By Hauwa Abubakar
Having understood why your business needs a strategic business plan, it is important to know how to develop one. Often times, there is no hard and fast rule to strategy because what applies to industry A may not necessarily work for industry B and what affects one market may differ from another.
However, there are guidelines that help one identify the right factors to look out for when developing a strategic business plan. The first important step is to know what the business seeks to achieve because without this step, the business owner will just waltz around so many ideas without a sound strategy. You must:
- Have an objective or a list of objectives
- Choose a methodology to reach your objectives
- Identify the challenges and propose mitigating measures
- Design a plan
- Measure performance
When a business objective is set, it is important to ensure that it is SMART:
S- Specific (A specific objective helps to declutter all relevant business goals and for the entrepreneur to list them according to priority or relevance).
M- Measurable (A measurable objective is like setting a deadline or time frame for the achievement of your business goals).
A- Achievable (The achievable objective is about identifying those goals that are feasible within the set time period).
R- Realistic (Realistic is aiming for goals that are feasible)
T: Timed (Timed refers to goals that should be given a specific implementation lifespan)
Here is an example of a smart objective:
Develop a new product for skin care for people aged 45 to 65 within four months. Market the product to three skin care retailers in Lagos, Johannesburg, and Accra within three months.
Choose a Methodology
After setting objectives, the next plan would be to get about how to achieve them. You must consider the various factors that come to play in the industry, organisation and the wider market. This information would help choose the appropriate strategy.
In this section, an internal analysis should be carried out. Consider the 7Ps of marketing here including:
- Physical evidence
Analyze the External Environment
What are the legal bottlenecks or requirements to start the business? What is the environment like? What are the political factors to bear in mind? What technology do you need and how do you go about deploying them? The PESTLE Analysis helps to better articulate these:
P– Political factors
E– Economic factors
S– Social factors
T– Technology factors
L– Legal factors
E– Environmental factors
When considering the environmental factors, a good example is to consider if the business is located in a community that’s prone to flooding? What strategies will the business put in place in case of an incident of flood?
The business must also understand the competition to be faced and assess its strengths, weaknesses, opportunities to be tapped and threats it might face using a SWOT Analysis:
S – Strengths: For instance, your business’ unique selling point, people, resources, etc.
W – Weaknesses: What could be improved on, what is the business lacking when compared to competitors?
O – Opportunities: What opportunities are available to the business based on the external environment?
T – Threats: What are the factors that may threaten your business’ growth and how do you address them? Some examples of threats may include unstable markets, inflation, unreliable suppliers, etc.
Afterwards, you need to conduct a risk assessment. Think of the resources to be deployed and what might be attainable or not. Also, think of how to go about deploying these resources and consider the risks involved so that solutions can be designed before they occur. Hence, the business will be prepared when these challenges occur.
Score the risks on a scale of 1 to 5 – where 5 means severe risk and 1 means minimal risk.
Design a Plan
After doing all the necessary assessments, it is time to design a business plan. Segment your goals into short and long term goals. Then identify strategies to match the short and long-term goals – these can bi weekly, monthly, quarterly, bi-annually and so on. Choose a strategy that is unique to your business and the industry you operate in.
If a short-term goal has been set, measure this goal after the deadline has been reached. Assess if the goals were achieved or not. Identify what strategies worked well, focus on the ones that need improvement and discard the strategies that did not yield any results.
How has a strategic business plan helped you grow your business? Share your experiences in the comments section below.
If you found this article useful, bookmark 234Finance.com or kindly follow all of our social media pages for more business tips.
234Finance is an online hub that promotes African Entrepreneurship. We feature small and medium sized businesses on the platform, shedding light on the current and future developments in diverse sectors across Africa. We also provide free resources, share opportunities and events on our platform that entrepreneurs can benefit from and thrive in Africa’s tough business landscape.