurting the company's bottom line. Unfortunately, most managers only devote seven percent of their time to developing employees and engaging stakeholders. Yet, a successful strategy creates value for every stakeholder—both internal and external.

Strategy Implementation

Crafting a business strategy is just the first step in the process. Implementation takes a strategy from formulation to execution . Successful implementation includes the following steps :

• Establish clear goals and key performance indicators (KPIs)
• Set expectations and ensure employees are aware of their roles and responsibilities
• Delegate work and allocate resources effectively
• Put the plan into action and continuously monitor its progress
• Adjust your plan as necessary
• Ensure your team has what they need to succeed and agrees on the desired outcome
• Evaluate the results of the plan

Throughout the process, it's important to remember to adjust your plan throughout its execution but to avoid second-guessing your decisions. Striking this balance is challenging, but crucial to a business strategy's success.

Learn More About Creating a Successful Business Strategy

Business strategy constantly evolves with changing consumer expectations and market conditions. For this reason, business leaders should continuously educate themselves on creating and executing an effective strategy.

One of the best ways to stay up-to-date on best practices is to take an online course, such as HBS Online's Business Strategy program. The course will provide guidance on creating a value-driven strategy for your business.

Do you want to learn how to craft an effective business strategy and create value for your company's stakeholders? Explore our online course Business Strategy , or other strategy courses , to develop your strategic planning skills. To determine which strategy course is right for you, download our free flowchart .

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14 Reasons Why You Need a Business Plan

10 min. read

Updated May 10, 2024

There’s no question that starting and running a business is hard work. But it’s also incredibly rewarding. And, one of the most important things you can do to increase your chances of success is to have a business plan.

A business plan is a foundational document that is essential for any company, no matter the size or age. From attracting potential investors to keeping your business on track—a business plan helps you achieve important milestones and grow in the right direction.

A business plan isn’t just a document you put together once when starting your business. It’s a living, breathing guide for existing businesses – one that business owners should revisit and update regularly.

Unfortunately, writing a business plan is often a daunting task for potential entrepreneurs. So, do you really need a business plan? Is it really worth the investment of time and resources? Can’t you just wing it and skip the whole planning process?

Good questions. Here’s every reason why you need a business plan.

• 1. Business planning is proven to help you grow 30 percent faster

Writing a business plan isn’t about producing a document that accurately predicts the future of your company. The  process  of writing your plan is what’s important. Writing your plan and reviewing it regularly gives you a better window into what you need to do to achieve your goals and succeed. 

You don’t have to just take our word for it. Studies have  proven that companies that plan  and review their results regularly grow 30 percent faster. Beyond faster growth, research also shows that companies that plan actually perform better. They’re less likely to become one of those woeful failure statistics, or experience  cash flow crises  that threaten to close them down. 

• 2. Planning is a necessary part of the fundraising process

One of the top reasons to have a business plan is to make it easier to raise money for your business. Without a business plan, it’s difficult to know how much money you need to raise, how you will spend the money once you raise it, and what your budget should be.

Investors want to know that you have a solid plan in place – that your business is headed in the right direction and that there is long-term potential in your venture. 

A business plan shows that your business is serious and that there are clearly defined steps on how it aims to become successful. It also demonstrates that you have the necessary competence to make that vision a reality. 

Investors, partners, and creditors will want to see detailed financial forecasts for your business that shows how you plan to grow and how you plan on spending their money. 

• 3. Having a business plan minimizes your risk

When you’re just starting out, there’s so much you don’t know—about your customers, your competition, and even about operations. 

As a business owner, you signed up for some of that uncertainty when you started your business, but there’s a lot you can  do to reduce your risk . Creating and reviewing your business plan regularly is a great way to uncover your weak spots—the flaws, gaps, and assumptions you’ve made—and develop contingency plans. 

Your business plan will also help you define budgets and revenue goals. And, if you’re not meeting your goals, you can quickly adjust spending plans and create more realistic budgets to keep your business healthy.

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• 4. Crafts a roadmap to achieve important milestones

A business plan is like a roadmap for your business. It helps you set, track and reach business milestones. 

For your plan to function in this way, your business plan should first outline your company’s short- and long-term goals. You can then fill in the specific steps necessary to reach those goals. This ensures that you measure your progress (or lack thereof) and make necessary adjustments along the way to stay on track while avoiding costly detours.

In fact, one of the top reasons why new businesses fail is due to bad business planning. Combine this with inflexibility and you have a recipe for disaster.

And planning is not just for startups. Established businesses benefit greatly from revisiting their business plan. It keeps them on track, even when the global market rapidly shifts as we’ve seen in recent years.

• 5. A plan helps you figure out if your idea can become a business

To turn your idea into reality, you need to accurately assess the feasibility of your business idea.

You need to verify:

• If there is a market for your product or service
• Who your target audience is
• How you will gain an edge over the current competition
• If your business can run profitably

A business plan forces you to take a step back and look at your business objectively, which makes it far easier to make tough decisions down the road. Additionally, a business plan helps you to identify risks and opportunities early on, providing you with the necessary time to come up with strategies to address them properly.

Finally, a business plan helps you work through the nuts and bolts of how your business will work financially and if it can become sustainable over time.

6. You’ll make big spending decisions with confidence

As your business grows, you’ll have to figure out when to hire new employees, when to expand to a new location, or whether you can afford a major purchase. 

These are always major spending decisions, and if you’re regularly reviewing the forecasts you mapped out in your business plan, you’re going to have better information to use to make your decisions.

