The starting point of strategic planning is for you to develop absolute clarityabout your current situation. Look at your overall business and ask, “What’s working?” and “What’s not working?” in every area.
What is your current level of sales? Break them down by product, product line, service, market, and distribution channel. What exactly are you selling, to which customers, at what prices, and with what level of profitability?
Compare your current sales with your assumptions, your expectations, and your projections. Are you on track? Compare your level of sales with last year. What are the trends? Are they up or down? Are they temporary or permanent? What do the trends suggest for the future of your business? What could you do to respond more effectively to them?
Cash Flow is Everything
Look at your cash flow and levels of profitability for each product, service, and area of activity. Are your profits going up or down? Are they on budget or going sideways? Look at the percentages. Analyze your return-on-equity, return-on-investment, and return-on-sales. Are they increasing or decreasing?
Jim Collins says, in Good to Great: Why Some Companies Make the Leap -And Others Don’t, that you must be willing to ask the “brutal questions” about your business if you are going to solve your problems and achieve your goals. If your goal is to build a great company, why isn’t your companyalready great?
Which of your products or services is selling well today? Which of your products and services are the most profitable? Which ones are doing poorly? Which ones do you lose money on?
Is your current business situation, positive or negative, in any area, temporary, or is it part of a long-term trend? How can you know for sure? How can you find out? What should you do next?
Clarity is the Key
Perhaps the most important word in strategic planning is “clarity.” You must be absolutely clear about the answers to each of these questions. Vagueness or fuzziness in any area can lead to problems, difficulties, and even disasters.
Why has your business been successful in the past? What have you done well in the past that has been responsible for your success to date? What are the most important skills and competencies that your company possesses today? What are the very best products and services that you offer right now?
Look at the people around you. Who are your most valuable people? Who is no longer as valuable as before? Who even represents a net loss or detriment to your business? Be prepared to ask and answer the brutal questions.
The Customer is the King
Who are your best customers today? What and where are your best markets? What do your customers like most about what you do for them? What do they compliment the most of what you offer or do for them? What is your number-one area of customer satisfaction?
What do your customers like least about what you do? What do they complain about most? What is it that you sell that your customers and potential customers prefer to buy somewhere else rather than from you?
Question Your Assumptions
Time management expert Alex McKenzie once wrote, “Errant assumptions lie at the root of every failure.” Everything you do in your business is based on certain assumptions. Some of those assumptions could be wrong. The answers may have changed, and what was correct in the past may not be correct today. Check every assumption and ask, “What if this assumption were not true?”
If you found that you were operating on the basis of a false assumption, what changes would you have to make, especially with regard to your key people, key customers, key products and services, and key projections?
Strategic planning requires that you begin with a realistic and honest assessment of exactly where you are and what you are today. This becomes your starting point for strategic planning and strategic thinking. It becomes the foundation upon which all future decisions are made.
Action Strategies:
- What is working best in your business today? What parts of your business make you happiest?
- What is not working in your business? What causes you the most aggravation and frustration?
- What are your most important products and markets? What accounts for the largest portion of your revenues?
- Who are your most important people? Who are the people who account for most of your results?
- What are your special talents and skills? What is it you do that accounts for most of your success?
- What are the major changes taking place in your market? What changes should you make to compensate for them?
- What are your most treasured assumptions about your people, customers, markets, products, services, and yourself? What if one of them weren’t true? What would you do then?
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