Strategic Planning for Entrepreneurs and Business Owners

Copyright Aaron Lynn.

There are two different types of entrepreneurs and business owners: those who know how to implement strategic planning, and those who don’t.

Those who do, manage to handle the growth and hurdles and go on to hit objective after objective as their companies scale up.

Those who don’t, flounder and either close up shop or end up scaling their companies back to a more manageable size.

When you start a company, it’s straightforward. There is zero friction between your vision and the company’s actions, because it’s just you.

As the company starts to grow though, it becomes more complex.

At first, it might just be some simple miscommunication, which is manageable.

Then you start seeing people working on things they shouldn’t be. Perhaps some processes aren’t followed.

Then you start having entire teams headed in different directions from where you think the company should be going.

The result?

Declining margins, loss of market share and lower profits.

The sad thing about this is not the decline of the company, though yes, that does suck. It is that you — as the founder and CEO — have let your people down and it could all have been avoided.

All you needed to do was to give them a clear path forward — a strategic plan.

And that’s exactly what we’re going to cover today.

What Exactly Is Strategic Planning Anyway?

Strategic Planning is a fancy way for consultants to say “goal setting for companies, teams and organisations”.¹

It is useful to think of strategic planning like this:

Strategic planning does not replace your existing workflow or your work methodologies, it simply sits above it.

You can break down strategic planning into two parts:²

1. Strategic Thinking.
2. Execution Planning.

Strategic Thinking is about setting priorities.

Execution Planning is about making them happen.

Whereas goal setting is an individual activity and pretty straightforward,³ strategic planning is a bit more complex.

And here’s why.

Connection Complexity

The more people there are involved with something, the more complex it becomes, as there are more connections to consider.

With two people there is one connection.

With three people, three connections.

With four people, six connections.

And so on.

It can be useful to think of strategic planning as business goal setting with:

• A framework,
• Some meetings,
• Some discussions,
• And some consensus-building bundled in.

Why Is Strategic Planning Important?

We have briefly looked at what happens if you don’t strategically plan: things start to get complicated pretty fast, and then start to spiral out of control.

Business owners usually respond to this complication in one of two ways:

1. Scale back the business to a manageable size, usually either 4 people or 12 people, depending on their skillset.
2. Call it quits and shut down the business.

If you are reading this, neither of those are likely to appeal to you.

It is also likely that you already understand the importance of goal setting. You define goals, write them down, and then you go out and take action and achieve them.

For business, it should be obvious that this is even more important. Without clearly defined objectives for the business, there is no direction, and that usually means no customers, no sales, and no profit.

I would argue that from an ethical standpoint it is your job as an entrepreneur or business owner to make as much money as possible, both for yourself and for your team.

Despite what some business owners think, businesses do not exist just for you — they also exist to serve your customers and your employees. And if the business doesn’t serve you, your team, or your customers… why bother in the first place?

But let’s get even more practical.

Strategic planning is a systematic and structured way to create top-to-bottom alignment across your organisation.

To get everyone “on the same page”.

You may personally know where you and the company are headed, but your senior team, your managers and your frontline staff may not.

By having a strategic plan in place, it makes it easier for everyone to decide on which opportunities to pursue (or not).

It makes it easier for your people to show up to work, know exactly what they’re doing and why they’re doing it.⁴ It makes the road ahead crystal clear for them. And if your people win, you also win.

It makes it easier for your partners, vendors, customers and clients to know who you are and what you stand for. This makes it easier to niche, to charge higher prices, and to do business on your terms.

It also makes it easier for you to become a better entrepreneur. You can think of a strategic plan as a distribution system — one that conveys your vision, message and objectives throughout the company that you’ve built.

When Should You Do Strategic Planning?

If the company has just started up, then you don’t need a strategic plan.

What you need to do, is to work out what your product is, then sell it like crazy.

Once you have a product-market fit and regular profits and start thinking “what’s next?”, then it’s time to start the strategic planning process.

The ideal time to work on a strategic plan is in quarter four.⁵ Start with one three-day planning session that defines the upcoming year, and then hold shorter quarterly sessions to check in on high-level progress.

It is also worth introducing a series of weekly meetings to keep the entire company in alignment.

Teams and team members should be referring to their individual accountabilities and KPIs daily.

What Does A Strategic Plan Look Like When It’s Done?

Before starting on something, it is useful to visualise what it looks like when it’s done, so you know where things are headed.

Here’s what your strategic plan should look like:⁶

Each level of the strategic plan flows downwards into the next.

