Stragetic Planning for Family and Private Business

First of all it is beneficial to briefly summaries strategy and strategic planning.

Strategy is the longterm direction of the business that:

  • achieves a competitive advantage for the business in its chosen market
  • positions the business in the market in relation to its competitors
  • defines the scope of the businesses functions, capabilities and capacity
  • matches the businesses resources and activities to the business environment

Strategic planning is the process (and thinking) that underpins the development and analysis of the options available to the business when choosing its strategy.

For the purposes of this article the focus will be on the higher level strategic planning, or corporate planning, as this is where the company’s direction is set and what drives its operational performance that delivers shareholder value. In addition, it defines the company’s business model, the corporate culture and its reputation from a corporate, social responsibility perspective regardless of its size or structure.

Broadly speaking there are only four types of corporate strategies being:

  1. Growth or market penetration – Same products / services into same market
  2. Market development – Same product / service into a new market
  3. Product / service development – New product / service into the same market
  4. Diversification – New product / service into a new market

Once we accept this then the planning process can be followed to develop a robust and valuable strategic plan for the business.

We apply a rigorous structured process to strategic planning that incorporates a range of activities and analysis designed to achieve the clear direction for the business, its structure, its employees and all business activities.

The first part of the process includes:

  1. Core values of the owners – These are critical as they make up the philosophy and ethics of the business and the people
  2. Goals of the individuals and for the business these are critical as it focuses everyone of the type of strategic direction of the business.
  3. Core competencies of the business – These may be based on the technical expertise of the owners however it is best to think about what competencies the business will leverage to develop the business model it will adopt
  4. Development of the businesses VISION and MISSION – These provide the focus for all future activities. A Mission statement should not be any more than two sentences of between 8 and 10 words otherwise they lack focus and are of little value to the business
  5. Your VISION is an internal statement that drives its direction and performance
  6. Your MISSION is a statement to internal and external stakeholders of how you conduct your business

The second part of the planning process is where the real power of strategic planning is developed as it consists of a series of analysis – Four in fact, which are all designed to provoke a breath and depth of thought that will have a major impact on the structure and operational performance of the business.

Environmental analysis – this is the business environment you operate in and it includes six elements:

  1. Political
  2. Economic
  3. Social
  4. Technical
  5. Environmental
  6. Legal

Industry analysis – this analyses the industry environment you are operating in and competing with and is based on Porter’s Five Forces:

  1. Power of buyers (the buyers of your products / services)
  2. Power of suppliers (those that supply your business)
  3. Threat of new entrants into the market (is it easy for another like business to establish)
  4. Threat of competitive rivalry – How competitive is the market and how do / will competitors react to your business
  5. Threat of substitutes – What is substituting your product / service in the market

Resource analysis – this is the compartmentalization of your resources and is the critical link between the businesses mission / core values, structure and operational strategies / performance. It includes:

  1. Physical – Your location and physical assets
  2. Reputation – The reputation of your business at all levels
  3. Organisational – Goes to the heart of the operational structures and includes what type of human resources is required for the business
  4. Financial – The financial requirements for the business now and into the future
  5. Information – This ranges from your operational information i.e. SOP, policies, T&C of Trade etc to IP that you want to protect / hold separate to the day to day operations of the business
  6. Technical – The technology utilised within the business and the future technology requirements of the business be it systems or software or the use of media

The good old swot analysis – The strengths, weaknesses (or constraints), opportunities and threats (challenges). The swot analysis is infinitely more valuable to the process after the above three analysis have been completed because the business owner will have a greater understanding of their business and will be able to conduct this analysis with clarity and purpose.

Phase three of the process is the development of the businesses strategies. This pulls together everything done to date and results setting a clear direction for the business. We have a three step process for the development of these higher level strategies, which includes

Matrix for offensive and defensive strategies through the matching of:

  1. Strengths and Opportunities – Offensive
  2. Strengths and Challenges (threats) – Offensive
  3. Opportunities and Constraints (weaknesses) – Defensive
  4. Constraints (weaknesses) and Challenges (threats) – Defensive

Prioritising the strategies by filtering then through a specific framework to assess their:

  1. Feasibility (do you have the capacity and capability to implement the strategy)
  2. Suitability (does the strategy suit the current circumstances of the owners and business environment)
  3. Acceptability (this is the risk / return assessment, which includes the possible reaction of stakeholders i.e. employees, your financier, suppliers, customers and competitors)

Strategic choice – Based on the above select the most appropriate direction for your business.

While this process appears involved, complex and time consuming it can be tailored to suit the business. However it is important to have a clear focus on the end game, which is to be a strategically focussed business that has a clear direction and purpose that can be measured.

Common Reasons for Small Business Failure

Why Many New Businesses Fail – Four Common Reasons of Small Business Failure

You may have already heard many stories of how people started a business with much enthusiasm but fail to run it successfully for a long-term. The failure of a business has, in my opinion, nothing to do with your luck or any other spiritual powers. There are a few common reasons of small business failure and I have written some of them in the following headings;

1: Poor Market Research

It sometimes happens that you wake up from your bed at 3 a.m and say to yourself ”wow, this is a multi-million dollar business idea”. Lame! Multi-million dollar business ideas do not simply pop-up into your mind while you are sleeping; instead they require a hell lot of market research to assess whether your business idea is worth a million dollars or not. Making a million dollars is not as easy as you think.

Poor market research plays an integral role in small business failure. People forget to gather useful data from the market which, in real terms, ensures success. They overestimate the potential of their product/service to sell in their target market. So, before you spend a single penny on your business, conduct a detailed market research.

2: Poor Business Planning

I have seen people who grab a page or two from their pocket and say, ”this is my business plan”. You are pretty much sure about the reaction that occurs on your face when someone says so. You’re right! Another reason why people fail to make their business successful is that they do not draft a proper and well-researched business plan. Warning: do not waste months on preparing a business plan rather than actually doing anything.

