Strategic Planning: 4 tips and 37 Questions to Start Your Year Off Right
I was talking with Jim, owner of a $50 million per year boutique private equity company that we coach about the coming year. As we clarified the most important initiatives and goals for his company this year what became clear to me was that every company needed to go through this same clarifying and focusing process.
Which is why I decided to sit down and draft in writing my best input to you to guide your start to the year strategic planning.
Here are my best 4 strategic planning suggestions (along with the detailed questions I recommend you ask yourself) so that you start your year off on the best manner.
1. What is your single biggest “short term limiting factor” inside your business? In other words, what one limitation is currently doing the most to limit the growth and success of your business over the next 3-6 months? Getting clear on your short term limiting factor is a key guidepost of where one of your key company focuses needs to be. (See “Sweet Spot Analysis” below.)
2. What is your single biggest “medium or long term limiting factor” inside your business? I’ll define “medium” term as over the next 1- 2 years, what’s the biggest limitation to the growth and success of your business. Long term is defined as over the next 3-5 years. Getting clear on your medium and/or long term limiting factor(s) gives you insights to the capabilities that you’ll likely need to develop. And developing capabilities often takes time, hence the importance of looking further ahead to plan in advance. CAUTION: you can’t make too many big bets on things that you expect to pay off in 3-5 years or longer if you don’t have the staying power to be around then. So when in doubt, put more resources on things that pay dividends this year versus 3-5 years out. This is especially important for younger companies with less reserves. Of course you need to be aware of your long term needs, just make an intentional balance that gets you to that future you’re so busy planning for.
3. Put your key strategic decisions on trial. It’s been said that the enemy of the best is not the worst, it’s the good that wastes resources and distracts you from investing your resources in the best. This directly applies in your business as you likely are frittering away your resources (such as staff time, focus, money, and customer attention) on too many choices.
Here are the seven strategic decisions you can examine:
• Choice of target market. Who will you focus on selling to and who will you ignore? Which markets are the easiest for you to dominate? Cost the most to reach? Are the most profitable for you? Taking all this into consideration, which clients should you fire? Phase out? Refuse to take on? Aggressively court?
• Choice of product or service. Which products or services will you develop and promote? Which of your products have the best margins? The strongest competitive advantages? Are the easiest for you to scale? Which products or services should you eliminate? Phase out? Aggressively promote?
• Choice of business model. How will you profitably charge for the value you bring to the market, and who will be paying for that value? Will customers buy a product or rent a hosted solution? Will you sell direct to your market or through a wholesale model? Will you use physical locations, mobile locations, conferences, or sell online? If you didn’t have your current investment in how you do things and were starting over today totally fresh, what business model for your company would most excite you?
• Choice of pricing. How will you price your product or service? In relationship to your costs? Your competitors? The cost of your customer’s pain? Should you price with one large payment due upfront or with an ongoing subscription fee paid monthly? Or offer long-term financing to your customers? If you have a limited supply of your product or service and strong demand, how do you use pricing to control demand? It’s all too common for business owners to have legacy pricing or pricing models left over from when they first opened their business. Back then, you often had lower costs since you were operating on a shoestring, and priced relative to your competition with the goal of being lower cost than they were. Well, that might have served you once upon a time, but does it still? If you were starting fresh with how you price and the payment options you offer clients, what would you choose?
• Choice of marketing channel or sales model. What is the main means by which you market and sell your product or service? Do you use an inside tele-sales force or a field sales team? Do you use strategic partners who already have existing relationships with your target market as your main means to sell, or do you build your own marketing list? What marketing or sales channels are working well for you that you should scale? Which are ineffective and should be cut or phased out?
• Choice of positioning and branding. What “parking spot” have you chosen for your company? What is your essential brand promise and your top three brand emotions? Is this choice of position and branding consistent with how you are perceived by your market? Is it consistent with your real strengths? If you were a third-party consultant looking at your business, what choice of positioning and branding would you recommend the company go after and why?
• Choice of product pathway. How will your customer likely move through your suite of products or services? Which will be your “gateway” purchase? What is the desired flow of purchases they will make to optimally benefit from your product or service? How does this optimal purchase pathway relate to how you currently do business? What changes or adjustments do you need to make? All too often business owners get so caught up in the day-to-day adrenaline of running their business that they forget to step back and ask the hard, strategic questions that would have such a dramatic impact on their business. Take Thomas Jordan, the owner of a successful mobile bottling company.
4. Leverage the power of THREE. What are your top three strategic results you are looking to accomplish this year? Now reduce this back to Q1. What are the top three strategic focuses for you to prioritize in Q1 of this year?
There is a reason why I counsel business owners to pick a maximum of 3 strategic focuses each quarter on their quarterly plan of action – any more would split their efforts and lead to overwhelm, and overwhelm leads to inaction or unfocused action. Be realistic as to what you can in fact do as a business each quarter. But be relentless in the discipline of creating your clarified action plan each and every quarter.
I hope these strategic planning ideas help you start the year off in a profitable and powerful way.