7. You’re more likely to catch critical cash flow challenges early

The other side of those major spending decisions is understanding and monitoring your business’s cash flow. Your  cash flow statement  is one of the three key financial statements you’ll put together for your business plan. (The other two are your  balance sheet  and your  income statement  (P&L). 

Reviewing your cash flow statement regularly as part of your regular business plan review will help you see potential cash flow challenges earlier so you can take action to avoid a cash crisis where you can’t pay your bills. 

• 8. Position your brand against the competition

Competitors are one of the factors that you need to take into account when starting a business. Luckily, competitive research is an integral part of writing a business plan. It encourages you to ask questions like:

• What is your competition doing well? What are they doing poorly?
• What can you do to set yourself apart?
• What can you learn from them?
• How can you make your business stand out?
• What key business areas can you outcompete?
• How can you identify your target market?

Finding answers to these questions helps you solidify a strategic market position and identify ways to differentiate yourself. It also proves to potential investors that you’ve done your homework and understand how to compete. 

• 9. Determines financial needs and revenue models

A vital part of starting a business is understanding what your expenses will be and how you will generate revenue to cover those expenses. Creating a business plan helps you do just that while also defining ongoing financial needs to keep in mind. 

Without a business model, it’s difficult to know whether your business idea will generate revenue. By detailing how you plan to make money, you can effectively assess the viability and scalability of your business. 

Understanding this early on can help you avoid unnecessary risks and start with the confidence that your business is set up to succeed.

• 10. Helps you think through your marketing strategy

A business plan is a great way to document your marketing plan. This will ensure that all of your marketing activities are aligned with your overall goals. After all, a business can’t grow without customers and you’ll need a strategy for acquiring those customers. 

Your business plan should include information about your target market, your marketing strategy, and your marketing budget. Detail things like how you plan to attract and retain customers, acquire new leads, how the digital marketing funnel will work, etc. 

Having a documented marketing plan will help you to automate business operations, stay on track and ensure that you’re making the most of your marketing dollars.

• 11. Clarifies your vision and ensures everyone is on the same page

In order to create a successful business, you need a clear vision and a plan for how you’re going to achieve it. This is all detailed with your mission statement, which defines the purpose of your business, and your personnel plan, which outlines the roles and responsibilities of current and future employees. Together, they establish the long-term vision you have in mind and who will need to be involved to get there. 

Additionally, your business plan is a great tool for getting your team in sync. Through consistent plan reviews, you can easily get everyone in your company on the same page and direct your workforce toward tasks that truly move the needle.

• 12. Future-proof your business

A business plan helps you to evaluate your current situation and make realistic projections for the future.

This is an essential step in growing your business, and it’s one that’s often overlooked. When you have a business plan in place, it’s easier to identify opportunities and make informed decisions based on data.

Therefore, it requires you to outline goals, strategies, and tactics to help the organization stay focused on what’s important.

By regularly revisiting your business plan, especially when the global market changes, you’ll be better equipped to handle whatever challenges come your way, and pivot faster.

You’ll also be in a better position to seize opportunities as they arise.

Further Reading: 5 fundamental principles of business planning

• 13. Tracks your progress and measures success

An often overlooked purpose of a business plan is as a tool to define success metrics. A key part of writing your plan involves pulling together a viable financial plan. This includes financial statements such as your profit and loss, cash flow, balance sheet, and sales forecast.

By housing these financial metrics within your business plan, you suddenly have an easy way to relate your strategy to actual performance. You can track progress, measure results, and follow up on how the company is progressing. Without a plan, it’s almost impossible to gauge whether you’re on track or not.  

Additionally, by evaluating your successes and failures, you learn what works and what doesn’t and you can make necessary changes to your plan. In short, having a business plan gives you a framework for measuring your success. It also helps with building up a “lessons learned” knowledge database to avoid costly mistakes in the future.

• 14. Your business plan is an asset if you ever want to sell

Down the road, you might decide that you want to sell your business or position yourself for acquisition. Having a solid business plan is going to help you make the case for a higher valuation. Your business is likely to be worth more to a buyer if it’s easy for them to understand your business model, your target market, and your overall potential to grow and scale. 

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• Writing your business plan

By taking the time to create a business plan, you ensure that your business is heading in the right direction and that you have a roadmap to get there. We hope that this post has shown you just how important and valuable a business plan can be. While it may still seem daunting, the benefits far outweigh the time investment and learning curve for writing one. 

Luckily, you can write a plan in as little as 30 minutes. And there are plenty of excellent planning tools and business plan templates out there if you’re looking for more step-by-step guidance. Whatever it takes, write your plan and you’ll quickly see how useful it can be.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Table of Contents

• 6. You’ll make big spending decisions with confidence
• 7. You’re more likely to catch critical cash flow challenges early

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6 Reasons Why Every Organization Needs a Strategic Plan

To move forward, sometimes we must take a step back and refresh or relearn the basics of why something is done or is important.

Although leadership should always be thinking about the future, many organizations will soon begin  (or have already begun) their formal strategic planning for the next 1, 3, or even 5 years, especially now with summer winding down and kids returning to school.

While there are corporate leaders who have mastered this process from top to bottom, the vast majority struggle to develop, much less execute, an actionable strategic plan. A survey conducted by Bridges Business Consultancy shows that 48% of all organizations fail to meet at least half of their strategic goals.

