Strategy, business plans, action plans…in some businesses, there’s basically “a plan” that encompasses all three.
And for some businesses, that might be ok.
But for the most part, strategic planning is critical for enabling growth that’s sustainable over time. That’s because it involves thinking deeply about where you want to take your business in the long term, then setting goals, defining projects and priorities to achieve those goals, and allocating resources effectively.
Developed and executed well, strategy is a game-changer.
The strategic planning challenges faced by SME owners and leaders are not unique. Many of these hurdles are common, and it's this shared experience that should reassure you that you're not alone in needing help to give strategic planning the attention it deserves.
And it’s not just us saying so. In a recent survey by SAI Global, strategic planning was at the top of the list of things SME owners said they’d like to do better.
In this Insight, we explore common hurdles that SMEs face in addressing strategic planning and provide some practical solutions to overcome them.
Why is strategy important?
The answer is “for so many reasons.” Remember, we’re talking longer-term planning here, and a good strategy sets your business up for sustainable success in a number of ways:
It provides clear direction for the future: when aligned with your business purpose, strategy guides decision-making and helps you prioritise initiatives.
It ensures that resources are allocated efficiently, helping to maximise return on investment. No business has unlimited resources, so smart, targeted use of those you have is essential.
It helps you identify potential risks and to develop strategies to mitigate them.
It creates a more effective means for identifying opportunities, which gives you more confidence when prioritising projects.
It helps align employees with the business vision and objectives, which is known to be a key contributing factor to higher engagement (and therefore motivation and productivity).
Despite these benefits, many SME owners find the idea of getting down and dirty with strategic planning daunting. So, let's explore the common hurdles and how to overcome them.
What are the common strategic planning hurdles for SME owners?
1. Lack of clarity on purpose and vision
Challenge:
SMEs sometimes overlook the need to be clear on business purpose (the reason your business exists beyond making money) and vision (what you want your business to become in the years ahead).
Solution:
Reflect on your origins. What inspired you to start your business? What problems are you great at solving for your clients? The answers to questions like these form the basis of your purpose.
Be clear about the difference you make. How do you make a difference for your clients? How are they better off as a result of being your client? Your purpose should reflect this positive influence.
Engage with your employees. Why do they work with you? Their perspectives can provide valuable insights into what makes your business unique and why they believe in it.
Write your purpose down and talk about it. Writing it down gives it a start in life. Telling everyone who’ll listen makes it grow.
Align your strategy. Once you've taken care of defining (or redefining) your purpose making it part of your DNA, ensure your strategy aligns.
2. Limited resources
Challenge:
SMEs usually operate with fewer financial, human, and technological resources than they’d like, so it’s challenging to engage in comprehensive strategic planning.
Solution:
Prioritise high-impact activity: Focus on areas where strategic planning can create significant benefits. This ensures that limited resources are used effectively. Think also about the ease with which those high-impact activities can be implemented. High impact, easy execution is always a winner!
Leverage Technology: Use affordable strategic planning tools and software to streamline the planning process. There are literally truckloads on the market with varying capabilities and at different price points. And even various free options that can assist in organisng and tracking strategic initiatives.
Outsource Expertise: Consider independent help for your strategic planning. This provides access to expertise without the need for a full-time effort from existing staff.
3. Short-Term Focus
Challenge:
In SMEs, immediate operational issues often take priority over long-term strategic planning, leading to a reactive rather than proactive approach to operations.
Solution:
Try to balance the short-term and long-term: Easy to say but harder to do. Try to develop a balanced approach by making sure that short-term business objectives observably contribute to long-term goals. This helps ensure that daily operations have long-term, strategic relevance.
Regular strategy reviews: Keep your strategy “alive” by scheduling regular planning and review sessions – quarterly or six monthly is sufficient. In those sessions, check in on progress and adjust strategies as needed.
Educate your leaders: The strategy challenge doesn’t just belong to you as the owner. So, ensure that leaders in your business understand the importance of strategic planning and are committed to allocating time and resources to it.
