This article appeared in the
January 2004 edition of Profit published by The Business Development Bank
of Canada. The article was written by Ross Rogers and is reproduced by
special permission.
strategic planning, or
the art of driving with a road map
A few words of wisdom from Hugh Latif: "You could be at the
wheel of a beautiful Ferrari but speeding in the wrong direction."
It comes as no surprise that the BDC consultant describes
strategic planning as a "road map to reach your destination."
"If you're doing well in your business, you want to have a
plan to stay on course. If you're facing obstacles, you want to know why,"
he says. "Are your problems momentary or a trend? Is there an
industry-wide symptom? Is it the strategy or the execution? Is it the
execution or the driver?"
Latif, who has extensive experience in the field, would
first like to clear up a misconception among business owners who think
strategic planning is best left to large companies and corporations. "It's
really the process of developing and maintaining a viable fit between your
company objectives, resources and market opportunities," he says. "Your
plan doesn't have to be a giant document. In fact, the content of a
strategic plan is entirely influenced by the size and complexity of your
company." For readers who might confuse a strategic plan with a business
plan, he offers this clarification. "Your strategic plan is your overall
umbrella, which could include several business plans addressing aspects
such as HR, finance or operations."
So what can small and medium-sized businesses expect to see
in a strategic plan?
organizational structure
One of the first topics on the list for Latif is a
company's organizational structure. "Your structure evolves historically.
You add chairs to the bus as you need them. But at some point, you really
need to know where you're going," he says. Typically, for example,
entrepreneurs may have everybody in the company reporting to the owner.
"I think what's key today is structuring your company so
that you can delegate strategy. You want your senior people to help you
bring the strategy from the top and integrate it throughout your company,"
he emphasizes.
people
resources
A strategic plan will also address important aspects of the
business such as "people resources," says Latif. "You may need new talent
and feel that you can't afford it. But you don't have to buy the movie
house because you want to see the movie," he says. Many entrepreneurs fail
to realize that they can build their teams with outside consultants and
get their expertise without full-time hiring. As well, companies can build
alliances and strategic partnerships to reinforce their existing
resources. "This enables you to expand and penetrate new markets and share
the risk involved," he says.
critical
success factors
Along with having the right people resources in place, a
good plan will also include critical success factors – the essentials that
you need to get to where you want to go. "Most people know where they want
to go. It's how to get there that poses problems," adds Latif. A
strategic plan enables companies to map out their tactics one step at a
time. "It won’t be a straight line. You have to think progressively and
establish milestones toward your destination," he says. Latif also points
to strong leadership as a critical success factor in a strategic plan.
"It's not a democracy that you're running. A leader takes charge and
sticks to a strategic plan while building buy-in and team involvement," he
says.
Another important priority for Latif is having an outside
facilitator involved in strategic planning. "This can take away some of
the pressure. An outside source can give you an objective viewpoint, help
you resolve conflict and ensure your people respect their goals and
commitments," he says. The BDC consultant recommends that entrepreneurs
make good use of specialized experts who have in-depth knowledge of
strategic planning.
investments and
capital requirements
"If you're pumping water slower than the tap is filling,
eventually you'll be in trouble," emphasizes Latif. Strategic planning
also deals with ways of maintaining capital in your company, whether it's
used for buying equipment or simply keeping money in the bank for tougher
times. What's vital today, he says, is being innovative with your
financing and applying some "outside the box" thinking. "You have to
realize that an interest rate is not the only thing to assess in your bank
relationship. You have to look at the overall relationship and how you're
benefiting from it on the long-term," he says.
objectives
and rewards
For Latif, the performance of employees is a make or break
factor for success. So naturally, you have to reward them to remain loyal
to your company. "You have to ignite in people a real desire to get the
job done," he says. A sound strategic plan outlines your reward tactics,
whether it's putting bonuses in place or simply maintaining ongoing, open
communications with employees. Entrepreneurs should also consider
rewarding employees for "strategic wins," such as penetrating a new market
or gaining a new customer.
timing,
priorities and tracking
Being realistic about expectations and making goals
attainable are also an integral part of strategic planning. "Your
employees have to understand your priorities, whether it's building your
customer base or increasing revenues," says Latif.
Once your objectives are in place, it's also important to
plan how you'll report and track your performance. Although entrepreneurs
may assume that a good monitoring system is basically a financial
statement, Latif believes that tracking and reporting goes much further
than this. "You have to be sure you have information on productivity and
quality achievements," he says. "Forecasts too enable companies to better
see how they're doing."
competitive
arena
Most small and medium sized businesses do an assessment of
their competitive market before getting started, but few do the proper
follow-up, says Latif. "You have to make this assessment an ongoing
process in your company," he says. "Check them out frequently,
systematically and as thoroughly as you can."
In concluding, Latif believes that strategic planning is a
vital tool for entrepreneurs today, no matter what the size. "Of course,
improvising, quickly adapting and using your instinct are important to
running a company now. But strategic planning can put you on the best
route for improved business performance," he says.
