Editor’s Note: This is the third of Chuck Gremillion’s columns on family business. Read the introduction to his series by clicking here.
Strategic Planning – Your Roadmap to Success
By Chuck Gremillion
When my brothers, brother-in-law and I, along with three other key managers who were not family members, created the first strategic plan at A&E, it was a true breakthrough moment for our company because it provided a roadmap that previously did not exist.
In my most recent column (click here to read that column), I described the importance of clarity and alignment in any business, but especially family businesses. When members of a family and an organization know the desired destination (the organization’s vision of success) and the guidelines of behavior (its core values) by which to achieve it, the path to reaching that destination is much more direct. But there is still one key element that is missing, the roadmap to the goal, the organization’s strategic plan, which is the subject of my column today.
Making the Leap
I often hear of companies that can’t make the leap from successful small business to a significantly larger organization. More often than not, the owner of the company, who is typically the entrepreneur founder, believes that he doesn’t need a formal plan to continue the success. Sometimes he believes that if the company has made it that far without a strategic plan, why mess with success? Or, if the founder does recognize the importance of a strategic plan, sometimes he doesn’t know how to create one, or is reluctant to admit that and seek outside advice.
However, the more a company grows the more complex it becomes to manage and continue that growth. Ultimately, the company plateaus, growth becomes negligible, and members of the organization become frustrated. A good strategic plan, properly developed and executed, eliminates this problem because it sets measurable, attainable goals, with strategies and tactics to achieve those goals, assigned to individuals in the company who are accountable for their execution. In short, it’s a roadmap to greater success.
Making a SMART Plan
So, what does a strategic plan look like? It is a document that consists of long-term strategic goals, many times with sub-goals, that are supported by strategies and tactics to achieve those goals. A well-written strategic plan not only provides direction, it provides focus, metrics to measure progress toward those goals, and accountability.
All goals in the plan should be S.M.A.R.T. goals: S – specific M – measurable
A – achievable R – relevant T – time-based.
An example of a long-term strategic goal written as a S.M.A.R.T. goal might read as follows:
By December 31, 2016, our annual sales revenue will exceed $5,000,000 with a pre-tax profit of at least 10% of sales, or $500,000, whichever is greater.
Related sub-goals and associated strategies and tactics that support achieving this strategic goal might read accordingly:
I. Develop new sales & marketing strategy and present to management team for approval by March 15, 2014. (Joe Salesmanager)
a. Achieve the following sales revenue milestones
i. Sales revenue of $4,000,000 in calendar year 2014
1. Implement social media marketing strategies by May 1, 2014
2. Consider whether or not additional salespeople will need to be added and make recommendation by April 1, 2014.
ii. Sales revenue of $4,500,000 in calendar year 2015
II. Consider ways to increase profit in each department and report findings to management team by April 15, 2014 (Sally Operationsmanager)
i. Study areas where price increases are justified and implement them by May 1, 2014.
1. Develop strategy of how to communicate these price increases to our customers and do so by April 25, 2014.
ii. Identify five areas where cost reductions and/or efficiencies can be gained and implement by May 1, 2014
1. Form a committee that includes one key person from each department to identify these opportunities by March 1, 2014
2. Present recommendations to management team by March 15, 2014
3. Communicate these changes to all employees by April 1, 2014
The illustration provided above covers just one area of focus and is overly simplified. Other areas of focus that a plan might include are human resources, administration, customer service, new markets, and technology strategies, just to name some.
I would recommend that strategic planning be done off site at a location that limits distractions. That way participants can focus their energy on this critical task. Strategic planning meetings are true team-building events, if done properly. They also help to build consensus. I would include key managers and executives, but limit the group to no more than six to eight people, plus an experienced facilitator.
Follow-up Ensures Accountability
Once the plan has been finalized, I recommend that the management team meet once per month to review progress. This ensures accountability. Additionally, it allows management to revise goal dates if need be. It is not unusual for the activities in the strategic plan to be overly ambitious and require revision. The key is that the management team regularly and consistently reviews and measures the progress of the plan.
One of my fondest memories of working at A&E with my brothers and brother-in-law was our first strategic planning retreat. I knew when we concluded on that Sunday evening that we had made a huge breakthrough, and I was right! Our company more than quadrupled in size over the next 15 years, all with organic growth. Your company can too if trust exists, the destination is clear, team members are aligned, and the organization has a roadmap to get there.
Chuck Gremillion now runs Gremillion Consulting Services LLC, which focuses on the needs of small businesses. He is a past president of IRgA, and chairman of the IRgA President’s Council. He welcomes input and questions from other family business owners. He can be reached at email@example.com.