Some executives challenge the value of Strategic Planning particularly for Small Businesses, defined here as companies with <$25M Revenue.  A few even argue that it is inappropriate (https://bit.ly/2GMsaI9).  For all those naysayers, the four most commonly cited reasons are: 1) no time, 2) big cost, 3) small payoff, and 4) plans are short-lived.  Let’s look at their points of support and compelling counterpoints:

TIME

Their Point:  Management has neither the time nor resources to invest in days of planning.

Counterpoint:  The Management Team should be motivated by business success and the rewards that it brings.  Therefore, they should welcome the opportunity to put in a few extra hours to help set company direction.  The right Management Team will find the time.

COST

Their Point:  Because Small Companies’ top teams usually lead their sales efforts, taking them off the road has an immediate negative impact on revenues.

Counterpoint:  Hogwash! To identify BIG opportunities, Management must be clear and aligned on the strategic direction and pathways to get there, which in and of itself increases the probability of reaching financial goals.

PAYOFF

Their Point:  Strategic Planning payoffs are often measured in millions of dollars rather than hundreds of millions, so it makes no financial sense to overinvest in the effort.

Counterpoint:  The goal of any strategic planning process is to set a direction for the company that increases its enterprise value.  Payoff of planning process costs is irrelevant within this context!

PLAN LIFE

Their Point:  Smaller businesses must continually adjust their strategy, so the strategies they develop during a strategic planning session are usually short-lived.

Counterpoint:  Short-lived strategies are bad strategies developed in bad planning processes.  Versus Large Enterprise, Small Business is in a better position to continually challenge its direction, indeed because they are smaller and more agile.  That’s an advantage, NOT a disadvantage!

Strategic Planning should result in a clear direction for the company that increases the company’s enterprise value.  Senior Management and other stakeholders must be aligned in order for the company to achieve its goals.  A deliberate approach to strategic planning with well-communicated expectations (e.g. roles & responsibilities, timelines, outputs, etc.) need not be costly, nor overly time-consuming.  Without it, the probability that payoffs will be small and strategies will be short-lived . . . skyrockets.

1 reply
  1. Mary B
    Mary B says:

    Strategic planning is an annual event that involves executive management team with BOD governance inputs. Annual budgeting seems pretty isolated if not in the context of a strategic plan.

    Reply

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