There are even a significant number of organizations that have no strategic plan at all, which can be disastrous, especially in today’s environment.

Before getting into the reasons why having a strategic plan is important, there are a couple of misconceptions to clear up.

The first is the common mistake of confusing strategic and annual planning .

Business strategy, or its strategic plan, can best be described as big picture goals and formal plans for the future, or, as Dr. Carol Poore explains in her book Strategic Impact: A Leader’s Three-Step Framework for the Customized Vital Strategic Plan :

Strategy is the process of making choices about the business you’re in, what you’re delivering, as well as what your organization has no intention of providing. Strategy is a framework for making decisions about how goals will be accomplished and deliver value and competitive edge, for which customers or service clients are willing to pay.

On the other hand, annual planning details specific steps business departments will take to achieve the goals outlined in the strategic plan.

The next common misconception many organizations have is they mistakenly believe a strategic plan has to consist of a list of 10-20 goals.

Unless we’re talking about those few rock star organizations out there, the vast majority of companies who do this will end up getting lost in the weeds and accomplish nothing. As I mention in a previous article published in Carrier Management , it’s okay for a strategic plan to consist of just one goal (2-3 being the ideal), especially if you’re rather new to this. (In fact, I strongly recommend starting out with a basic annual plan if your organization has no planning experience whatsoever.)

With that out of the way, let’s jump into the six reasons why every organization needs a strategic plan.

#1. A strategic plan provides direction.

Not having a strategic plan is similar to a ship at sea without a compass or any other navigational aids. If a ship leaves port with no idea where it’s going, there’s no telling where it could end up.

The same can be said for an organization with no strategic plan.

One fundamental purpose of having and executing a strategic plan is to ensure that various business areas are all moving in the same direction and that company resources are being allocated properly.

Without this direction, departments throughout the organization will simply focus on their pet projects without any concern for the bigger picture. There will be no rhyme or reason for how financial and human resources are allocated. At best, this can lead to recurring problems or issues that require leadership’s attention rather than managing the organization for success.

The departments’ activities shouldn’t appear as convoluted as Atlanta’s famous “Spaghetti Junction,” right?

#2. A strategic plan encourages fact-based discussions of politically-sensitive issues.

Some conversations around goals and what the organization will focus on can be very touchy. Specific departmental “pet projects” or society-driven topics can be challenging for managers and executive decision-makers to discuss publicly or in a larger group.

Developing a strategic plan helps diffuse issues like this since it provides departments and the company at large with specific guidance on where leadership wants to go. The final strategic plan is not the work of just one person in the organization, but rather a team effort involving leadership, business managers, and even certain subject-matter experts.

Having this guiding document in hand helps ensure the organization doesn’t find itself getting torn apart from useless turf battles and the like.

#3. A strategic plan creates a framework for allocating resources.

Working hand-in-hand with reason #1 above, the strategic plan serves as a basis for how human and financial resources are allocated in the organization.

When it comes to money, the strategic plan provides a measuring stick against which the organization can determine a proper budget. Knowing what the organization as a whole wants to focus on is critical for understanding how much money needs to be allocated to achieve a particular goal. The strategic plan helps the organization understand whether a certain dollar amount is enough or if pursuing a goal is too expensive and needs to be broken into smaller parts or delayed.

The strategic plan also helps managers and executives be more efficient with the organization’s human resources. Perhaps one area doesn’t need as many people and can reallocate this talent to other roles where they can play a more direct role in helping the company, whether expanding into new markets, developing a new business or product-line, or establishing a new internal department/function.

#4. A strategic plan provides a proper context for evaluating employee performance.

When an organization develops specific goal(s) and objectives in the form of a strategic plan, one of the benefits is the ability to cascade those corporate-level goals down to specific individual-level performance metrics that link to said goals. Similar to linking risks to the specific strategic goal(s) it impacts, managers can use this information as a basis for evaluating the value a particular employee is bringing to the organization.

Also, coupling performance and strategic goals gives employees a sense of ownership in the success of the organization. People crave this level of connection…they want to know they’re not doing something just for a paycheck but rather that what they do is making a real difference. Surveys in recent years have shown that employees increasingly value this more than pay raises and benefits.

#5. A strategic plan fosters a culture of informed decision-making.

Besides ensuring everyone throughout the organization is working toward the same goal(s), developing and executing a strategic plan also positively impacts the organization’s culture by setting a standard by which decisions at the business level are made.

Most strategic goals or objectives should require the input of different departments throughout the organization. This means that leadership will be working across the organization to solicit that input, which demonstrates to the employees that leadership recognizes the need for information and the value of the departmental knowledge and expertise.

In addition to corporate level strategic plans, departments need a strategy for what they will be doing to support the pursuit of these larger goal(s). This process eventually works its way through the culture of the organization to positively impact decision-making at all levels .

#6. A strategic plan increases confidence in the business’ mission, vision, and values.

Before any strategic plan can be developed, the organization (whether for-profit or not-for-profit) must develop its core mission, vision, and values statements to guide its strategic planning.

This is like a strategic plan for your strategic plan. Without it, the goal(s) executives develop will be at the mercy of “shiny-object syndrome,” which can lead to devastating consequences up to bankrupting the organization. To avoid this outcome, the mission, vision, and values must become ingrained in the culture at-large.

Once a full strategic plan is developed and stakeholders see it start to take shape, there will be greater confidence that the organization is fulfilling the purpose for which it was created.

