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[S1051]Strategic Planning Small Business

by Aaron Hoos, Aar

PROBLEM:
Lots of entrepreneurs start their businesses because of an interest or skill in delivering a service, or because they want to monetize a hobby, or because of a desire to take control of their financial future. Unfortunately, acquiring customers (and then acquiring more customers) can be a challenge and one of the reasons that small businesses struggle with this is because of a lack of differentiation.

When a business looks too similar to its competitors, it is not differentiated enough and won't attract customers. Some entrepreneurs might feel, "if it works for my competitors it will work for me", but this is a business-killing mindset because it destroys customer loyalty. If customers feel that they can get the same service whether they shop at store A, store B, or store C, they will barely notice if store D shows up on the scene to offer similar services and then folds later.

SOLUTION:
A lack of differentiation can be a challenge for businesses. Fortunately, there are tools that businesses can develop strategies to differentiate themselves. One strategic tool was introduced by W. Chan Kim and Renee Mauborgne in the book Blue Ocean Strategy.

Kim and Mauborgne talk about the red ocean that most businesses compete in and then discuss the blue ocean that differentiated (and successful) businesses compete in. Then, they present a tool to help businesses move from the over-crowded red ocean to the opportunity-rich blue ocean.

The tool is called the "Strategy Canvas". Along the bottom of the Strategy Canvas, users list measurable categories practiced by businesses in the industry. These categories might include general categories like price, customer service, quality, as well as industry-specific categories, too (like meals and lounges in the airline industry or vineyard prestige in the wine industry). Then, users chart the industry players, comparing how some deliver varying combinations of the categories. Users also compare their own business with their peers.

Charting the current industry conditions highlights how businesses are competing. If they want to move from a lower-priced provider to a higher-priced one, they might need to increase how they deliver in each category. But doing that still only leaves them competing with others.

The concept of Blue Ocean Strategy suggests that businesses can add new categories – once that are not used by competitors – to move from the highly competitive red ocean into the preferable blue ocean.

EXAMPLES:
In their book Blue Ocean Strategy, Kim and Mauborgne highlight several examples of blue ocean strategy in practice, including Southwest Airlines, Yellow Tail wine, and Cirque du Soleil.

Another example might be one company who saw that SMS and blogs could be combined to create the microblogging phenomenon we know as Twitter.

APPLICATION:
So, how can you put this into practice?

1. Start by listing the categories in your industry that you compete on.

2. Compare how industry competitors are delivering combinations of those categories. Are they delivering higher amounts of (and investing higher amounts in) a certain category but ignoring others?

3. Then, determine additional factors not present in the industry.

4. Create a new combination of existing categories and new categories that competitors do not possess.

Small business owners mistakenly believe that the size of their business negates the need for strategic planning but the opposite is actually true. Its inherent size is actually what makes strategic planning more important because it can be means for a small business to gradually evolve into a huge and thriving multinational corporation.

What Small Business Owners Need to Know about Strategic Planning

Planning is one of the five important functions of management, but it's arguably the most important of all because it's the first function that any manager or business owners should focus on. Planning sets the goals, mission-vision, and direction for the company. Without it, the other functions may be impossible to achieve.

A business can't, however, benefit from just any kind of planning. It must be strategic in essence to be effective. Strategic planning is a methodical process of deciding where you want your company to be in a given time frame and what you propose to do to get there.

There are different ways to let your company benefit from strategic planning so don't worry about following the so-called rules. Whatever works for your company is good enough.

Elements of Strategic Planning

Internal and External Assessment of Strategic Planning ? A coach of a basketball team won't be able to map out an effective play if it doesn't know its players well, which team it will be playing against, and other related factors. The same can be said for any business manager. Before you can start working on the details of your strategic plan, you must first focus on compiling data about the external and internal environment of your company.

Outside your business, politico-legal, economic, and socio-cultural factors can affect how your business will fare in the next few years. Inside, factors such as management style and the type of workforce you have can also help or hinder your company from attaining your goal.

Setting Your Company's Goals ? Small or big, the important thing is for your business to have goals. If you? can be satisfied with small and short-term goals then that's good; if you secretly desire for bigger goals then that's even better. To know if the goals you plan to work on are indeed workable, determine if they adhere to the SMART rule ? specific, measurable, attainable, realistic, and time-bound.

Rule of Majority ? Of course, as owner or manager of a business, you reserve your right to approve or naysay any suggestion but as much as possible, allow the rule of majority to stick. Plans can only come to fruition if everyone in the company works together and you can assure yourself of their cooperation by showing them that you care about what they think.

Devising an Action Plan ? Finally, it's time to concentrate on the nitty-gritty of your strategic plan. List down possible and specific courses of action then choose what all of you deem as most suitable. Make sure that you set a definite schedule or timetable for everything but give allowances for unexpected delays and concerns. Set a budget as well.

The Ever-So-Popular Plan B ? Last but not the least, devise a Plan B in the event that your first plan doesn't work and list down indications to know when's the right time to put Plan B to action.

Good luck on strategic planning for your business!

Article Source : Small Ways To Save

About Author

Both Aaron Hoos & Mario Churchill - are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Aaron Hoos has sinced written about articles on various topics from Marketing and Communications, Home Management and Internet Marketing. who advises small business owners, analyzes small business strategy, and accelerates small business performance. Aaron holds an M. Aaron Hoos's top article generates over 14800 views. to your Favourites.

Mario Churchill - has sinced written about articles on various topics from . Mario Churchill makes it quicker and easier for you to create profitable , develop your marketing strategy or start. Mario Churchill -'s top article . to your Favourites.