Developing a Strategic Business Plan

A business's growth and success depend on its strategic plan. Without a strategic business plan, the whims of customers and employees, the effects of legislation, and even environmental circumstances might direct the course of a company by default. It might drift in several directions at once. If no one's looking ahead and plotting a course into the future, a company could easily run aground. Many companies operate this way, dealing with problems on a daily basis, and by so doing, they're putting themselves at unnecessary risk, making themselves more vulnerable than they have to be.

There are seven steps in developing a strategic plan that will help your company stay focused and afloat. In this article, we'll discuss them as they relate to retail stores, but they do apply just as effectively to manufacturing and service companies.

Mission Statement

The first step in a strategic planning process is to develop a mission statement that defines where your company is headed and how it's going to get there. It reflects the values of the company leader and defines the company's ethical standpoint.

Objectives

Your second step is to establish objectives that are quantifiable, measurable and attainable. Be specific. It's difficult for employees to know if they're successfully accomplishing their objectives if those objectives are vague. For example, rather than telling employees they should smile more, state that the company wants to improve total sales by 10% through customer service.

Situational Analysis

The third step in strategic business planning is to conduct a situational analysis. Retail companies often conduct what's known as a SWOT analysis, which examines two internal issues and two external issues. A company's strengths and weaknesses are internal issues. Strengths are things like quality human resources and optimal location, whereas weaknesses might include poor customer service and over-priced items. A company's external issues consist of opportunities and threats. The general concern here is competition. A threat is something like a store one block away that specializes in the same items. An opportunity might be the chance to locate your new store in a neighborhood with a concentrated population of people who would be interested in your particular product. A situational analysis creates awareness and provides information, both of which are essential to phase four of your strategic business plan.

Choosing Your Market

Step four of your strategic plan usually involves some degree of market segmentation, a method used to specify the type of customers your store will cater to. One approach is to avoid market segmentation altogether by assuming all customers are alike in some way and catering to that which they have in common. This is referred to as aggregation. For example, a department store might decide to pursue a cost leadership strategy based on the assumption that all customers like low prices. Partial market segmentation is another approach. In this case, a company would cater to the market as a whole, but offer optional specialization for specific target markets. A grocery store could sell common brands at common prices but also maintain a special section for those who are willing to pay more for organic produce. The third approach would be extreme segmentation, which is used by specialty stores trying to reach a specific set of consumers with certain demographics by offering them something they wouldn't be able to find through mainstream competition. A clothing store, for example, might sell only styles which appeal to goth and punk teenagers.

Resources

Step five of your strategic business plan involves obtaining the resources needed to compete. This is when you decide whether to create a corporation or a privately owned business. It's when you decide where to locate your store and what kind of building to occupy. It's when you choose which brand of cash register to use. But you're not just acquiring physical resources, you're also looking for human resources. At this point, you must devise a method for hiring, equipping and training personnel. Without a good team, it's hard to run a successful store.

Brand Positioning

Phase six of your strategic business planning process is to develop a strategy for positioning your brand in the consumer's mind in a favorable way. Your main goal here is to make your new store appear better and more desirable to your target market than those of the competition. Brand positioning can be accomplished through a variety of means, including advertising, cost leadership and customer service.

Implementation & Evaluation

The most difficult part of strategic business planning is not the actual planning but rather the implementation of your decisions. A lot of ideas look great on paper but become difficult and even unrealistic when you attempt to exercise or manifest them in the real world. The most important thing is to be careful to implement every element of your strategic business plan with your target market in mind. And don't think the process ends there! Strategic planning is ongoing. Once you implement your strategies, you must evaluate the results. It may turn out that you want to tweak your strategy in some way in order to ensure future success.