A business plan will help you draft a map of how your business will meet its objectives. You will address all operational areas of your business before actually starting anything; this will ensure that you are well prepared for any surprises that come your way. I have covered a diverse range of topics related to business planning in my blog and hope you will find them helpful. While preparing your business plan, all you need is to be honest and realistic about the projections and assumptions you make.

3: Limited Start-up Capital

Another common reason for most business failures is either they start with little start-up capital or they spend the available capital on unnecessary luxuries such as buying expensive furniture, expensive graphic designs for your websites, hiring more people than required, expensive marketing campaigns etc. It is always important that you prepare for running the business at breakeven (or even loss) for at least the first year of operation. The available capital shall be used in necessary and value adding items.

A business plan will help you develop a forecast of how much capital do you need to start your business and what is actually necessary at the start. Spending wisely in the start will help you sustain for a longer period as well as prepare you for hard times.

4: Synergy between Team Members

This is another common reason causing many new businesses to fail. Unless you are a single proprietor or a professional offering your services, you need to team up with people. You may also have co-founders who are with your from the scratch of your business. The team members and their synergy among each other play an important role in the overall success of your company.

Be careful when you select your partners and other team members because they will be playing a key role in your business. There is a need of people who have technical knowledge about your industry as well as those who are good in other business operations.

I hope the above reasons have helped you in understanding how you should start initially. There are many other reasons to a business failure that can be written here but these four reasons are in my top list.

5 Marketing Mistakes That Small Business Owners Make and Ideas to Fix Them

Marketing mistakes are easy to make and for many small business owners they can seem like a bottomless pit that is tough to get out of. Take for example: Bill.

Bill started his mortgage company because he wanted to be in control of his future and he was good at doing mortgages. Bill had never owned a business before, but thought he would just figure it out. So starting the business was exciting; writing a business plan, getting funding, choosing a location, hiring staff, buying furniture, all the fun stuff. Once he set up the business, then the question was raised, “How are we going to get customers?” And like many small business owners, Bill looked at advertising, flyers, business cards, radio ads, newspaper and spent many thousands of dollars to figure out what did and did not work. Luckily for Bill his investors had deep pockets and the economy was on his side and he made it.

But fast forward 10 years and the market is very different. Investor’s pockets are not as deep and the economy may not be helping you. As a small business owner over the past decade, times has gotten more competitive and some say it is “eat or be eaten.” And with so many challenges, it is easy to make a few wrong moves and loose a business you have worked so hard to build.

The main cause of many business fatalities is not knowing how to effectively get more clients. Although many will create a business plan, few will create a marketing plan, this is the first mistake. A marketing plan is a strategic plan of how you are going to gain awareness for your business and educate clients and customers about your products and services. Marketing includes everything from your business card to your website to advertising and social media. But marketing today is much more sophisticated than it used to be.

It used to be, just put up a website and you get calls. Today there are many more factors to consider, such as: how will your get your site noticed among the billions of other pages on the internet? And once you decide that, then who will do it? Will you do it yourself or will you hire someone? So the first fatal mistake is not having a plan and using “hope” as a strategy for business success.

The second fatal mistake, is not having a budget. When it comes to making sales whether it is for a chiropractic business or an online business, if clients do not know that you exist, they can not buy from you. And in order to have your clients know about you this will take either time or money or both. Consider the marketing strategies that require time, for example: networking, speaking engagements, educational opportunities – like webinars, and social media. They might not require lots of money, but without a small budget, none of these strategies will produce stellar results.

Let’s look at networking for example. Going to a networking event can be free or low cost, but in order to make that event productive, let’s look at the steps it really takes. First, you will want to have business cards and possibly a name tag. Once you have their business card, you will want to follow up with them and keep in touch. At least sending an email or personal card. This can be a time intensive effort and by just missing one step, like not knowing who to network with or not following up, can cost you dearly.

This brings us to many business owner’s third fatal mistake, they don’t take time to learn how to market or sell their products. Even if you get the other 2 steps right, this alone can stop you in your tracks. Suppose you have a plan and reasonable budget, it is very easy waste TONS of money on marketing and not get results. For example, let’s say you decide to place an ad in a local newspaper and in your excitement, you don’t put a compelling offer in the ad. Your ad just says who you are and your phone number. Three months later, you have spent almost a thousand dollar and you are frustrated that didn’t work. So you try another paper and another and before you know it, nothing seems to work. The problem is not the media’s, but the marketing strategy. Without a compelling message, a trackable ad, and correct placement, you can quickly drain even deep pockets.

This leads us to our fourth mistake, not tracking where your clients are coming from. Let’s say that you have deep pockets and you are marketing your business everywhere. The calls start coming in and before you know it, your business is growing. But then a hiccup occurs: the city decides to do road maintenance right in front of your business and the business slows down. Now with a smaller budget, you can not market like you did before, but you don’t know where your clients came from so you are left to guess where to spend your smaller budget. Guess wrong, and this might mean the end. Business development should not be left up to guessing. Tracking your business is critical to the success of your business, but in our excitement we often forget to track what generated the business leaving us guessing what worked.

And finally, the fifth mistake is not optimizing your marketing. Once you do track your business, then it is time to review which marketing efforts are creating the best results. This is easy to do when you have the data. Track the following information per campaign: new contacts (people who contact you from the efforts of that campaign), new clients that you get from that campaign, cost of the campaign and revenue generated from the campaign. These four numbers will reveal the insight to what is really working.

So to give your business the best boost, following these 5 steps:

1. Plan your marketing

2. Have a budget

3. Learn the basics of marketing

4. Track your results

5. Optimize your marketing.