Business Strategy and Planning is important for businesses that seek funding from investors or banks. The process of creating a business plan helps clarify goals for the company and shows transparency for potential funding channels.
Mistaking planning for strategy is a trap that even experienced managers fall into. Henry Mintzberg identified this problem in 1978 and described a solution that is as simple as it is powerful.
Strategy Definition
In the context of business strategy and planning, the term “strategy definition” refers to creating a vision for how a company wants to position itself in the marketplace and then defining objectives that will help the company reach this position. It’s a process that involves leaders, managers and individual contributors as well as stakeholders and customers.
The first step in strategy definition involves identifying the current market and its competition. This is often done using a SWOT analysis. The second step in strategy definition involves identifying the company’s strengths and weaknesses. This helps ensure that the goals set in this stage are not overly reliant on existing resources and that additional resources will be needed to meet those goals.
The third step in business strategy definition involves determining the necessary steps to achieve the goal established in the previous step. For example, if the company’s objective is to become the cheapest provider in the market, their managers would need to negotiate with suppliers to reduce purchase costs. This is a tactic that will help the company achieve their set strategy.
SWOT Analysis
The first step in the business planning process is a SWOT analysis, an evaluation of strengths, weaknesses, opportunities and threats. While the framework seems simplistic, it’s an important part of any business plan to ensure that all potential risks and exciting possibilities are taken into account. For example, a company debating whether to launch a new product might find that increased material costs and strained distribution lines could outweigh the market demand for the product, even if its features are enticing.
Once a team has completed a SWOT analysis, it must convert the bulleted list of internal and external factors into a strategic plan. Rather than simply working to improve its weaknesses and eliminate threats, the team should create strategies that leverage its strengths and capitalize on opportunities. For example, it might use its reputation for high-quality products to attract a new customer base or develop more environmentally friendly manufacturing processes. This approach makes it possible to achieve its goals while eliminating roadblocks and avoiding threats.
Business Planning Process
Business planning involves creating a long-term strategic plan that prioritizes goals. This can involve conducting market research, identifying opportunities and threats, and developing strategies to achieve those goals. It may also include identifying resources that are necessary to attain a goal. Business plans are a critical tool for determining the direction of your company and can provide a framework for short-term tactical business decisions.
The first step in the business planning process is defining the company’s goals. The goals should be measurable, achievable, relevant and time-bound. You should also conduct market research to identify industry trends and identify opportunities and threats.
Next, the business will develop strategies to achieve those goals. These can include identifying customer needs and offering solutions, investing in new products or services, increasing sales, or improving profitability. It’s important that the strategic objectives align with the company’s core values and vision. This will help to ensure that the business is able to implement its strategy and stay competitive in the marketplace.
Business Planning Tools
Business planning tools can help you define your strategy and create a plan that meets your goals. These tools can help you identify and analyze both internal and external factors. They can also help you evaluate the effectiveness of your current strategies.
Some of the most common strategic planning tools include SWOT analysis, business model canvas, and PESTLE (Panel of Environmental Strengths, Threats, Opportunities and Liabilities). These tools help you look at your company’s strengths and weaknesses as well as potential threats and opportunities.
Some business plan tools offer templates to help you get started. Others focus on creating a fully developed plan that you can use to seek funding or impress investors. iPlanner, for example, offers a range of tools that help you organize inputs into a structured business plan and financial projections. Another example is LivePlan, which offers template-based guidance as well as customer support and online learning programs.