I find it interesting (…and a little distressing, to be honest) that so many companies do not take the time and effort to develop a practical strategic plan. With so many potential landmines out there, from supply chain to changes in customer expectations to potential market disruptions, no organization can afford to just cross its fingers and hope for the best.

Through tools like ERM and others, time and effort will need to be put into developing an informed strategic plan that an organization can use as a blueprint for better serving its target market and ensuring long-term success.

With us heading into the last months of 2023, is your organization excited about developing its strategic plan? …or does it recoil at the thought?

I’m interested in hearing your thoughts about how a strategic plan has helped your organization be more focused and ultimately successful. Leave a comment below or join the conversation on LinkedIn .

And if you’re struggling to develop an actionable strategic plan and feel like a fresh perspective could help you get unstuck, please don’t hesitate to email me directly to schedule some time to discuss your issue(s) and potential solutions.

Featured image courtesy of Jeshoots via Unsplash.com

Additional blog image courtesy of Samuel Agbetunsin via Unsplash.com

• Carol Williams
• August 25, 2023
• Strategic Planning

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Strategic Planning Is Essential for Your Business to Succeed. Here's Why (and How to Do It Right). By following these simple tips, you can ensure that your strategic planning process is successful and that your business achieves its goals.

By Nick Mascari Edited by Chelsea Brown Jul 15, 2022

Opinions expressed by Entrepreneur contributors are their own.

Strategic planning is an organization's process of defining its strategy or direction and making decisions on allocating its resources to pursue this strategy. It may also extend to control mechanisms for guiding the implementation of the strategy.

Successful businesses need a strategic plan . Without a plan, your company will likely wander haphazardly with no priorities and employees confused about their purpose in this new landscape of yours! So, spend time developing an effective strategic plan for where you want things to go; even if the planning process takes time and resources, once implemented correctly, it can certainly make all the difference between success and failure in your business. Strategic planning is essential, especially for small and medium-sized enterprises (SMEs), because it helps them focus on their limited resources and how to use them best.

Related: How to Fall in Love With Strategic Planning

Strategic planning process

There is a three-dimensional structure for strategic planning. With its categorization, you can clearly understand how the aspects of your strategy fit together:

What's the situation now? Check in on your current strategic position and clarify your mission, vision and values.

What's next after this? Establish a competitive advantage and a clear vision for your business. Identify the direction your business is going.

What's the plan of action to get there? Lay out a clear roadmap of where you're at to where you're headed, outlining what you'll require to execute your plan.

Once the planning goals have been set, strategies are developed to achieve them. These strategies are then implemented, and the results are monitored to see if the objectives have been met. If they have not, the process is repeated until the desired results are achieved. Here are a few things to remember when creating a strategic plan :

Create a truly differentiated strategy

One of the most important aspects of any business is its strategy. Your strategy should be unique to your business and designed to give you a competitive advantage in your industry. Without a differentiated strategy , it won't be easy to scale your business and achieve sustained success.

There are many factors to consider when developing a strategy, but one of the most important is your target market . Who are you trying to reach? What needs do they have that your business can address? Once you have a clear understanding of your target market, you can begin to develop a strategy that will allow you to reach them effectively.

In addition to your target market, you'll also need to consider your competition. Who are your competitors? What are they doing that's working, and what's not working? And finally, what can you do differently to stand out from the crowd? Answering these questions will help you develop a truly differentiated strategy.

Related: How Strategic Planning Transforms Chaos Into Confidence

Align your team

Once you have a clear and actionable strategy, it's time to start aligning your team . This means creating a clear and concise vision for your business and ensuring that everyone on your team is aware of and committed to achieving it.

It's also critical to establish clear roles and responsibilities within your team. Everyone should know what they are responsible for and how their work fits into the larger picture. By aligning your team, you can ensure that everyone is working toward the same goals and that your business is running like a well-oiled machine.

Accelerate your results

Once you have a clear strategy and an aligned team, it's time to accelerate your results. This means setting tangible goals and putting systems and processes in place to help you achieve them. But it also means having the right people on your team — those who are passionate about your company's mission and have the skills and experience to help you achieve your goals.

One of the best ways to accelerate your results is to develop a strategic advantage over the competition. You need to position your company as a market leader to achieve this. One way to accomplish this is through marketing and sales initiatives, product development and exceptional customer service.

Another way to develop a strategic advantage is to differentiate your company from the competition. Start by offering unique products/services or providing an exceptional customer experience . Whatever your differentiation strategy is, make sure it is clear to your team, and communicate it to your customers.

Related: Keys to Business Growth in 2022: Lead Your Team, Manage Yourself and Execute Your Strategic Plan

Advance your plan

As your business grows and evolves, it's crucial to constantly revisit and update your strategic plan. Strategic planning is not a one-time event but rather an ongoing process that should be reviewed regularly to ensure that your business is on track to achieve its goals.

Here are a few tips for updating your strategic plan:

Set realistic goals: Be sure to set achievable goals that are aligned with your company's mission and values. As your business grows and changes, so too will your goals.

Be flexible: The business world is ever-changing, so it's vital to be flexible in your planning. Be prepared to correct course when necessary in order to stay on track.

Keep your team involved: Strategic planning is not something that should be done in a vacuum. Make sure to involve your team in the process, so that everyone is on the same page and working towards the same goals.

Communicate, communicate, communicate: Once your strategic plan is finalized, be sure to communicate it to all members of your team. Strategic planning is only successful if everyone knows and works towards the same goals.

