Strategic Business Plan & Strategy Planning with Strategic Planners, Strategic Plans, Mission Statements, Vision, SWOTs, Strategies, Strategy Development

Elroy Mariano

    Table of Contents 2. Characteristics of Successful Businesses3. Clarify Existing Business Strategies4. Look into Future SWOTs for Strategies 5. Basic Strategic Planning Approaches6. Creating Strategic Combinations7. Compiling Strategic Statements8. Next Steps towards a Strategic Business Plan 9. Introducing PlanWare10. Copyright & Legal StuffThis work […]



2. Characteristics of Successful

A successful emerging growth business is likely to display many of the
following characteristics:

  1. Sensibly financed (with prudent mix of equity and debt).
  2. Strong cash position (with access to follow-on or contingency funds).
  3. Offers above-average profitability (in terms of return on capital
  4. Aims for rapid growth in revenues (with profits lagging but in prospect).
  5. Targets expanding, or otherwise attractive, market segments.
  6. Develops a strong franchise or brand.
  7. Devotes substantial resources to innovation (R&D, offerings
    or market).
  8. Competes on non-price issues (e.g. quality, service, functionality).
  9. Very close to customers and responsive to their needs.
  10. Seeks specialist/leadership image with superior offerings.
  11. Well managed with high-grade staff & good people-management.

Behind every characteristic there should be an explicit strategy designed
to increase the chances of success and not simply aimed at reducing the
likelihood of failure. For example:

  • A growth business needs a cash war chest and not merely
    “adequate” debt facilities.
  • Likewise, its management team must have the capacity to manage the
    present business as well as its growth.

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3. Clarify Existing Business Strategies

In planning new strategies for a business, it is essential to define
its current (implicit or explicit) strategies for the business as a whole
and its main functional areas – finance, marketing, sales, management,
operations etc. Do this by setting out a series of short strategic statements.
Some examples:

  • The business has been financed entirely from retained profits and
    without recourse to debt or external equity.
  • The implicit sales strategy has been to offer a very broad range of
    products at premium prices and to invest heavily in promotion.
  • The senior management team has been drawn exclusively from family
  • Instead of doing R&D, the business copies competing products and
    sells them at a discount.

To get at the root (fundamental) strategies, critically examine each
statement. For example:

  • How has the company really been funded?
  • How has the company sought to increase sales and market share?
  • How have productivity/costs moved?

Up to eight statements should suffice to cover all the essentials. Ask
whether they contain the seeds for significant growth or merely represent
hedges against possible failure.

Undertake separate analyses for each business unit if a large corporation
is being appraised.

See Developing a Strategic Business Plan (Sections
1.3 & 1.4) and free Online
Strategic Planner
for further guidance.

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4. Look into Future SWOTs for Strategies

An effective SWOT (strengths, weaknesses, threats & opportunities)
analysis is a key component of strategic development. It can prompt actions
and responses:

Internal External
Build on strengths Exploit opportunities
Resolve weaknesses Avoid threats

If the business is seeking significant growth, it is important to fast-forward
and assess SWOTs as they might exist a year or two hence. This will help
ensure that strategies are ambitious and robust and that emerging issues
are anticipated.

Have a look at the discussion on SWOTs and related matters in Developing a Strategic Business Plan (and especially Sections 1.3 to 1.5).

Take a moment to complete or view the results of these surveys:

about Strengths & Weaknesses of Businesses
about Writing a Business Plan

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5. Basic Strategic Planning Approaches

The primary strategic options for a new or established business include
the following:

Grow fast (and ahead of most competitors)
Grow in line with industry
Defend existing status (assumes a moderately
strong starting position)
Catch up (with leaders & then grow
with or ahead of them)
Turn around (from being an underperformer)
Hang in (go with the flow but
don’t expend much effort)
Harvest (milk the opportunity
with a view to withdrawal)

The preferred option is likely to be very influenced by the dynamics
and prospects of the sector in which the business operates. For example,
if the sector is under serious long-term threat then the only realistic
options might be to hang in or harvest.

The two main approaches to strategic development for an established business
can be classified as either organic or quantum as illustrated below:

Organic Quantum
Lower risk Higher risk
Limited resources needed Substantial resources needed
Absorbs less effort May divert/deflect attention
Low immediate returns Higher returns (?)
Incremental learning/progress Excellent insights required
Strategic flexibility Unforgiving of errors

In the case of a start-up venture, organic and quantum approaches translate
into soft or hard start-up strategies. An example of a soft
start would be a software company which evolves from a part-time business
into full-time service provider and then progresses into software products
(classic “back room” start). Another example, would be an engineering
company which starts in a shed and gradually moves into a proper premises
(“garage” start).

Soft start strategies can be very effective as they allow entrepreneurs
to learn the trade (and make mistakes) without incurring major, irrevocable
(and maybe premature) commitments. Hard starts are obligatory where substantial
investments (in R&D, market or assets) or resources (technology, manpower
etc.) are needed from the outset. It may be possible to soften
a hard start by renting (rather than buying) premises; leasing equipment
(instead of purchasing); acquiring a franchise (in lieu of developing
a new brand, systems etc.); entering into a joint venture; or subcontracting
manufacturing, distribution, accountancy services and so on.