We will go over this in detail below.

How To Implement Strategic Planning At Your Company

Note: This process can also be used by a team leader who has been given some autonomy within a larger organisation, but modifications would need to be made to ensure that the plan aligns with the parent organisation’s objectives.

We mentioned above that you can think of strategic planning as systematic and aligned goal setting across your entire company.

Strategic Planning is a process that involves:

1. Strategic Thinking, where you perform long-term goal setting alongside your company’s big-picture thinkers and set the overall agenda for the company.
2. Execution Planning, where your managers or team leaders take those long-term goals and derive short-term individual and team goals and then organise their teams to achieve them.

At the end of this process you are left with a business artefact called a Strategic Plan.

As you will see, there will be many copies of this plan with most of the plan remaining the same, and only individual accountabilities changed.

Feel free to refer to the diagram above as needed. Let’s get to it.

1. Start With Yourself First

Before you start the formal strategic planning process, you need to sit down with yourself.

I understand that for some CEOs, entrepreneurs and business owners, it can be weird and uncomfortable to start here, especially if you are not the original founder of the company.

But in order to lead what is essentially now your company into the future, you have to first be able to lead yourself.

Your ability to do that will flow downwards into your ability to define the company’s core and objectives at different timeframes.

1.1. The Bare Minimum

Hopefully you will already have some goals in place for yourself. Perhaps you also have some idea of your own mission, purpose, values and personal code.

All these things could be lengthy guides in and of themselves, but the bare minimum you need to answer is:

1. What does life mean to you?⁷
2. What are your personal values?
3. What are your personal standards, especially regarding business, work, career and wealth?
4. Why did you start or join this business?
5. What are your own goals over the next quarter, one year, three years, five years and beyond?

The most important thing here is that it needs to be clear in your mind that the company is there to support you personally. You started or joined this company because it benefitted you in some way, and the company needs to continue doing that into the future, otherwise there will always be friction.⁸

If this is clear in your mind, then you are good to proceed.

Note: If you have a senior team, it is worth having them answer the same questions before you all sit down and undergo the planning process.

Let’s move on to the next part of the process, strategic thinking — setting your company’s priorities.

2. Strategic Thinking: Get Your Business Core In Place First

Start strategic thinking by getting your company’s core in place.

And by core I mean:

• Mission and purpose.
• Company values.
• Long-term objective, or BHAG.⁹

Here’s how you can develop each of these. I suggest involving your senior team in this process, and keep it separate from the actual planning session outlined in the next section.

2.1. Mission and Purpose

For your mission and purpose, ask:

Why did you (or the founders) start this company?

You need to respect the company’s mission because it is what makes you (the company) who you are.

There is no moral judgement here — if a company’s mission is to serve its market better and more efficiently than its competitors, then that is its mission.

That being said, not all missions are great. Sometimes people start companies for all the wrong reasons, and it comes back to bite them later. It is not likely you are in this scenario, as companies that survive through to product-market fit and profitability usually have at least their mission right.¹⁰

2.2. Core Values

For your core values, you want to do the “Mission to Mars” exercise created by Jim Collins. You pick the best five-to-six people from your company, and pretend they are being sent as humanity’s representatives to Mars. And then ask:

• What values do these people represent?
• What values do these people aspire to?

Core Values are something that take time to get just right. Rather than being a nice PR piece for the clients, core values are how the company collectively aspires to behave when no-one is looking.

If this is the first time you have written down your core values, it is likely that they will undergo a few revisions before they are solid, and that’s OK. Just write down what you think is correct now, and come back to them in future strategic planning sessions.

A common question with core values is: should the company’s CEO be included in the group being sent to Mars?

Well, hopefully yes, provided the CEO is one of the best in the company.

I believe that the job of a CEO is essentially to be a living embodiment of what the company stands for, which means they should be one of the best in the company.¹¹

2.3. Long-Term Objective (BHAG)

Your long-term objective (BHAG) is essentially your twenty-year goal.

If your company doesn’t already have one, then your first cut will very much be just a guess, but it can also be refined over time.

To formulate your long-term objective, ask yourself and your senior team:

• What do we stand for? (hint: mission, purpose, values)
• Where are we headed in twenty years’ time?
• Where is our industry headed in twenty years’ time?

Once you have a first cut of your long-term objective in place, it is time to call for a formal strategic planning session.

3. Strategic Thinking: Do A Strategic Planning Session

The second part of strategic thinking is what I like to call a “strategic planning session”.