A strategic plan is a great tool to have in your arsenal. It is capable of helping your business achieve great things. Here are a few examples:

Strategic planning can help you double the cash flow rate: Strategic planning can help you manage and control your finances more effectively. Having a clear plan in place gives you a roadmap to follow and helps you make better financial decisions.

Strategic planning can help you triple your industry average for profitability: A well-crafted strategic plan can help you focus on the most profitable areas of your business and make decisions that will increase your profitability.

Strategic planning can help you increase valuation relative to competitors: Strategic planning can help you create a sustainable competitive advantage and position your business for success in the long-term. By developing a clear plan, you can make decisions that will help you stand out from your competitors and make your business more valuable.

Strategic planning can help you grow shareholder, employee and customer value: Strategic planning can help you create shareholder value by growing your business and increasing your profitability. It can also help you attract and retain employees by providing them with a clear sense of purpose and direction. And finally, it can help you win and keep customers by providing them with a superior product or service.

Strategic planning is essential to any business and should be given the attention it deserves. With a well-thought-out strategic plan, your business can reach new heights. By following these simple tips, you can ensure that your strategic planning process is successful and that your business achieves its goals.

CEO of Mascari Strategy Group L.L.C.

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Why is Strategic Planning Important? Key Benefits

In today’s fast-paced and ever-evolving business world, the question “Why is strategic planning important?” is more relevant than ever.

Strategic planning is not just a task for the boardroom or an annual retreat; it is the heartbeat of every successful organization.

It’s the process of defining a company’s direction and making decisions on allocating resources to pursue this direction.

This critical activity provides a roadmap for an organization, guiding it through the complexities of its business environment, ensuring adaptability, and securing its future.

In this blog, we dive deep into the 10 reasons why strategic planning is indispensable for any business aspiring for growth, efficiency, and long-term success.

Download the above infographic in PDF

The 10 Key Benefits of Strategic Planning

1. defining vision and direction.

Strategic Planning as a Guide to Success

Strategic planning is pivotal for setting the course of an organization.

Think of it like planning a long journey.

Without a map and a destination, you might end up anywhere, or nowhere at all.

In the business world, this ‘map’ is your strategic plan, and your ‘destination’ is your company’s vision.

Importance of a Clear Vision

A clear vision sets the tone for everything your company does.

It’s the guiding star that keeps everyone focused.

When you know where you’re heading, making decisions becomes much easier.

It’s like deciding what to pack for your journey – if you know you’re going to the mountains, you pack accordingly.

Similarly, if your company’s vision is to be the leading innovator in your industry, every decision you make will aim to support that goal.

Setting Goals and Objectives

Along with defining your vision, strategic planning helps you set achievable goals and objectives.

These are the milestones you aim to hit on your journey to your ultimate destination.

Goals are broader, like wanting to increase brand awareness, while objectives are specific and measurable, like gaining 10,000 new social media followers in six months.

Aligning with the Company’s Mission

Your company’s mission is its reason for being – it’s why you do what you do.

Strategic planning ensures that your long-term vision and day-to-day operations align with this mission.

If your mission is to provide eco-friendly products, your strategic plan will revolve around sustainable practices and green innovation.

The Role of Leadership

Leaders play a crucial role in strategic planning.

They are the navigators of this journey, keeping everyone on course.

Their vision, decisiveness, and ability to inspire others are key in guiding the company towards its goals.

Communication is Key

Finally, communicating your vision and strategic plan is as important as creating it.

Everyone in the organization, from top executives to new hires, should understand where the company is headed and how their work contributes to this journey.

It’s like ensuring every crew member knows the destination and their role in getting there.

2. Resource Allocation

Optimizing Resources for Maximum Impact

Strategic planning is akin to a master chef carefully selecting ingredients for a gourmet dish.

Just as the chef knows which ingredients and in what quantity will create a culinary masterpiece, strategic planning helps organizations decide where and how to allocate their resources effectively.

Understanding the Importance of Resource Allocation

Resources in a business, be it financial, human, or technological, are often limited.

Strategic planning acts as a guide to ensure these resources are used efficiently.

It helps in prioritizing projects, initiatives, and departments that align with the company’s strategic objectives.

Prioritizing for Efficiency

Imagine a scenario where a company spends its budget on less impactful projects while neglecting areas crucial for its growth.

Strategic planning prevents this misstep by helping leaders identify and focus on areas that offer the highest return on investment.

It’s about doing more with less and avoiding the trap of spreading resources too thin across multiple fronts.

Aligning Resources with Goals

Strategic planning ensures that the allocation of resources is directly tied to the company’s goals.

For instance, if a company aims to expand its digital presence, strategic planning would involve allocating more resources to digital marketing, innovative website design , and online platforms.

The Dynamic Nature of Resource Allocation

Resource allocation is not a set-it-and-forget-it task.

As the market changes and the company grows, strategic planning allows for the reassessment and reallocation of resources.

This dynamic approach keeps the organization agile and responsive to internal and external changes.

In essence, resource allocation within strategic planning is about investing in the right areas at the right time.

It’s a critical component of ensuring that the company not only survives but thrives in a competitive landscape.

Proper resource allocation, including training classes from Agile , fosters efficiency, effectiveness, and sustainability.

3. Risk Management

Download the above infographic

Navigating the Business Landscape with Foresight

Strategic planning a business to foresee potential risks and devise strategies to navigate through them.

Identifying and Anticipating Risks

One of the key aspects of strategic planning is risk identification .

