Build your business -- Strategic business development
10 tips to transform your company: Rental companies can benefit from real-time end-to-end visibility, allowing them to respond and adapt to current and future situations.
by Marc Emmer
Within our strategic planning practice, we have worked with every conceivable type of business, large and small. Larger companies are more likely to engage in strategic planning, not because it is more relevant for them but because they tend to hire professional managers who understand the dramatic impact that a strategic plan can have on profitability and morale.
You may be wondering, why wouldn’t everybody want a plan? One has to start by understanding the underlying psychology.
We get caught in a trap, where the urgent nature of today’s work always takes precedence over strategy. We feel greater accomplishment from finishing routine tasks than attacking larger projects that deliver enterprise value but may require months to complete.
To be fair, small businesses are more strained for resources than larger companies. They do not have dedicated people for things such as research and development. Regardless of size, every entrepreneur should find time to be thoughtful about the future of his or her company. The pressure on independent business owners is immense, and a thoughtful planning process can chart a course to a successful future, one with more clarity and less stress.
Many entrepreneurs have a plan in their head, and they are under the impression that is good enough; it isn’t.
Lack of clarity manifests in poor decision making about new products, who to hire, where to staff a sales team and what equipment to buy.
When these decisions are made in a vacuum and without sufficient data and context, a management team has to spend precious time unwinding mistakes. This is why the notion that we don’t have time to plan is really just a rationalization (one could even call it an excuse). The greater proportion of our time we spend planning instead of reacting, the less total time we expend.
Other small business owners will rationalize that they can’t plan because the world is a volatile place; and it is. But the businesses that plan what they can control are in better position to react to the things that they can’t.
Here’s a 10-step process to build a strategic plan:
1. Include the right people
Business owners are often resistant to share information out of fear it will end up in the wrong hands, so they keep a tight circle on with whom they have strategic conversations. The people closest to the customers are the ones with the most information about their problems and potential solutions. In many companies, capable employees are unwilling to share their opinions.
It’s important to include as many people who they can trust and who can think strategically. It tends to be a wider circle than they might expect.
2. Gather data
Having access to pertinent market data is the No. 1 barrier for most independent businesses. There is a wealth of free information available at sources such as the Bureau of Labor Statistics, Bureau of Economic Analysis and low-cost consumer research tools at sites such as gutcheckit.com.
Companies often do a poor job capturing and mining internal data. Every company should segment its reporting by channel, customer, product categories and others that make sense for the business. Surveying strategy participants is also a useful way to gather information and rank strategic issues by importance. Even in smaller companies, these principles may be executed with as few as five people, but it still yields insight.
3. Expect preparation
Strategic planning is garbage in, garbage out. Every person participating in strategic planning should be expected to prepare for a strategy conversation, whether that is by developing information or learning more about the mechanics of the business.
4. Create the right environment
Creating a safe harbor, a place where people feel safe about having strategy conversations, is as important as making sure the physical environment, such as an off-site location, is suited to creativity. Many companies hire facilitators to keep the meeting on track.
5. Build your plan
Entrepreneurs may have anxiety about writing a plan, but that is actually the easy part if you have done your homework. Components of a strategic plan usually include things like an executive summary; financial projections; strengths/weaknesses/opportunities/threats (SWOT) analysis; external factors; market/competitive analysis; vision map; and action plan.
6. Focus on growth, value
Often, companies engage in operational planning and call it strategic planning. Continuing to do what you have always done is not strategy unless you have weighed alternatives. Focus on how you will grow the business and in particular, what product or service innovations will improve the customer experience.
7. Organize around strategic objectives and an actionable plan
The first thing that should come out of a strategic plan is unity about four or five overarching objectives that serve as a script for the management team. They should be illustrated in some form of vision map that can be shared with managers and perhaps throughout the company.
It’s not uncommon for companies to hold strategy sessions and then fail to put their strategy into action. Don’t waste your time doing strategic planning if you don’t come out of it with an actionable plan complete with assigned champions and due dates. When action items are organized by objectives, the objectives remain alive even after action items are completed.
8. Gamify
The most successful companies I have been around are the ones with clear intention about converting their strategic plan into their corporate DNA. They do this by:
- Sharing the vision map with a broad group of people
- Building a corporate scorecard
- Tie performance management, including incentive plans, back to the strategy
- Celebrate wins and engage their employees in the process.
9. Execute relentlessly
It’s easy to get sidetracked with issues of the day and back-burner strategic efforts. To combat this, meet with your team every month or quarter to review the strategy and action plan. It’s the only way you will stay on a strategic track.
10. Strategic planning is a process, not an event
Companies operate on all types of cycles. Whether you engage in strategic planning annually or quarterly, it must be a repeatable process that reviews the strategy, budget, scorecard, performance management, and action plan. Repeat at least every year.
Great leaders inspire others with their vision. They don’t get caught in the trap of being operators every day without connection to the broader strategy. Reinforce your plan every day, until every employee understands and buys in to your vision.
----------------------
Marc Emmer is president of Optimize, Inc., a management consulting firm and a longtime Vistage member and speaker. Vistage helps small businesses make strategic decisions that drive long-term growth. Learn more at www.vistage.com.
This story originally appeared in the January-February 2021 issue of Pro Contractor Rentals magazine, ©2021 Urbain Communications LLC. All rights reserved.
PRO CONTRACTOR RENTALS MAGAZINE
Pro Contractor Rentals provides information of value to rental centers who focus time, resources and attention on meeting the demands of construction contractors and other equipment rental customers.