The purpose of this session is to define:

If you have never held one of these before, there are a couple of logistical issues worth considering:

• It is useful to have yourself and the senior team in the same physical location, preferably offsite. Conference centres at hotels or meeting rooms at co-working spaces are great for this.
• Expect the session to take at least three days, maybe four if you’ve never held one before.
• Plan the session two to three months ahead of time so your senior team has time to read and prepare. Assign reading if you have to.
• It’s worth having everyone talk to customers, partners and team members before attending. This lets them gather feedback and bring important issues to the table.¹²
• Ask everyone to set aside an hour a week just to think in the lead up to the session.

With the above in place, let’s go over what happens during one of these sessions. This is not a strict agenda, but more of a guide for what should be covered over the course of the session.

3.1. Company Core

By now you should have some indication of the company’s mission/purpose, core values and long-term objective.

You should begin the strategic planning session with a review and discussion of these to put everyone in the right frame of mind.

3.2. Three-to-Five Year Priorities¹³

This is where you start to see the downward-flowing nature of your strategic plan.

Given your mission/purpose, core values and long-term twenty-year objective:

What five things does the company need to achieve in the next three-to-five years to meet all of these?

Some of these will be obvious. Others will be more of the “we need to build X capability in order to do Y” nature.

As with personal goal setting, make sure that these objectives are properly defined with specific measures and a clear process for each.

3.3. One Year Priorities

Once you have your three-to-five year priorities defined, you can move downwards into the next timeframe, which is the year ahead.

Again, repeat the process:

What five things does the company need to achieve in the next year?¹⁴

Be sure to include specific measures and a clearly defined process for each objective.

3.4. Quarterly Priorities

Hopefully you can see how this works by now.

Given your one year priorities, what five things does the company need to achieve in the next quarter?

3.5. Metrics

I want to make a quick note on metrics.

Metrics are important, yes.

But outside of the standard financial metrics, they are unique to each company and the best person to tell you what metrics are important for your company, is well, you, and your senior team.

Have your finance team put together the standard ones first — revenue, profit, cash. Then add in the ones that are important for your business and industry.

Each of the above timeframes should have its own set of metrics. They may just be estimates, but at least you will have a starting point and some indication for future planning sessions.

It can also be quite revealing to see how each member of the senior team thinks the company performs, compared to actual hard numbers.

3.6. Culture Stuff

“Culture Stuff” is a little bit different from the rest of your strategic plan.

Company culture isn’t something you can consciously create, only influence. It is the sum of how everyone in your company goes about their business when they are at work.

In terms of your strategic plan, culture can be represented in a number of ways. I like Verne Harnish’s interpretation, which is to elect a company theme, a scoreboard and some form of celebration.

• A theme is just a fun make-believe insider environment that your company is going to foster over the next year. It could be sports. It could be superheroes. It could be something philosophical.
• The scoreboard is a dashboard or visual representation of progress towards the company’s priorities. Teams that work with kanban or sprint boards are already familiar with this.
• The celebration is a reward for if certain performance benchmarks are reached. It doesn’t have to be lavish, just in line with the theme and the company’s culture.

Thanks to media coverage of tech companies, most entrepreneurs and business owners understand culture nowadays. But there are some who still insist that their company doesn’t have a “culture”, and people just show up and do their work and go home.

Well, like it or not, you have a culture. It may simply be a no-nonsense “come in, do your work, don’t make a mess, collect your paycheque and go home” culture, but it’s still a culture.

And if that happens to be your company culture — you are missing out on a huge opportunity to increase productivity and profits.

People, even your employees, all want to belong to something greater than themselves. If you have a good and healthy company culture, they will want to belong to it. This means fewer staffing issues, more productive workers and a better run company.

3.7 Formulate Your Strategic Plan

With the above six pieces in place you now have the first version of your strategic plan.

Have one of your senior team go through it and clean it up and format it nicely, and then share it with the rest of the company in your internal wiki or as a document file.

4. Execution Planning

With your nicely formatted Strategic Plan completed, you may be asking — what’s next?

If you recall, we referred to the process of formulating the plan as Strategic Thinking. The next step is Execution Planning, or, how we take the priorities we have set, and actually make them happen.

You have already worked with your senior team on the initial plan.

Now it is time for them to write in their own individual accountabilities (their personal five priorities and KPIs) for the upcoming quarter and to go over them with you.

And from there, they can repeat the same process of creating individual accountabilities with their respective departments/direct reports.