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6. Creating Strategic Combinations

This Section presents several different combinations of strategies which
could be used to help develop a range of strategic options. These can
be strung together to form explicit strategic statements of intent. For

Any Inc’s central objective is to become a full-line supplier.
It will reduce its cost base through introducing new processes
as result of licensing-in technology in parallel with broadening
its distribution activities
financed by retained profits and
external debt

The purpose of this section is not to encourage a form of planning
by words
but to simply expose the range of possibilities that might
be considered when formulating explicit strategies. These can be applied
equally to start-ups and established businesses. Of course, the big distinction
is that the start-up is building strategies from scratch without the benefits
of any market position, momentum or pre-existing strategies.

Any selected suite of strategies must be integrated and internally consistent
and in-line with the business’s broader vision, mission and objectives
(see Developing a Strategic Business Plan). There
is little point in a business claiming to be technologically advanced
if its R&D spend is sub-critical, or aspiring to become a leading
brand if it has neither products, nor funds nor distribution to ensure
this could happen.

Basic thrusts of a business (to be continued, deepened or initiated):

Supplier Thrusts
Specialist vs. Full-line
Market/price leader vs. Market/price follower
Products vs. Solutions
Goods vs. Services
Low volumes vs. Mass production
Commodity offerings vs. High added-value
Differentiated offerings vs. Me-too offerings
Niche markets vs. Broad segments

Primary product and market combinations include:

Existing Products New Products
Existing Markets Lowest risk Moderate risk
New Markets Moderate risk Highest risk

Investment possibilities include the following:

Improve market share, enhance brand,
extend distribution
Increase capacity or efficiency or
reduce costs
Extend product ranges and/or served
Stabilize/strengthen financial position
Innovate and create new offerings
Increase skills or productivity
Scale back or close down

Possible future directions of main activities (Xs signify desired action):

Activities Direction
Ignore Initiate Intensify Reduce Withdraw
Distribution X
Retail X
Services X
Manufacturing X

Alternative technology acquisition routes include:

Own R & D
Own D & no R
License in
Joint venture

Funding strategies could embrace the following sources and forms:

Sources Forms
Internal Retentions
Forego dividends
Existing shareholders
Disposal of surplus assets
Sale & lease back
Better management of working capital (see
External Debt (short- or long-term)
Factoring & discounting
Supplier/customer loans or advances
Leasing (operating & capital)
Grants & subsidies
Equity (formal and informal venture capital)

The range of quantum leap possibilities could include:

License in/out
Trade investment
Minority/majority stake
Joint venture
Consortium membership
Sponsor start-up

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7. Compiling Strategic Statements

Strategic statements can be defined as broad indicators of the direction(s)
in which a business should be driven in order to fulfil its vision/mission
while taking realistic account of its resources, constraints and opportunities.

Exl-Plan, our range of Excel-based financial
planners, are ideal for exploring alternative funding options and
related strategies and for undertaking sensitivity analyses.

They also serve as the link between the a business’s objective and actions
plans and should result in a series of integrated sub-strategies and action
programs with goals, budgets, timetables. These can be most effective
when linked to specific functional areas. For example:

Industry Operations
Marketplace Finance/funding
Technology Sales
Offerings Management
Marketing Organization

Limit the number of strategic statements to what can be realistically achieved
within a realistic time frame and, if necessary, prioritize
them. It is possible that just one strategy is needed for each of the
main main functional areas listed above. See the latter parts of this Sample
Strategic Plan
for an example of a set of strategic statements. It
might help to summarize and sequence the key elements in a color-coded
Gantt chart or table like the following:

Quarter 1 2 3 4 5 6 7 8 9
Strategy 1                  
Strategy 2                  
Strategy 3                  
Strategy 4                  
Strategy 5                  
Strategy 6                  

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8. Next Steps towards a Strategic
Business Plan

Once a set of strategies has been developed, it will almost certainly
need detailed planning and reality testing. This could embrace market
research, acquisition scouting and all forms of planning ranging from
investment appraisal through financial projections to business plans or
corporate submissions. Useful software-related resources to assist these
processes include:

Also, the following white papers are central:

For a start-up, additional planning activities could include (in no particular
order) management team formation, R&D, market research and entry planning,
feasibility studies and preliminary fund raising.

Free Tools from PlanWare

  • Business financial planner for high-level,
    integrated 2-year projections using Excel – details and download links for Exl-Plan
  • Excel-based, comprehensive, rolling 6-month cash
    flow planner
    – details and download links for Cashflow
    Plan Free
  • Business plan template & guidelines
    (Word format) – details & download
    for Free-Plan.
  • Online strategic planner for creating a
    3-page strategic plan – details and sample plan.
  • More free tools here.

Be realistic about the rate at which a management team can implement
strategic change and allow for the fact that these may involve factors
totally outside the business’s control. It may be better to implement
a few strategic initiatives successfully and on time rather than a multitude
badly or only partially. The solution here is to prioritize.

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9. Introducing PlanWare

PlanWare develops and sells a range of
financial planning packages – Exl-Plan and
Cashflow Plan – for businesses of all sizes &
types. Trial versions of all products can be downloaded from our
PlanWare site and many other sources on the ‘Net.

PlanWare also features:

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10. Copyright & Legal Stuff

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