What is strategic planning?

Strategic planning is a process used by organizations to identify their goals, the strategies necessary to accomplish those goals and the internal performance management system used to monitor and evaluate progress. Most organizations use a SWOT or gap analysis to identify the underlying factors driving their current performance. This, in turn, provides information regarding the most high-leverage strategies to create change.

Companies looking to optimize their performance and growth rely on a strategic planner, meaning a person who is dedicated solely to carefully planning the actions a company needs to take to reach their full potential.

The strategic planning process culminates in the development of a strategic plan document that serves as the organization’s collective roadmap. While each organization is unique, the essential elements of a strategic plan include:

• Clear mission and vision statements to frame the context of the document
• Clear timelines for strategy implementation and progress monitoring
• Quarterly benchmarks or objectives that will inform progress towards annual goals
• Identification of the data sources used to track progress
• Indication of the individuals and/or offices responsible for each strategy

An effective strategic planning process is required for all organizational processes, from human resource policy implementation to financial growth goals. Whatever the goal, you can create a performance improvement plan to streamline the processes you undertake to further your company’s growth.

Right from the start: strategic planning for your business

Creating a strategic plan when you first start a business is a helpful strategy to set your business up for success. Doing so can create a structure to guide the initial brainstorming that businesses are already engaged in when first starting up. In this case, the strategic plan would be one component of the larger business plan that includes a financial plan, marketing plan and operational or management plan. Strategic planning is especially helpful for new businesses to stay focused on a few key priorities.

Whether you’re a new company trying to manage your budget and get your brand recognized, or an established company looking to expand, a good strategic plan can help organize goals and draw investors to your company. Even when the goal is small compared to normal operations, such as increasing your warehouse space, a plan always helps streamline and hasten the implementation of your new projects.

Where and when to use strategic planning

In addition to the initial start-up phase, strategic planning can be a helpful process throughout the life of a business. In general, the decision about exactly when or how often to engage in strategic planning is specific to each organization. Some organizations engage in strategic planning annually or biennially, adjusting goals and strategies throughout as needed. In education, for example, schools develop strategic plans annually. They are usually generated in the late spring and are based on the previous school year’s student performance. The financial sector, however, often aligns strategic planning to quarterly financial reporting cycles.

Strategic planning can also be beneficial for organizations during any of the following circumstances:

• Changing industry trends or economic market
• Before the launch of a new product or branch of the business
• Following a merger with another organization
• Following a change in senior leadership

Next steps for strategic planning

Here are three helpful steps to take following the initial strategic planning:

1. Allocate resources in alignment with the strategic plan. If the strategic plan is to be the central driving document for a business, that company’s financial and personnel resources should be allocated accordingly. This may require involving finance and operational staff who might not have been part of the initial strategy development.
2. Develop cascading goals. Cascading goals are structured so that businesses align goals from the highest level of the company all the way to individual employees. Beginning with the highest level goals from the strategic plan, business owners then backward plan for the smaller sub-goals that offices and individual employees must accomplish to achieve the broader outcomes. Doing this can help employees see the connection between their performance and the larger organization’s success, which can increase motivation and engagement.
3. Build a performance management infrastructure. Building a robust infrastructure for performance management can help your organization stay on track with its strategic planning process. This requires identifying the necessary data points, individuals responsible for analyzing and reporting data and meetings for review that include all relevant stakeholders. The structured checkpoints present an opportunity to refine the plan as needed in response to the performance of your company along a calculated timeline, such as one fiscal year.

Streamline and organize your processes with a strategic planning template

There are numerous aspects to an inclusive strategic plan, but you can make the process simpler and more organized by creating or following a template designed for your sector. When determining the strategic planning process that would most benefit your company, determine the processes undertaken most often within the industry and what areas you want to improve and grow. Effective strategic planning efforts should include this information:

1. Theme: Inform the reader of your report what kind of a company you represent, your corporate culture and an overview of your achievements thus far. Discuss how your company operates and who works there, and what your collective goals represent.
2. Goals: Use this space to describe your company’s current short- and long-term goals in areas such as expansion, social responsibility, and financial growth.
3. Objectives: Specifically define your goals in a measurable way, such as decrease debt liability by 50% by end of year (EOY) or increase labor crew by a strategically defined amount.
4. Strategy: Underline how your company plans to reach the goals you outlined previously in the document. You can talk about your SWOT analysis and the techniques you will implement throughout the timeline of your strategic plan to reach your goals.