In this manner, the company’s core flows down into its objectives over different time frames, then down to the senior team, their departments, then to each individual team member. By doing this, it creates a very direct link between what each team member does, and how it contributes to the company as a whole.

Common Problems and Objections

Strategic Planning doesn’t always go smoothly.

Here are some common problems and objections I have come across, and how you can handle each one.

My industry is online/offline/whatever and different.

The strategic planning process is conceptual enough that it can be adapted to any ongoing business.

You will probably want to define different metrics or change the composition of who is in the planning session, but everything else should be fairly similar.

I’m not the boss, and he/she doesn’t want to do this.

Bluntly: you’re fucked.

If your company is being led by someone who doesn’t see the value in planning, and there isn’t a board or shareholders to step in and replace that person, it’s likely there is no long-term viability in the business.

You can try to step up and lead the process, but you will experience conflict and resistance from the head of the company every step of the way.

My suggestion: ride it out and get off at the next port of call.

How do I get my people to buy into this process?

There are usually two reasons people don’t buy into the planning process:

1. You haven’t explained the process clearly enough to them, or
2. They are resistant to change.

If it’s because they don’t have a clear picture of the process, then meet with them over a coffee or other non-formal setting and walk them through it.

Your job as the business owner or CEO is to get everyone on the team in alignment anyway, so this should be familiar territory.

Communicate to them what the company does, how it does it, what the company believes in and show them how having a clear strategic plan laid out, is better than not having one.

If it is because they are resistant to change, then you have a different problem. You need to ask the hard question here of if this particular team member has a good reason for not wanting to buy into the process, or if they are just being stubborn.

If it’s the latter, well, you can think of the company as the ship, and as the business owner or CEO, you are the captain. If you have a crew member who isn’t contributing — it’s time to leave them ashore at the next port.

I don’t want to share the plan with the entire company.

I personally believe that the more open and free flowing information is within a company, the better that company is able to move and react to the market.

But if for whatever reason your particular industry or company or market doesn’t allow for it, then censor out the information that you don’t want to share.

At the very least, the core, priorities and culture should be shared with the company so everyone can see how what they do contributes to the greater whole.

All this meeting and planning and thinking is taking up too much time.

Yes, your first run through the strategic planning process will be time-intensive and perhaps even frustrating.

But after the first time, future sessions will be much smoother as you will have all the templates and agendas already in place.

Do I really to do all this?

Yes and no.

As I mentioned earlier, if you are still in the startup phase and finding your place in the market, then there is no point undergoing strategic planning. What will carry you through in your efforts to sell and market and achieve product-market fit will simply be the human drive and potential to succeed, which is pretty darn powerful.

When your business has achieved a certain size however, you will need systems and structures to keep things running smoothly, lest everything just descend into metaphorical fires and chaos.

What To Do Next

For your reference again, here’s what your strategic plan needs to cover:

As we have seen, each level of the plan flows downwards towards the level below, aligning the organisation as a whole.

You may already do some parts of strategic planning, in which case, please feel free to take what I’ve outlined in this article and adapt it to your own structure.

If you are new to strategic planning, you now have a starting point from which to run your own planning sessions.

[1] I refer to traditional companies up to about 250 people in size. I’m sure the same processes could be applied at larger corporations as well. This process will likely not work for startups, as their objectives and structures are different from a traditional business.

[2] This is something I learnt from Verne Harnish of Gazelles.

[3] You just sit down and think for a bit and do it for yourself essentially.

[4] For more on the why, see this TED Talk by Simon Sinek.

[5] Normally September to December unless you want to plan by your financial year.

[6] This is my conceptual representation of Verne Harnish’s One Page Strategic Plan, with some changes. Feel free to modify mine (or Verne’s) to suit your organisation’s needs better.

[7] The meaning of life is different from the purpose of life, which I believe is to be happy.

[8] If it doesn’t support you… then what’s the point? Also, it is perfectly OK for there to be some circular logic here, with your goal being to grow the company and the company supporting you by growing and providing you with wealth and resources.

[9] BHAG is a Big, Hairy, Audacious Goal as outlined by Jim Collins in Built to Last.

[10] If you are however, you have a chance now to build a better mission going forward.

[11] And if they/you are not, then there are much bigger issues in play that no strategic plan will help smooth out.

[12] This is also good general ongoing business practice.

[13] I call them priorities here, but you can refer to them as goals or objectives as well.

[14] The timeframe can be three-to-five years or simply three years, which is what I would recommend.

Originally published at https://aaronlynn.com on February 3, 2020.