| Rigorous Self-Examination Key to Writing Successful Strategic Plan Source: Knight Ridder/Tribune Business News Publication date: 2002-02-06 Most managers look forward to preparing a strategic business plan as much as they did a school term paper -- pages of pain, with no relevance to the real world. Worse, you can't even crib it from some little-known journal. Once written and graded by someone else -- in school it was a teacher, now it's a banker, or head office -- it just goes in a drawer or onto a shelf, and is not used again until the next time someone insists on a plan. But the biggest benefits of writing a plan do not come from the plan itself but from the process of thinking strategically about your business. The value comes from the process of evaluating how you plan to allocate scarce resources among competing needs to help accomplish your goals. As discussed last week, the process should involve an assessment of strengths and weaknesses, known as "looking at your business from across the street". Visualise yourself as others see you and "think like a customer". Strategic planning provides a focus and guideposts for decision-making. The idea is not to plan every possible event or anticipate every possible outcome, but to provide focus and targets along the way. The completed plan must be fluid and changeable and must have a process to keep the effort alive. Another benefit of planning comes from communicating your ideas to your employees, customers, shareholders and your bank. But remember: "packaged" planning templates do not ensure success. There is no substitute for excellent management. Many successful businesses use the planning process to sustain competitive advantage. At KPMG, we believe you are responsible for applying sound principles of management to ensure your success. The process should involve a number of key steps: --Develop a vision, a sense of purpose that binds the organisation together; --Articulate your values -- what's important to you; --Focus your strategies on your mission and values; --Think about your desired future and what it will take to make it happen; --Respond to your strengths and weaknesses; --Use the resources around you to help you; --Make your financial projections the result of your strategy; --Develop objectives that are SMART: Specific, Measurable, Attainable, Realistic, Time-bound. --Develop processes to keep the plan alive, to celebrate accomplishments and take corrective action. --Consider a retreat to develop the ideas of the team and consider the alternatives. How do you do a business plan? First, it's important to go through the process yourself, not delegate it 100 percent to someone else, so you gain a familiarity with the business and what will be necessary to make it succeed. You'll also "know it cold", so you can respond with confidence to questions about the plan from anyone: financial sources, suppliers or customers. You can't buy a plan and expect it to be effective. The role of the consultant is to help you maximise the benefits from the process by providing structure and discipline and by acting as a sounding board to vet your ideas and question your assumptions. Some techniques to get at the strategic thoughts include: --Ask yourself how your customers would describe your operation. What words would they use? --Identify your five biggest problems. Sometimes the first step to solving a problem is recognising you have one. --SWOT: Examine your Strengths, Weaknesses, Opportunities and Threats. --Consider the strategic factors that are most important to your customers. --Consider where you want to be next year, in three years, in five years. --Determine the critical success factors and whether your plans are responsive to these factors. What follows is a general outline of what stakeholders may look for in your plan, and what you will find useful in the self-examination process: --A business description. What business are you actually in? This can be a thought-provoking question. Describe the business, your product or service and potential customers, current ownership, and previous financing. --Market analysis. You must convince your reader that: a) there is a market need for your product or service; b) you understand potential customers' needs, and your product or service meets them; c) you can sell your product or service at a profit. --You will need to talk about such things as who your customers are, when they buy, and their expectations in terms of price, quality and service. You will also need to discuss the competition, their respective strengths and weaknesses, their market share, and how your product or service compares. --Product/service advantages. What distinguishes your product or services, in other words, your market niche. --Marketing strategy. Demonstrate that you understand your target markets and can sell and deliver effectively to them. Identify your targets, provide estimates of sales and market share for two to five years, discuss pricing strategy and how it compares to the competition, and provide details of your sales plan. Also consider how you will respond to the competition's strategies. --Production or service operations. Discuss how you plan to produce your product or service. Factors include your location and how it relates to customers, transport, labour and materials, facilities and equipment, including leasing/buying arrangements, labour force and production operations, including quality control procedures and sources of material. --Management and organisation. People make the plan happen. Describe how the team is organised, including the primary role of each member, and how the team provides a balance of marketing, financial expertise, skills and experience. If there are any apparent weaknesses, explain how they will be overcome, for example, through outside advisers, training or recruitment; --Financial information. Include projected balance sheets, profit and loss, cashflow statements and break-even analyses. Charts and graphs make information meaningful by focusing attention on key factors and trends; --Financing requirements. This section is sometimes done first when it should be last. This should express in numbers your plans and strategies. Indicate how much you need, when you will need it, and how it is to be used. Also include the financial structure you propose, its terms and whether you qualify for government assistance; --Executive summary: This is the last thing you should write, but it should appear first in your plan. Investors and lenders have to review hundreds of plans, and a good summary that provides a quick and concise overview that will help convince them to continue reading. By putting all these things together in one presentable package, you will give yourself the best possible chance of having a workable plan that produces results. Andrew Thomson is a partner of management consulting at KPMG in Thailand, a member firm of KPMG International. He can be reached at [email protected]. (c) 2002, Bangkok Post, Thailand. Distributed by Knight Ridder/Tribune Business News. Publication date: 2002-02-06 |