Documents to include in your strategic plan

When creating a strategic plan for your company, it’s important to conform to standard business practices so that you can share your report with potential partners or if you want to take out a business loan. While there is no defined set of documents required for an immersive strategic plan, it’s important to carefully consider every aspect of what you’re defining in order to give the reader an in-depth look at the company. Typical aspects of a strategic plan include:

1. Executive Summary: This section should be completed last in order to include all the details of the report. It should be the first item in your plan, so a person reading it will see your company’s achievements and objectives upfront.
2. Elevator Pitch: This is your chance to shine. Let the reader know what awesome contributions you can make to your sector with your business and what you’re doing to reach your goals. Add visual elements like pictures of your product or service and team photos of your employees hard at work.
3. Mission Statement: A mission statement is defined as “a formal summary of the aims and values of a company, organization, or individual.” Use it to describe what your business does, why it exists and what your dream is as to the impact of your company on the world.
4. Vision Statement: Unlike a mission statement directed to consumers and partners, your company’s vision statement is directed to the employees. It details the long-term goals and vision of the company. This can be included with your mission statement or incorporated into it.
5. Goals: When crafting your strategic planning process, you’ll need to define your company’s resources and how you plan to allocate them. Research to find up-to-date data that you can apply to your organization’s current processes and effectively prioritize your efforts in accordance with the company’s needs.
6. SWOT Analysis: Take a hard look at your company’s strengths, weaknesses, opportunities, and threats (SWOT) to explain what techniques to use to achieve your organizational goals effectively.
7. Key Performance Indicators (KPIs): Key performance indicators (KPIs)are ways to measure the outcome of your business’s goals. Depending on your sector, you will have different metrics to note. For example, a sales segment would focus on financial documents to measure profit margins and how many new clients the company has added.
8. Industry Analysis: An industry analysis paints a picture of your industry’s wider business environment, helping you strategically plan ways to meet your goals. Include a SWOT analysis of competitors in your field and area to strategize ways to outshine the competition. In your analysis, consider social, political, technological and economic factors that impact your work.
9. Marketing Plan: A marketing plan sets the business up for success when launching a product or service. Undergo a thorough analysis of your target audience and define both standard and creative ways to promote your company.
10. Operations Plan: Describe what daily tasks your team undertakes, the team’s composition, and what facilitates company growth in your operations plan.
11. Financial Projections: Use your company’s existing financial data to predict the course of your business’s finances and create effective projections. It’s imperative to provide financial projections to investors, as they will want a detailed account of your current and projected financial growth.

FAQs about strategic planning

Review some frequently asked questions about strategic planning below:

Why conduct strategic planning?

Strategic planning is a helpful organizational process that, if executed effectively, can increase the likelihood that a company will successfully meet its goals. Additional benefits of strategic planning include:

• Building consensus and engagement of all stakeholders
• Establishing systems of accountability
• Clarifying priorities
• Analyzing the organization’s strengths, weaknesses, opportunities and threats (SWOT)
• Creating mechanisms for evaluating progress

What is the first step in the strategic planning process?

Although this may vary across organizations, the first step in the strategic planning process is typically to create mission and vision statements. It’s helpful to begin the process in this way so that your values and long-term objectives guide the goal setting and action planning components of the process. For companies with a solidly established mission or vision statement, this step may reflect refining more than creating or customizing the vision to reflect a new or changing project.

Who should be involved in a company’s strategic planning?

Typically senior leaders who engage in the initial strategic planning process are involved. Following the initial plan development, leaders commonly engage their teams, sometimes for feedback and other times to inform them of upcoming changes in company policies.

Once established, it is the responsibility of all employees to execute the strategic plan strategies and monitor progress. Although individual offices may monitor their sub-goals, it’s again senior leadership who typically engages in the formal, ongoing performance management. A company’s data analyst also supports the performance management process by running reports and preparing data for leadership to review.