Three Reasons Why Business Planning Must Be Strategic

By Hauwa Abubakar

There’s something that we experience with political leaders. They often talk about great plans but their talk is not often followed with action.

It is very common to hear a Minister state loud and clear on television that all pregnant women would access free healthcare until after two years of their delivery. It’s even easier to hear a governor state that unemployed youth in his state would get seed funds to start a business of their choice during his tenure. Fast forward to three years after, and a little investigation would show that not one of the promises these leaders made were kept.

Some people admit that it is normal for political leaders in Africa to talk and not act, simply because they take their people for granted. However, it could be that what they lack is strategy.

Sadly, this does not apply to politicians alone but it also affects businesses. Many business owners or even aspiring entrepreneurs do not have a hard time thinking through their goals and targets. Hence, it becomes easy to have a goal to sell your products across Africa.

However, the big question often is, what is your strategy to achieve this? There is a brilliant business idea in the pipeline but no plans to drive it. No short-term plans or long-term road-map. No articulation of possible challenges and mitigating measures. These are the issues strategic business plans bring to the fore and help entrepreneurs to minimize risks whilst maximizing profit.

What is Strategy?

According to Johnson and Scholes, (2006) “Strategy is the direction and scope of an organisation over the long-term: which achieves an advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations”.

To break it down, strategy is the proposed mechanism or processes a business puts in place to achieve set goals within a set period of time, and within available resources to the benefit of the business while serving the purpose it was established for.

When planning a business, an entrepreneur often has many ideas struggling for his or her attention. Sometimes entrepreneurs becomes swamped with the many things to be done that they begin to feel like the business idea has become an unattainable goal. Often times, some business owners drift into self-doubt – believing that they definitely cannot do it alone. The clogs in the way of your business drive, the highs and lows and the bottom line truth of whether one can achieve a business plan or not, lies in the strategic planning process.

Therefore, it is never enough to just have a plan, it is important to have a strategic one.

We will explore reasons for having a strategic plan and how to develop one. Here are our top three reasons why your business plan should be strategic:

1.  To ensure adequate implementation

A business is born when an idea is set in motion. With a strategic business plan, you can begin to identify what is necessary and what is not, what should take priority and the idea element that can wait. A business owner should design a clear road-map that leads to a final destination  – whether it is to produce a new product or launch a service. A strategic business plan gives a clear picture of where a business is headed and how to get there. With a strategic business plan, an entrepreneur can identify possible challenges and plan a way to address them before they spring up.

Strategic planning is simply doing some research as well as having a guide through the process of developing and launching a business. As John Kennedy, a former American President puts it, “effort and courage are not enough without purpose and direction.” Think of your strategic business plan as the direction your business needs and the efforts will pay off.

2. To avoid wasting time and resources

Without a doubt, a strategically planned business would definitely help to avoid the waste of time and resources. This is because the entrepreneur would be able to see what is relevant at every step of the business process; in order to set priorities and a timeline for implementation. A strategic business plan would help identify those grey areas that may seem promising, but not profitable at certain times. As Johnson and Scholes said, ‘strategic plan achieves an advantage for the organisation through its configuration of resources.’ Through it, a business can use what resources are available to get what it needs to move the business forward. For instance, with a strategic plan, borrowing can be avoided and resources maximized to avoid running into debt. When a business plans strategically, it maximises profit. This is simply because a strategic plan provides the opportunity to do a risk assessment and plan mitigating factors, thus reducing waste.

3. To measure growth

A business can always refer to a strategic plan to measure implementation of projects, to see how close it is to achieving set goals. If the plan says to manufacture a new product to be introduced to three markets within three months, the business owner can conduct an assessment after three months to ascertain if this was achieved or not; as well as identify the challenges and risks associated with this set back or milestone. However, if a plan is not strategic, progress cannot be measured and this can lead to waste of time and resources. Always note that the best way to avoid waste is to measure performance from time to time. That way, a business can keep track of success and where it needs improvement.

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