Would you get on the road and head to an unknown place without a map or the aid of a GPS navigation system? Would you just cross your fingers and hope luck would get you to your destination? You wouldn’t do that, especially since there are so many resources available to help you get where you are going.
In the world of business mere luck won’t get you to your destination either. Per researchers from both the University of Pennsylvania and Columbia University, though formal planning reduces risk, only 23 percent of companies in the United States use any form of strategic planning. It doesn’t make much sense, especially since the research also found that those businesses that do plan are 12 percent more profitable.
It’s clear that your business needs a strategic plan – and now. Here are three of the perks that should inspire you to get to the drawing board.
A strategic plan gets everyone on the same page
The first step in your strategic plan should start with implementing the company’s mission statement. By creating a strategic plan using something like the Hoshin Kanri matrix, you can reflect on your objectives so that you can direct your employees towards the same goals. Better yet, sharing your initial blueprint for the company may inspire your employees to improve the overall vision. Keep in mind that defining your mission should be broad enough to guide your employees as to the common goal but narrow enough to give everyone a focal point on their purpose.
A strategic plan helps evaluate progress
Part of a strategic plan should involve analyzing the progress of your mission. Whether it’s by qualifying or quantifying your results, you should be able to conduct a full assessment of your goals. This means getting your team together to discuss different areas including profits and losses, competition, technological advances, and changes in customer base. Per Balanced Score Card Collective, a whopping 86 percent of company teams spend less than an hour monthly discussing strategic planning. With no mission or progress evaluation, it’s no wonder half of the small businesses don’t make it to their fifth anniversary.
A strategic plan simplifies decision-making
Strategic planning becomes essential in rooting out the eeny, meeny, miny, moes when making decisions. If you’ve got a plan and are monitoring your progress, then deciding on new and old policies should come easier. Sometimes if you’re not prepared with solid options and become stressed at the prospects, the inclination to make impulsive decisions increase. Remember, don’t make permanent decisions based on temporary emotions. Be prepared with a flowchart or menu options on how the company should adapt to new competition, a dip in sales, and employee turnover. Risk is part of doing business and everyone has a different risk tolerance. Using a strategic plan will reduce risk even if the goal has a smaller percentage of success from the start.
A strategic plan is an asset to bring all employees and departments under one vision. It helps make everyone accountable for how their role fits into the bigger picture of the company. When everyone knows their purpose, it makes for a more productive team.