It involves analyzing the internal and external environment to identify potential threats that could impact the business.

This could range from market changes, new regulations, technological advancements, to internal challenges like staff turnover.

Developing Mitigation Strategies

Once risks are identified, the next step is to develop strategies to mitigate them.

This could involve diversifying the product line to reduce dependency on a single market, investing in employee training to reduce turnover, or adopting new technologies (such as using an e-fax solution to boost security and help) to stay ahead of the competition.

It’s about creating a buffer to cushion the impacts of unforeseen events.

Proactive vs. Reactive Approach

Without strategic planning, businesses often find themselves in a reactive mode, scrambling to address challenges as they arise.

Strategic planning shifts this to a proactive approach.

By anticipating potential issues, companies can prepare in advance, which often results in more effective and less costly solutions.

Building a Resilient Organization

Strategic planning in risk management is not just about avoiding risks; it’s also about building resilience.

This means creating an organizational culture and structure that can withstand shocks and stresses, adapt to change, and continue to thrive.

Risk management through strategic planning is a critical element of sustaining and growing a business.

It helps in building a robust and resilient organization that can not only survive but also thrive amidst uncertainties.

This foresight and preparedness are what differentiate successful businesses from the rest.

4. Improving Operational Efficiency

Streamlining Operations for Peak Performance

Strategic planning serves as a catalyst for enhancing operational efficiency in a business.

It’s like a mechanic fine-tuning an engine to ensure it runs at its best.

By identifying areas of inefficiency and implementing improvements, strategic planning helps the entire organization operate more effectively.

Analyzing and Refining Processes

A key aspect of improving operational efficiency is analyzing existing processes to identify bottlenecks or wasteful practices.

Strategic planning involves a thorough examination of how things are done and finding ways to do them better, faster, and cheaper without compromising quality.

Leveraging Technology for Efficiency

In the modern business landscape, technology plays a crucial role in enhancing efficiency.

Strategic planning often involves identifying technological solutions that can automate processes, reduce manual labor, and improve accuracy and speed.

This could range from using data analytics for better decision-making to employing automation tools for routine tasks.

Encouraging Innovation

Operational efficiency isn’t just about what is being done today; it’s also about what could be done tomorrow.

Strategic planning encourages a culture of innovation where employees are motivated to find new and better ways of working.

This could mean developing new products , improving customer service, or finding more efficient ways of production.

Aligning Resources for Optimal Performance

Just like a symphony orchestra where every instrument plays a critical role, in a business, every resource must be aligned and utilized optimally.

Strategic planning ensures that human, financial, and material resources are allocated in a way that maximizes operational efficiency.

Improving operational efficiency through strategic planning is about making the best use of available resources to enhance the overall performance of the organization.

It involves a continuous process of evaluation, innovation, and improvement, ensuring that the business operates like a well-oiled machine.

With the exploration of operational efficiency complete, our next topic will delve into how strategic planning helps businesses stay ahead of the competition.

5. Staying Ahead of Competition

Strategic Planning as a Competitive Edge

In the relentless race of business, staying ahead of the competition is crucial.

Strategic planning allows you to see farther and navigate better than your competitors.

It’s about understanding the market landscape, anticipating changes, and positioning your business to seize opportunities and edge out competitors.

Analyzing Market Trends and Competitor Moves

A key part of staying competitive through strategic planning is thorough market analysis.

This involves keeping a close eye on market trends , customer preferences, and competitors’ strategies.

Understanding what competitors are doing – their strengths and weaknesses – can help a business carve out its niche and stay one step ahead.

Developing Unique Value Propositions

To stand out in a crowded market, a business needs a unique value proposition (UVP).

Strategic planning helps in identifying and developing this UVP.

It could be exceptional customer service, innovative products, or cost leadership.

The goal is to offer something that resonates with your target audience and differentiates your business from the rest.

Agility and Adaptability

Markets are dynamic, and what works today may not work tomorrow.

Strategic planning fosters agility and adaptability, enabling businesses to pivot quickly in response to market changes.

This could mean adopting new technologies, entering new markets, or rebranding products and services.

Long-term Focus

While competitors may be focused on short-term gains, strategic planning allows a business to take a long-term view.

This long-term focus helps in building sustainable competitive advantages that are hard for competitors to replicate quickly.

Staying ahead of the competition through strategic planning involves a mix of market intelligence, innovation, agility, and a clear focus on long-term goals.

It’s about not just keeping up with the competition but setting the pace and direction of the market.

6. Adaptability to Change

Embracing Change with Strategic Foresight

In the ever-evolving business landscape, adaptability is key.

Strategic planning is about anticipating and preparing for change, ensuring that the organization remains relevant and competitive.

Predicting and Preparing for Market Changes

Strategic planning involves continuously scanning the external environment for signs of change – be it technological advancements, shifts in consumer behavior, or new regulatory frameworks.

By predicting these changes, businesses can prepare and adapt rather than being caught off guard.

Flexible Strategic Frameworks

A robust strategic plan is not rigid; it’s flexible.

It allows for adjustments and pivots as circumstances change.

This flexibility is crucial in a fast-paced world where sticking too rigidly to a plan can lead to missed opportunities or continued investment in outdated strategies.

Cultivating an Adaptive Organizational Culture

Adaptability to change is also about fostering a culture that embraces change rather than resists it.

This involves encouraging innovation, supporting continuous learning, and empowering employees to contribute ideas.

