HomeBusinessSMEChat: Strategic planning essential even for SMEs

SMEChat: Strategic planning essential even for SMEs

This book asserts that innovation is a social act and a team effort. Johnson argues that most great ideas, and world changing inventions, have occurred as people bounced ideas off each other.

 

 

For example, double entry bookkeeping, described by Goethe as one of the “finest inventions of the human mind,” was codified in the trade capitals of northern Italy during the Renaissance.

Its development, says Johnson, stemmed from the spillover of ideas from one merchant to the next as markets transformed from the feudal system into early capitalism, and relationships between people became less hierarchical and more interconnected.

Small business owners and entrepreneurs, as a group, are allergic to bureaucratic processes, including strategic planning. But strategic planning is as important to small businesses as it is to large firms, especially today. With so much change and too much uncertainty both locally and on the global market, businesses that don’t take strategic planning seriously and prefer to fly each day as it comes, as many SMEs do, will find themselves running out of fuel with no runway in sight. 

What is strategic planning?
A strategic plan is different from a business plan. The focus of a strategic plan is usually on  the entire organisation, while the focus of a business plan is usually on a particular product, service or programme.

Simply put, strategic planning determines where an organisation is going over the next year or more, how it’s going to get there and how it’ll know if it is there or not. Strategic planning involves the key people in a business taking time out to map the organisation’s future and how it will defend itself against threats, mitigate its weaknesses, take advantage of opportunities and maximise on its strengths.

The process is most effective if it takes place away from the organisation’s premises, where people can bounce ideas off each other without the distractions of everyday work. According to Merianne Liteman, a strategy consultant and co-author of Retreats That Work: Everything You Need to Know About Planning and Leading Great Off-sites, off-site strategic-planning retreats typically are able to accomplish more than meetings held on site.

“When a retreat takes place in an organisation’s conference room, participants are tempted to run up to their offices ‘just for a minute’ and then never fully return,” Liteman said.

“Interruptions from colleagues who are not part of the strategic planning process are also more frequent. And it can be hard to establish the informality that is so helpful to the free flow of ideas.”

The strategic planning process
There is no single perfect strategic planning process; each organisation can develop its own method which can be modified to suit its changing needs. However, the basic process consists of five steps:

Identifying the organisation’s mission or purpose. This is the main reason why your business exists and what customer needs are being met by your product or service. This may start with a Swot assessment to identify the major issues affecting the organisation and prioritising them.
Identifying the main goals to be reached to accomplish the mission. 
Identifying strategies, or specific approaches that must be implemented to reach each of the main goals. 
Identifying specific action plans to be implemented for each strategy. These are activities that need to be undertaken by each function or department in an organisation. Financial budgets need to be allocated for these action plans.
Monitoring and updating.
Responsibilities need to be allocated for monitoring the implementation of the strategic plan on a regular basis. Otherwise it would simply be shelved and forgotten.

There was some interesting feedback to last week’s article, with mostly potential entrepreneurs commenting that although good business ideas are featured in the SME BusinessLink CD magazine, they still need funds to implement. Since last year, I have been trying to organise some sort of forum for linking those entrepreneurs with good ideas or existing businesses that need expansion, with people with extra cash who are looking for good projects to invest in.

I am glad to say that a few potential investors have finally warmed up to the idea and asked for proposals from entrepreneurs with “excellent” ideas. You can email me for information on the requirements and conditions.
Please read about how to protect your idea on my blog http://chichonip.wordpress.com before you send your business proposal to anyone. 

Phillip Chichoni is a business planning consultant who works with SMEs and entrepreneurs. 
— e-mail: chichonip@gmail.com 

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