Strategic Planning

Small Business Strategic Planning

While operating a small business successfully can be very rewarding, the typical small business does not have the staying power financially to weather a business downturn. Avoiding a business downturn requires that business managers not only attend to the day-to-day functions of the business but also have an eye on the horizon so that “bumps in the road” can be managed.

It is asking a lot to expect the small business owner who already turns the operational crank and does the purchasing, pays the bills, handles the payroll, completes the customer billing, follows up on collections, maintains the equipment and schedules the work to take on the additional task of strategic planning. The typical SUCCESSFUL small business owner has a limited staff and is working 55 to 60 hours per week without addressing strategic planning. It is due to this reality that EAGLSHARP LLC was established. ES offers an affordable outsource for the small business owner to address planning, set performance targets and to track actual performance against those targets.

Because things change, strategic planning needs to be reviewed periodically. The “things” that impact strategic planning include:

Strategic Planning

• competition
• economy
• suppliers
  • pricing issues
  • delivery issues
  • quality issues
• labor
  • cost issues
  • attendance issues
  • quality issues
  • staffing
• technology
  • product or service
  • equipment

It takes a certain amount of “research” to stay informed regarding these “things”.

But wait a minute! Does strategic planning make sense for you? You might ask, “If my trade is based on my skill and training, what business options do I really have? The plumber does plumbing. The electrician does electrical. The dry cleaner performs dry cleaning. The grocer purchases and resells groceries. Etc. So what’s to plan?”

All small business owners have a number of options regarding their business. A careful consideration of ANY small business reveals more complexity than you might imagine. Consider the options facing the corner hotdog vender.

Of course there are the operational decisions: supply source, inventory levels, product line, pricing etc. But there are several strategic decisions that are best made based on sound data and with careful consideration:

Strategic Decisions

1. What is the competition and where are they located? What advantages, if any, do they have? What advantages does my stand have, if any?
2. What is happening to local demographics? i. e. Are ethnic groups moving into the area that have food preferences away from hotdogs?
3. Have buying or eating habits changed overall? i.e. Do people want to pay with credit cards? Should condiments and drinks include some healthy options? Are changes occurring as to when people eat, such as increases in second/third shift workers?
4. Are regulatory changes occurring that could impact my business, such as licensing or health inspections? This could signal a problem or an opportunity depending on the circumstances.

Effective strategic planning for your business can require several hours of work initially, but annual updates involve less time and effort. Initial planning includes market research and a comprehensive analysis of the strengths and weaknesses of your business. The idea is not to set up a defense against pending problems. Rather, strategic planning identifies opportunities to grow and prosper. In fact, what appear at first as problems are often really opportunities.

If your business has been negatively impacted by the recession, strategic planning becomes more critical. You might need to change certain aspects of your business to survive and prosper. The effective strategic plan will lead to an Action Plan that details the steps required to turn your business around and recognizes the limited resources you have available to drive the Action Plan.

Below are some strategic plans that resulted from careful planning. They are shown next to the Action Plan that was crafted from the respective strategic plan.

Real World Examples

Business: Residential General Contractor

New Strategic Plan: Locate RFQ’s in new market segments and acquire resources
to service those segments.

The following growth segments are targeted: Medical facilities and government agencies located in the geographical area served.

Action Plan

1. Complete Central Contractor Registration
   
2. Complete ORCA registration
   
3. Hire Project Manager with medical facility experience who can both bid and manage projects.
   
4. Contact local government agencies and find out how to get on their database list of suppliers.

Business: Salvage Yard

New Strategic Plan: Augment traditional scrap sales to processor with sales on website
E-Bay for those items whose value exceeds scrap value.

Action Plan

1. Change yard procedures to identify items that might be candidates for E-Bay sales.
2. Assign someone the task of using E-Bay to determine what candidate items sell for.
3. Assign someone the role of pricing those items where “E-Bay value” exceeds scrap value and then listing the items on E-bay.
4. Change office procedures to capture sales and profits from E-Bay.

Business: Electrical Supply Distributor

New Strategic Plan: Reduce distribution centers from 5 to 3. Reduce number of stocking items and negotiate with suppliers to provide three day delivery on high-turn, non-stocking items.

Action Plan

1. Complete research to determine which centers can be closed with least impact to operations.
2. Complete a closing time line that assigns all tasks relative to the closings.
3. Complete research to determine which items should be retained as stocking items and which denoted as high-turn, non-stocking items.
   
4. Complete a time line to reduce inventory that assigns tasks and recognizes the resources available to move stock and change records. Include the task of advising customers of new stocking program and new locations etc.

Implementing a new Action Plan can be challenging. It means doing something new and different; meeting with new faces; learning about new processes/products and/or applying resources differently. In short, a new Action Plan typically involves a lot of change. EAGLESHARP can assist in the early steps of the Action Plan, and on a long-term basis, keep your business on track.

However, it is your business. It was very likely your creation and reflects your traits and your entrepreneurial spirit. EAGLESHARP recognizes the importance of small business in the U.S. and is proud to play a supporting role.