An adaptive culture is one that sees change as an opportunity rather than a threat.

Responding to Technological Advancements

In the digital age, technological advancements can rapidly change the playing field.

Strategic planning helps businesses stay abreast of these advancements and integrate new technologies where beneficial.

This could mean adopting new software, exploring e-commerce, or leveraging data analytics for better decision-making.

Adaptability to change through strategic planning is about being proactive rather than reactive.

It’s about anticipating shifts, remaining flexible in approach, and cultivating a culture that thrives on change.

In a world where change is the only constant, this adaptability is a critical factor for success.

7. Employee Engagement and Alignment

Fostering a Unified Workforce Through Strategic Planning

In the realm of strategic planning, engaging and aligning employees is akin to a conductor harmonizing an orchestra.

It’s about ensuring that every member of the organization understands the common goals and plays their part in achieving them.

Creating a Shared Vision

Strategic planning involves creating a vision that resonates with all employees.

When employees understand and believe in the direction the company is heading, they are more likely to be engaged and motivated.

This shared vision acts as a guiding light, giving everyone a sense of purpose and belonging.

Aligning Individual Goals with Company Objectives

A key aspect of strategic planning is aligning individual employee goals with broader company objectives.

This alignment ensures that each employee’s efforts contribute directly to the company’s success.

It’s about making sure that everyone is rowing in the same direction.

Involving Employees in the Planning Process

Involvement breeds commitment. Including employees in the strategic planning process can increase their engagement and commitment to the organization.

It gives them a voice and a sense of ownership in the company’s future, fostering a deeper connection to the organization’s goals.

Communicating the Plan Effectively

Effective communication is critical in aligning and engaging employees.

The strategic plan should be communicated clearly and consistently across the organization.

This communication should not just be a one-time event but an ongoing dialogue, keeping everyone informed and involved.

Recognizing and Rewarding Contributions

Recognizing and rewarding employees for their contributions towards achieving strategic goals can significantly boost engagement.

This can be through formal recognition programs, performance incentives, or simple acts of appreciation.

It’s about acknowledging the role each employee plays in the company’s success.

Employee engagement and alignment through strategic planning are about creating a unified workforce that is deeply connected to the company’s mission and goals.

It’s about ensuring that every employee feels valued and understands how their work contributes to the bigger picture.

8. Measuring Progress and Success

Tracking the Journey Towards Strategic Goals

Strategic planning is not just about setting goals; it’s equally about measuring progress towards those goals.

It’s akin to a hiker using milestones to track their journey up a mountain.

Regularly measuring progress ensures that the business stays on track and makes necessary adjustments along the way.

Setting Benchmarks and Key Performance Indicators (KPIs)

An essential part of measuring progress is establishing clear benchmarks and key performance indicators.

These are like checkpoints that help assess how well the business is doing against its strategic objectives.

KPIs can be financial, such as revenue growth or profit margins, or non-financial, like customer satisfaction or employee engagement.

Regular Reviews and Assessments

Strategic planning is a dynamic process. Regular reviews of the plan and its outcomes allow for timely adjustments.

This could involve reassessing goals, reallocating resources, or shifting strategies in response to changes in the business environment.

Feedback Loops for Continuous Improvement

Effective strategic planning incorporates feedback loops.

This means regularly collecting and analyzing data on performance and using this information to refine strategies and processes.

It’s an ongoing cycle of execution, assessment, learning, and improvement.

Celebrating Successes and Learning from Shortcomings

Measuring progress also means recognizing successes and learning from areas where objectives weren’t met.

Celebrating achievements can boost morale and motivate the team, while analyzing shortcomings provides valuable insights for future planning.

Measuring progress and success in strategic planning is crucial for ensuring that the business is moving in the right direction and achieving its goals.

It’s about having a clear understanding of where you are, where you’re headed, and what needs to be done to get there.

9. Long-term Sustainability

Securing the Future through Strategic Forethought

Strategic planning is vital for ensuring the long-term sustainability of a business.

It’s akin to planting a garden with the future in mind, choosing plants that will thrive over the years and adapting to the changing seasons.

This forward-thinking approach is crucial for businesses to remain viable, competitive, and profitable in the long run.

Building a Foundation for Future Growth

The heart of long-term sustainability lies in building a solid foundation.

This involves establishing strong business practices, creating a loyal customer base, and developing a resilient organizational structure.

Strategic planning helps in laying this groundwork, ensuring that the business is well-positioned to grow and withstand future challenges.

Anticipating and Adapting to Market Changes

Markets evolve, technologies advance, and consumer preferences shift. Strategic planning enables businesses to anticipate these changes and adapt accordingly.

This foresight is crucial for staying relevant and avoiding obsolescence.

Fostering Innovation and Continuous Improvement

Sustainability also hinges on a business’s ability to innovate and continually improve.

Strategic planning fosters an environment where innovation is encouraged, and efforts are made to continually enhance products, services, and processes.

This continuous evolution is key to staying ahead in a competitive landscape.

Balancing Short-term Wins with Long-term Goals

While short-term successes are important, they shouldn’t come at the expense of long-term goals.

Strategic planning helps in balancing immediate business needs with long-term objectives, ensuring that the decisions made today don’t hinder future opportunities.

In summary, long-term sustainability through strategic planning is about looking beyond the horizon, preparing for future challenges, and continuously evolving to meet the needs of tomorrow.

It’s a commitment to enduring success, not just fleeting victories.

