A strategic business plan is very important to ensure that the business succeeds. So why do only 15% of small businesses actually have a plan? Writing the company’s strategic business plan may seem like a daunting task, but after reading this article, one will understand why the company must have one.
Strategic planning owes its development to the military. It is the science or art of long-term planning and directing large-scale operations. Tactics, on the other hand, relate to the specific use or deployment of resources to achieve a short-term objective. Too often, business plans only contain tactics. An effective business plan must be based on a strategic plan.
Strategic business plans are essential to the proper management of the agency and are now often required to achieve “preferred” status with carriers. In today’s changing climate, to be a successful and successful business, an agency must have a strategic business plan.
An agency’s strategic direction is the big picture, or vision, needed to guide the business along the way. The best way to start the process is to create a mission statement. The agency’s mission statement is a clear and concise summary that describes the purpose of the business. This exercise is a crucial first step in setting the direction of the company’s future and contributing to the planning process.
The next step is to determine the current status of the agency. Owners and key employees should look within the business – a self-assessment of the agency and its resources, including an inventory of strengths and weaknesses. This allows planning team members to create meaningful and achievable goals using appropriate tactics.
Well-written strategic business plans capitalize on the strengths of the organization and strive to minimize or eliminate weaknesses. The main weaknesses identified can be transformed into opportunities for improvement. These opportunities then become the agency’s objectives for the coming year.
What is important
So why is it important to go through all the steps to have a strategic business plan? Well, there are many reasons, but we’ll only cover the ones that seem to be the most important for an agency.
The first reason to have a strategic business plan is that it helps managers set specific goals and objectives for the business. When the company knows what the plan is and what it wants to accomplish over the next year, it is easier for management to ensure that these tasks are completed. Good management should set goals and objectives and they should have a detailed plan to follow them. Bonuses can be attached to the achievement of goals and objectives by department.
Another reason an agency should have a strategic business plan is to see how much the agency is worth. This is also called company valuation.
Once all the steps of a strategic business plan have been completed, the business valuation can be completed. This means that there will be a detailed plan of where the business is now and how much it is worth. Goals can then be set for the business as to the desired level of growth over the coming year and the potential value of the business once the goals are achieved.
In order for the agency owner to merge or sell a business, the agency must have a strategic business plan and appraisal. If a business volume is trying to be sold to another agency, the better the business plan, the more the buyer will want to buy the business volume. If the buyer can clearly see how much the agency is worth, buyers are more likely to buy from that agency.
Also enlist the help of a professional consultant to help you with the evaluation process and in creating a profile for buyers.
One of the last and most important reasons for having a strategic business plan is to grow the existing business. From the strategic business plan, an owner would know where the business could grow in the next year. This process allows owners to focus on sales, acquiring new customers, and ensuring that existing customers are using the business to its full potential. By doing these things, owners make the most money in the most efficient and easy way.
The competition is fierce. Expenses must be well controlled. Market cycles continue to take their toll and agency value is at stake.
This annual planning and self-assessment process is the key to success. If the owners don’t know where they are going, how can we plan for tomorrow and know how to get there?
Agencies without a plan are totally reactive to their environment and have little control over their future. Businesses that incorporate an annual planning process are more efficient, profitable, and highly valued businesses.
Make a choice. Take the time to plan ahead and succeed. Or be at the mercy of the winds of change.
Next month, Minding Your Business will outline specific steps to complete a one-page business plan.
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