by Rob Stam | April 3, 2018
The longer I work with businesses at all stages of development and growth, the more shocked I become at the lack of strategic thinking and planning. Is it any wonder that the vast majority of businesses fail?
Before I throw stones at the other entrepreneurs out there, I must confess I’ve spent the majority of my career not having a plan either. There came a point, however, when I finally got really, really, really tired of failing.
Failure is a big topic. There are countless books written about it and even conferences where people tell their stories of failure and rebuilding. And that’s great and valuable, but as one who’s been through failure a few times, I can also tell you that failure is WAY over-rated. If I can be honest, it sucks. A lot.
No author or “expert” can tell you how to completely avoid failure because it comes in many forms and from many directions. However, I would bet everything I earn for the rest of my life that the single most significant thing you can do to minimize failure is to have a strategic plan. Actually, that’s only part of it. You have to live by a strategic plan.
I’m usually skeptical of statistics because many of them are attached to someone’s agenda, but there’s one category of statistics where I see the same numbers over and over from multiple sources. Here are some strategic planning stats from Mission Facilitators International that help summarize the point:
- Businesses using strategic plans are 12% more profitable than those that don’t.
- 95% of the typical workforce doesn’t understand their organization’s strategy.
- 86% of executive teams spend less than an hour a month discussing strategy.
- 60% of organizations don’t link strategy to budgeting.
- Of 26,000 start-up business failures, 67% had no written plan.
- More than 70% of companies with a strategic plan don’t execute it.
How many times do we have to be told that the one who aims at nothing is sure to hit it?
Allow me to simplify this blog in one sentence: write a strategic plan.
“How?” you might be asking. It’s probably a wise idea to get help with it, but here are five steps to get you started:
- Define your market. Your entire business model and strategy has to be relevant in the context of who your target market is. Research the market and put realistic facts and numbers to your plan.
- Regardless of your industry, look at what it will take to service and engage just 1% of that market. Yes, you may grow far beyond that, or you may reach far less and still be highly successful, but if you can’t build a strategy for 1%, you’ll never reach 10% or 100% or be successful with .001%.
- Do the math for two key variables: First, what are the hard costs to effectively create and deliver your product or services to that 1% of the market. Second, what will it take to effectively engage with your market with marketing and sales efforts?
- Draw an org chart that identifies every role in the company you’ll need to fill to accomplish all of this. You yourself may be filling every role initially, but draw that org chart out so you know what kind of people you’ll need to bring on board eventually.
- Create a month-by-month budget for no less than the next 12 months. Include everything you’ll spend money on. Yes, everything. Only then can you see if your market supports your business overhead. If not, the first step in your strategy has to be to cut costs, increase margins, get a bigger piece of the market, or come up with a better business idea.
Warning, shameless promotion coming:
Get The Entrepreneurs Survival Guide, work with a coach, and gain a more in-depth understanding on how to do this effectively. Failure is still a very real thing, but being as prepared as you can be will give you a greater chance to succeed.