10. Enhanced Decision-Making

Strategic Planning as a Beacon for Decision-Making

Strategic planning plays a pivotal role in enhancing the decision-making process in organizations.

It acts like a lighthouse, providing guidance and direction amidst the often turbulent seas of business operations.

Good decisions are the bedrock of successful businesses, and strategic planning lays the foundation for making informed, effective choices.

Providing a Clear Framework for Decisions

One of the key benefits of strategic planning is that it offers a clear framework within which decisions can be made.

This framework is aligned with the organization’s overall goals and objectives, ensuring that each decision, whether big or small, contributes to the broader mission and vision of the company.

Informed Decision-Making through Data and Analysis

Strategic planning involves gathering and analyzing a significant amount of data about the market, competitors, internal operations, and more.

This data-driven approach ensures that decisions are not based on gut feelings or assumptions, but on solid, actionable information.

Aligning Cross-Functional Teams

In an organization, various departments and teams often have their unique objectives and priorities.

Strategic planning helps align these cross-functional teams, ensuring that their decisions and actions are coordinated and support the overall strategy of the organization.

Long-term Perspective in Decision-Making

Strategic planning encourages a long-term perspective in decision-making.

Instead of being swayed by short-term gains or pressures, leaders are equipped to make decisions that are beneficial in the long run, even if they require short-term sacrifices or investments.

Empowering Leaders with Confidence

Having a well-thought-out strategic plan gives leaders the confidence to make bold decisions.

They can move forward with the assurance that their choices are guided by a comprehensive understanding of the organization’s direction and goals.

In conclusion, enhanced decision-making through strategic planning is about making informed, coordinated, and strategic choices that are in line with the organization’s long-term vision and goals.

It’s about having the confidence and clarity to make decisions that will lead the organization to success.

Strategic planning is more than just a set of actions; it’s a mindset, a culture that needs to be ingrained in every aspect of a business.

From defining clear objectives and ensuring efficient resource allocation to fostering innovation and enhancing decision-making, strategic planning touches every facet of an organization.

It prepares businesses to not only face the present challenges but also to foresee and adapt to future changes.

The importance of strategic planning cannot be overstated – it is the blueprint for success, the navigator for growth, and the shield against uncertainty.

Businesses that embrace strategic planning are setting themselves up for a future that is not only successful but also sustainable and resilient.

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7 Reasons Why You Need a Strategic Plan

Strategic planning is a useful opportunity for businesses and organizations to take a look into the future and determine in which direction they want to go. It’s a great way to reinvigorate your team, get everyone on the same page and document your strategies. But many go without one. 

If you’re on the fence about creating a strategic plan for your company, here are 7 reasons why you definitely want to do so:

1. Defines and clarifies the mission .

Your mission is the driver of your organization or business. The mission gives the overall purpose of who you are and why you exist. It’s the key that helps to direct all decisions within your organization, laying the foundation for everything that you do. Wow, right?! It’s pretty significant. Businesses and organizations can often lose sight of the mission especially if the company has been around for a while. Things like expansion, change of leadership, difference in direction, etc. can make the mission seem a bit cloudy, especially for new comers. Devising your strategic plan helps you put the mission back into perspective, redefine who you are and make sure your goals and objectives are in line.

2.   Establishes realistic goals and objectives.

Setting goals and objectives are one thing, but that only matters if the goals and objectives are within the organization’s capacity to implement them. Developing your strategic plan allows you to look at key issues of capacity and then develop goals and objectives based on the resources you have allocated.

3. Aids with efficiency and focus.

As organizations and businesses grow and expand, its easy to lose focus. Efficiency can also become compromised if everyone is not clear on the direction in which the organization is headed. The strategic plan defines the base for what the organization or business is looking to achieve in the long term. This helps everyone stay clear on what needs to get done in the shorter term.

4. Builds and increases team spirit.

Teams work together more effectively when everyone is clear on their role as it relates to the bigger picture. Teams can become disruptive, unresponsive and lose momentum when there is no defined focus and direction. The strategic plan becomes a source for connectivity, team cohesion and excitement.

5. Provides a tool for effective communication. 

Communication is key to any project, organization or venture. The strategic plan communicates easily the intent of the organization over the long term. For those participating in the process, it provides an environment for brainstorming, creative thinking, an array of ideas and exploration, opening up doors of open communication and dialogue. For those coming afterwards, it gives a comprehensive view of where the organization wants to go stimulating both internal and external conversations around each individual’s role in progressing the plan forward.

6. Puts assumptions in writing, reducing organizational frustration.

A documented plan becomes a reference point for those within the organization. When a plan is in place that is utilized and available, it ensures that everyone from leadership and management on down are clear on the goals and objectives. This minimizes guessing and making incorrect assumptions. The plan is a reference point from which everyone can meet and come together on the next immediate steps.

7. Builds consensus about where an organization is going.

If you have two or more people coming together you’re going to have a variety of ideas as to the direction of the business or organization. The strategic plan and the planning process provides an opportunity for ideas to be brought to the table, discussed and agreed upon. Everyone will have a vision for the organization. The key is to take a look at what opportunities are available, strengths and weaknesses and to collaboratively set a course for moving forward.

The strategic plan is a valuable tool that can help businesses and organizations at almost any level. It’s purpose is to define a clear direction for where the company wants to go, how to move forward and what resources are needed to do so.

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The Business Practitioner offers strategic planning facilitation as well as Strategy Saturday for smaller organizations and businesses. ____________________________________________

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