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 (). 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.
