What is Strategic Planning?

Is it worthwhile to predict the future?
What is Strategic Planning?

What Is Strategic Planning? A waste of time or not?

What is strategic planning and is it a waste of time to plan for a future you may not have a clue about? The best analogy I can come up with to describe what is strategic planning is the following scenario. Imagine you are in the middle of France and someone gives you an old fashioned map of France. You say, “thank you, but what do you want me to do with this”?

Your map provider says to your confusion and astonishment, “just go, go and find your path”! That’s very nice you say, but I have no idea where to go, no destination and no plan that may solve my problem of not knowing where to go. Like any entrepreneur, startup enthusiast, you are a trail blazer, someone who creates a path for themselves. But even trail blazers have a plan. What to do when it starts raining, what to do when they hit a wall, literally, one they can’t get around. What to do when it gets dark or run out of food!

Now fast forward back to reality, back to now! You may have a business idea, you may have a revenue target, a target group you want to market your product or service to, and maybe even a profit or cash-flow target. At least, contrary to the traveler without any destination, you have a destination you need to get to, the revenue target or other target. Now how are you going to get there? Without a plan that contains a strategy, a methodology as to how to move forward efficiently and effectively, it may take you a long time and most likely too much money to get to your target. You may even run out of money before you reach your target, i.e. go bankrupt. Many good ideas have gone under because they ran out of money!

That’s why strategic planning, knowing your (initial) targets, creating a strategy and a team to get there, is the opposite of a waste of time, it is key to success, provided you don’t spend more time planning than actually implementing! And don’t forget, you can always change the plan, change the strategy and change the team if you are not moving in the right direction or fall short of your targets.

Step 1 – Mission – Vision

What is strategic planning starts with a Vision and Mission. Like with a SWOT analysis, which outlines your current strengths, weaknesses, and opportunities and threats in a detailed list, your Vision statement describes your Vision of the future of your company from what I call a “helicopter viewpoint”.

Although not crucial to get a business going, having a clear vision of where you want to go is like having a map of a country with or without an intended destination. You may at some point in time find your goal, but if you roughly know where you want to go and when you want be be where and when it could save you a lot of time and money.

A Mission is less long-term. A Mission is what and where you want to be right now, keeping in mind the above stated Vision for the future. A mission could also be defined in wider terms. Answering the question, what is strategic planning, culminates in filling out every step you need to take to make your vision come true.

What is Strategic Planning?

What I mean by that is although you may have a Vision for the future like “being the best Car Dealership in the country making millions of dollars of profit”, your mission could include, “while being a good corporate citizen to the neighborhoods where we serve, participating in charitable events etc.”.

Both a Vision and a Mission’s main function is to create a goal, even if that initial goal may change. It will make it easier to create more detailed objectives and strategies. Next up in “What is strategic planning” is the SWOT analysis.


What is Strategic Planning?

Step 2 – SWOT Analysis

As mentioned above, what is strategic planning without knowing “where you are, where you are as a business”, and “where you think you are going”. The SWOT analysis, the listing of your strengths, weaknesses, opportunities and threats gives you a great sense of where you are, where you stand within the context of the business universe and where the future, opportunities and threats may lie.

If you as a person, and as a business person know where your strengths are, more importantly where your weaknesses lie, you’re half way down the path of creating a great team, a well oiled organization. Because now you know what other skills and experience you need on your team. Any business team should function as well as the next NFL or NHL team to score goals. Your goals may not be touch-downs but to reach your business goals you as the boss need to have as good a team as Brady has around him in New England, or Wayne Gretzky had in his heydays. Nobody can go it alone!

Like with any obstacles on the road, it will be of great benefit if you could anticipate your threats. It will prepare you during the tough times. Any good business person reacts swiftly to opportunities should they arise. But if you already know where certain opportunities lie, write a strategy and timeline around them so you can execute and implement as soon as needed. The more opportunities you can identify, now, even if they are or will be future ones, the better you can react to any competitive threats.

Case in point, when Gillette launches a new razor blade, say one with 3 blades, the one with 4 blades or a swivel head, a future opportunity to increase revenue, was already sitting in the wings to come out and be launched. When the competition like Chic and Bic came out with 3 blades, Gillette promptly came out with the 4 bladed razor blade nipping the competition’s efforts in the bud. Next up in “What is strategic planning” is Business Strategy.

Step 3 – Business Strategy

Now that you have defined your long-term Vision, your current mission, as well as outlined your strengths, weaknesses, opportunities and threats you now roughly where you need to go, where possible opportunities lie and where you may have to duck or jump when facing threats. That is great, it is like getting a treasure hunt map and knowing exactly where the gold is, the bonuses are and where the traps are. Well almost!

Now that you have all this information you need to devise a strategy. How many people do you need to reach that goal. What assets, like computers, cars, trucks and other equipment do you need to reach your goal. Who is going to do what (see also company structure), and when do people need to have done phase 1, phase 2 etc.

What is Strategic Planning?