This is something not only for those in actual leadership roles but also for those “informal” leaders – people who are “influencers” (in the very best sense of the word) in their team or across the business. They’re critical when it comes to strategy execution.
4. Resistance to change
Challenge:
Most strategy work results in some level of change in the business, sometimes significant. Those changes may be met with resistance from employees and even from management...you know who they are…
Solution:
Engage employees from the outset: This is a big step in some businesses, but involving employees in the strategic planning process is hugely beneficial to gain input and buy-in. Some of the best ideas you’ll ever have are hidden in plain sight in the minds of your employees. Draw them out. Debate them. You’ll probably be surprised at the level of engagement you’ll get from your team. Workshops, surveys, and brainstorming sessions all work well in this process.
Communicate benefits: Clearly and frequently communicate the benefits of the strategy, highlighting the positive impacts on the business and their roles. This should be a relatively easy step if you've engaged your employees as above.
Change management: Focus on using a range of change management practices to address resistance. Training, where needed, and appropriate support where roles might change will be important. Again, regular updates on the progress and benefits of the strategic initiatives will be key to effective implementation.
5. Uncertain market conditions
Challenge:
Strategic planning is a challenge, and it’s an even bigger challenge when markets and the economy are uncertain. It’d be easy to say it’s therefore too difficult to make longer-term business decisions and that would be exactly the opposite of a good response.
Solution:
Scenario planning: Develop multiple scenarios based on different market conditions (e.g., best-case, worst-case, and most likely scenarios). You won’t cover every possible scenario (something will always come out of left field), but it’s good to go through a bunch of “what if” planning. It means you’re prepared for various possibilities and have a plan of action tailored to them.
Continuous monitoring: You’ve probably gathered by now that strategic planning isn’t a set-and-forget activity. If that’s how you want to approach it, you may as well do nothing. To ensure your strategy or mix of strategies remains relevant and appropriate, set milestones you want to achieve in specific timeframes and monitor your progress toward them.
Sometimes, the right thing to do will be to adjust your strategy in light of changes in conditions. That’s not a bad thing…rather, it ensures that the business can respond quickly to changes in the market environment.
Stay flexible: From the very start, ensure you’re creating flexible strategies that can be adapted as market conditions change. This might involve diversifying your product/service mix, looking into new markets, or broadening your client base.
6. Great strategy…execution? Not so much…
Challenge:
One of the most common factors that derails strategy is a lack of focus on effective execution. Inevitably, that means target outcomes probably won’t be achieved.
Solution:
Implementation plan: Develop a detailed implementation plan that outlines specific actions, single-point accountability for those actions, timelines, and required resources. This plan is the bridge between strategy and effective execution.
Performance tracking: You may have a great implementation plan, but it’s just a plan unless you also implement a system for tracking performance and progress toward achieving your objectives. Without making it too onerous a task, it should include regular progress reporting (even verbal will do), key performance indicators (KPIs) and performance reviews.
Clear communication: Create an ongoing communication plan that keeps all employees up to speed with how strategy is tracking. People need to feel a connection between the bigger picture and what they do on a daily basis. The more they feel that connection, the more engaged they’ll be in contributing to the long-term success of the business.
That’s a lot…
Strategic planning is essential for SMEs' success and growth. It’s challenging, but with the right approach and mindset, most hurdles can be overcome.
You can create and implement effective strategic plans that drive long-term success by prioritising key areas, leveraging technology, investing in training, and building a strategic culture.
Do you spend enough time and effort on strategy?
Is it top of your list of things you'd like to do better?
Interested in how to better execute strategy?
Need guidance on involving employees?
A conversation with a GrowthCatalyst adviser could be just what you need to create a more robust strategic plan to underpin long-term, sustainable and profitable business growth.
Contact us to arrange a face-to-face or virtual conversation.
Alternatively, you can book a time for an initial discussion here.
In other news...
GrowthCatalyst has joined forces with a number of like-minded professionals to form the advisory group Konektis (check us out here). Collectively, the Konektis team provides integrated, multi-disciplinary advice to SMEs to deliver a "one strategy" outcome.
Take the Konektis Pulse Check and receive immediate, actionable ideas to grow your business.
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