Wednesday, January 27, 2010

Increase Your Business Profits With A Strategic Business Plan

A Strategic Business Plan involves putting your vision for your business into words, deciding where you want to go with your business, and developing strategies to get you there. Generally, when deciding on writing a business plan, entrepreneurs often focus on listing the goals of their businesses, with little emphasis on how those goals are to be achieved.
  • Writing a Strategic Business Plan will nudge you to ask questions such as: How do I turn my vision into the desired result? How do I get my employees to perform optimally? How do I attract new employees with the skills that my company needs? How do I attract new customers or clients? How do I obtain the finance to run my business? All these questions point to implementation.
  • However, implementation rings hollow if it is not backed by a well thought out strategy. In simple terms, a strategy is a plan of action designed to achieve a particular goal. While it is clear that the primary goal of a business is to make a profit, the drivers for achieving that goal are the kind of strategies chosen, and whether or not they are implemented.
  • A Strategic Business Plan will require that you evaluate the market you are planning to enter. What is the level of competition in the market? Are existing companies in the market doing well? What is the future prospect of the market? Do you have the right product and prices for the market? Is your organizational structure adequate to succeed in the market? Are your financial resources sufficient to maintain your business operation?
  • When satisfied that you have chosen the right market, develop your organizational structure, taking into account the vision, values and mission of your business. Key departments in your organizational structure will include the office/home, raw materials procurement, manufacturing, Warehouse, Purchasing and Sales, Transportation, Accounting, etc.
  • You will set goals for each of these departments. You will call them ‘secondary goals’ to differentiate them from the ‘primary’ goal of your business, which is to make a profit. The secondary goals define what each department should achieve, within a given period, with its available financial, material and manpower resources. These goals are broken down into ‘objectives’ with each objective assigned to an individual or a team for implementation.
  • As mentioned earlier, implementation is driven by well thought out strategies or a plan of action. What strategy is chosen will depend primarily on the objective, then on the internal and external resources of the business, as well as any known limiting factors that may interfere with implementing the objective. In the end, the strategy chosen should ensure full implementation of the objective; otherwise the objective will have to be modified to fit the strategy, or the strategy modified to fit the objective.
  • Implementation of the objectives must bend toward achieving the secondary goal to which they are linked. To ensure that this happens, the relationship between strategies and objectives should be actively evaluated to produce evidence that implementation is achieving the secondary goals as planned, and where such is not happening corrective action promptly taken to bring implementation in line with objectives.  
  • Once the secondary goals are being achieved, and all the departments in the business are operating optimally, the conditions are created for achieving the primary goal of the business, which is to make a profit. Under a Strategic Business Plan, strategy and planning are brought together where planning produces attainable objectives, and strategy provides the action to implement them toward achieving the primary and secondary goals of the business.
  • A Strategic Business Plan can be drawn up for any type of business regardless of size. For instance, a Home-Based business with only one employee could represent the various departments in the business with individual files: digital or physical files. The secondary goal and the objectives of each department are put in one file. The entrepreneur will develop strategies depending on the nature of the objectives to be implemented, and his or her resources to achieve them. Achieving the objectives and secondary goals of each department will move implementation toward achieving the primary goal of the business, which is to make a profit.
A Strategic Business Plan does not only press for the formulation of attainable business objectives and strategies to achieve the primary and secondary goals of the business, but it is an ‘action document’ designed to assist in the application for government grants or loans from the bank, as well as an indicator of an effectively managed business. 

Because of limited space, only an overview of a Strategic Business Plan can be provided here. Contact a financial consultant for detail information on how to write one for your business.

No comments:

Post a Comment