Self Taught MBA: Strategic Planning, Part 2 - The ABCs of Strategic Planningcomments (2) May 7th, 2012 in Blogs
This morning I received a distressing phone call from a subcontractor, Randy. He owns a small basement company and called to ask if I had any contacts for work, having none since November. "I'm going down the tubes," he confided. I thumbed through my mental rolodex, but on the heels of the worst year for new housing on record, I had no good leads to offer. I suggested Joe, "He's only doing remodels," Randy reminded me, and I suggested a few others, but he had already contacted each with no prospects for work. Randy used to build a foundation every three days, now he's lucky to install one per month, and he was obviously suffering, emotionally as well as financially.
Randy needs a new direction, because chances are the new home market will not rebound anytime soon. Many contractors have been in Randy mode, waiting for things to improve. So I suggested basement repairs. Randy said he'd been looking into it, and knew about a competitor that had gone from basements to repair services about two years ago, "Now he's got a six-month backlog now," Randy told me, "but he doesn't need my help." Randy needs a new strategy, and our conversation turned into an impromptu strategic planning session. I suspect many builders have come to the end of their carrying capacity, and have to figure out an alternative to waiting for the economy to improve, which is like holding your breath. It's time to do some serious strategic planning.
In the last blog, we touched very lightly on the standard business plan, which defines the steps for a new business. It covers standard topics including a description of products or services, the local market, the management team, and revenue and earnings projections. For most of us, this is a wasted effort. We're not starting a new business, but, like Randy, in need of a new approach that leverages existing skills and resources in a market-appropriate direction.
There are two steps to this effort: the first is tactical-what are we going to do and how? The second, operational, which is a detailed and specific implementation plan including duties, dates, and milestones required to achieve the goals outlined in step one.
ABCs of Strategic Planning
To start, a strategic plan represents an internal plan; it's not designed to sell your business idea or to obtain financing. You can forgo a lot of the pro-forma elements of a formal business plan, such as the product/service description, management structure, and financial history. But you will want to analyze the environment in which you're doing business, the threats and opportunities. You'll want to consider your company's resources, financial and personal. You will identify actions needed to move toward your goals, assign tasks, set dates and milestones, and then a program to track your progress.
The strategic plan may have more bullet points than narrative, and represents both a map and a to-do list. You may start with a vision, what will the company look like this time next year? Or you could start with the present situation, known challenges and opportunities, and through the planning process develop a vision. This is a problem solving approach, which sometimes supersedes the inspired, visionary goals that make strategic planning compelling. Either way, it will lead to setting specific goals and then reverse-engineering a route to obtain them.
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