Why every business needs a strategic plan – Business Daily
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Question: I read an online article that recommended a strategic plan for every business. What is a strategic plan and are there any legal issues that go into writing a strategic plan?
A strategic plan is a document that is prepared, usually at the onset of business operations, and is used to set out the businesses’ goals, objectives and actions that it needs to take to reach its goals.
Think of it as a road map that a business shall rely on to guide it. It certainly is important for every business no matter the size. The fallacy has been that strategic plans are only used for large businesses which is not the case.
Moses, if you were to open up a business what is your goal for having that venture in the first place? What specific objectives would you want your business to attain? A strategic plan is a document that you will use to document some of those key components.
Static planning is an entire process and some experts can help you draft your strategic plan if you can afford it. If cost is a hindrance, then you could use the many do-it-yourself tools that are available online. Such tools will guide you on how to draft the strategic plan for yourself.
Experts say that for a strategic plan to be a good one then it must be achievable and have measurable goals. Strategic planning, therefore, involves setting goals, analysis, strategy formulation, strategy implementation, and monitoring of performance.
Let us start simple. What is your vision? Write it down. What is your mission in other words how do you intend to actualise your vision? What values would you want your business to have?
All these will go into the strategic plan. I would advise you to do a lot of reading on how to draft a vision that will enable your business to stand out.
You will need to do what experts call a SWOT test which is an analysis of the possible strengths, weaknesses, opportunities, and threats before you begin your business. It is also important to undertake competitor analysis.
What are other businesses in the market offering and how is your business different from your competitors? This is what experts call a competitive advantage. What advantage does your business have over its competitors? Then all these can inform your strategy.
Moses, you asked about legal issues to consider when writing a strategic plan. In my view, legal issues form a very important component of strategic planning. Legal issues come in when undertaking the SWOT test as above.
When doing a SWOT test you must analyse the legal environment in which your business will operate. Say you want to get into mining, what does the law say about the mining sector?
The aim of doing a SWOT analysis on the legal environment is to highlight any laws that may create new opportunities for your business and align your business accordingly. For example, the Start-Up Act provides numerous opportunities for businesses servicing the sector.
A change in the law may necessitate a change in strategy. A legal environment can also be hostile to your business strategy. For example, a new law could be passed banning some activities or increasing the tax in the sector. Undertaking a SWOT on the legal environment will reveal all of these.
If the legal environment is supportive of your strategy, then by all means proceed. If the legal environment is hostile to your strategy, then it may be prudent to consider a change in strategy to avoid losses.
The writer is the founder of C Mputhia Advocates