Are you going to market your product or service online or through a “brick and mortar” presence. In other words what is and who are your distribution channels? Once you have chosen your distribution channels, how will you market your product, at what price, with what promotional support?

Even if you don’t know exactly what you will do, or how it will play out, any basic plan is a good start, you can always expand and refine it. But if you don’t have a strategy and are simply doing things for the sake of doing something, that is not really a solid business strategy. It is one thing trying something out on purpose with an anticipated outcome, it is another trying something for the sake of it without any plan or anticipated outcome, that’s just a waste of time and money. Next up in “What is strategic planning” is the financial plan and budget.

What is Strategic Planning?

Step 4 – Budget + Financial Plan

When I start talking about a financial plan and budget, some of my clients cringe and take immediate cover. They are business people, creative and/or marketing people, not financial people. They don’t like to think about numbers, let alone work with them and make sense of them. I get it, it isn’t always like Carolyn once said to me “think about the numbers as your friends, it makes financial stuff so much more bearable”. Well that’s one way of looking at it right?

I won’t ask the same of you, but I can guarantee you that if you can come up with a financial plan, whether you create one yourself or get some help from a financial professional, it will save you a lot over time, maybe even at the beginning. Per Warren Buffett’s thoughts, in the end, it’s all about the cash-flow!

Good business ideas have gone under, gone bankrupt, because they ran out of money! Do some initial unit calculations, multiply by price per unit and you have your revenue stream. Calculate the cost of these items sold and deduct it form your revenue and you have a rough gross profit. Deduct marketing expenses and administration expenses and you have a rough profit and cash-flow idea.

Deduct any payments for interest on borrowed money and assets bought like computers etc. and you have a rough net cash-flow prognosis. Of course, to be more accurate¬† you need much more detail, but the above gives you a quick and dirty idea of a budget. You have a financial target to work towards, and you adjust the budget based on the “actuals” coming in as you go along. Next up in “What is strategic planning” is the company structure.

Step 5 – Company Structure

When I talk about company structure I am talking both about the organization chart, i.e. your team, your people as well as the legal entity format you have adopted or will adopt. Let me start with the org. chart.

Although there is a tendency among young managers to keep an org chart as flat as possible, with the intention to make everyone feel as important as everyone else, or for any other reason, I don’t believe in too flat organizations. An organization cannot have more captains than one to start. Imagine your next flight has two captains on board and both want to go somewhere different. Not particularly safe for the passengers, right.

Additionally, you can’t have the whole, or a large part of the business organization (maybe in a very small startup) report to the boss! You need middle managers who will report to the boss, but they themselves will manage others.

What is Strategic Planning?

Think about an American Footbal team, where you have a head-coach, a defensive coach, an offensive coach and a special team’s coach, and this just scratches the surface. On the field the quarterback calls the shots when attacking and the defensive coordinator when defending. A business, whether large or small needs to be as organized as any football team to be successful.

The “Legal Entity Structure” has less to do with internal reporting and accountability than with legal responsibility, legal rights and tax status. There are significant differences between an LLC, a Limited Liability Company and an S-Corp or C-Corp corporation. Usually you don’t create your legal entity when you just have an idea. More often than not you register your company and create a legal entity once you have some sort of “proof of concept” that your idea, whether product or service is actually working. Read more about legal entities here

Next up in “What is strategic planning” is communication and accountability.

What is Strategic Planning?

Step 6 – Communication and Accountability

Finally, communication and accountability of a business, of individual objectives, goals and targets. in other words, who is responsible if sales targets aren’t met, who is going to change the input to make sure the sales goals are achieved? Who will be fired and replaced if sales targets are not met a few times in a row? That’s the first part, the accountability or responsibility part.

To make sure you can identify who is responsible you will need to create a crystal clear organization chart, showing who reports to whom, and who is responsible for what critical success factor otherwise know as Key Performance Indicator, i.e. KPI.

Next you need to set up a reporting structure, and a timeline when reports like a “sales report” gets published to the executive responsible for sales revenue. In the old days whole trees were needed to print sales reports for hundreds of products if need be.

Nowadays you can log into your computer and bring up a report that start at the top, i.e. sales for the whole company and by drilling down you can see sales (or what ever other KPI) at division level, country level, product category level etc.

As the boss, whether of the whole company or of a department, you communicate targets down the line through budgets and mid-year forecasts. You find out what the “actuals”, the actual results, are via the above mentioned periodical reports. You audit the system, to make sure your budget gets properly communicated and the actual results aren’t fabricated, at least once per year. Large corporations get their company audited by outside third party contractors.

This cycle or communication and accountability is called “cybernetics. To read more about cybernetics check out the following book by Raul Espejo.


White papers, blogs and “how to” articles are great to refer to, but they’re just one dimensional. They won’t critique your strategic plan, operational issues, web design or digital marketing plans. You may need a sounding board, one that gives you honest, constructive and actionable feedback, not a Top 10 List of what to do.

Consider contacting me and signing up for a free consultation.

Hans van Putten - Digital Artist - Marketer and Business Advisor