Strategic planning has been the first step for businesses and corporations of all sizes for many years. Implementing a solid and effective strategic plan beforehand can make all the difference between a successful and failing company. A strategic plan is an outline of a potential organization’s plans and goals, and how the organization plans to achieve them. Very in depth, strategic planning takes focus and paying close attention to detail.

Varieties of strategic plans exist and can vary according the type of business, size and overall goals of the company. Below is a brief outline and step-by-step guide to assist budding entrepreneurs with getting started on the right track.

1.Define a Purpose. Draft a mission statement. The word draft is used because as time passes and business progresses, the mission statement will undergo a few changes as well. The mission statement educates potential investors and consumers about the specified product or service how it can be of value to the potential consumer. A mission statement is a paragraph, usually only a few sentences, but can be longer if the situation calls for it.

2.Define Goals. What steps are necessary to fulfill the mission statement? In a general and brief fashion, list the goals to be completed for the mission statement to reign true. This requires a deeper look into the planning process and more importantly, foresight. Consider any possible obstacles and start to find ways to overcome them.

3.Define Strategies. How will I reach these goals? At this point in the planning process, specificity is paramount. Pay close attention to anything and everything that may have an effect on the organization, its intentions and decide how to handle the said situation. List the specific actions and responsibilities of every employee, department and group within the organization. List alternative strategies and take a look at the purpose and goals from every angle. The more in-depth the plan to start, the lesser chance of running into any issues later.

4.Take Action. It’s time to put the plan into play. It is important to stay on the path of the strategic plan. If your strategic plan dots every “I” and crosses every “t”, then this last step will not be a problem, as there should be no distractions.

Now that all of the specifics are out of the way, it’s time to sit back, not relax and observe your progress. Are goals being met? Is your consumer base growing? Keep track of what has and what hasn’t been accomplished and decide the next plan of action. Request feedback, take it into serious consideration and act on it.

The thought of drafting, designing and implementing a strategic plan makes it seem to be a daunting and downright tedious task. Although meticulous, a well crafted plan is the perfect first step to launching a thriving organization. The attached mind map presents the basics for strategic planning in a condensed, easy to remember format. Remember the four keywords to strategic planning: purpose, goals, strategies and action.

You may have been thinking about how to be able to transfer your business. This is where adequate business succession planning comes in, and though it may look complicated, this is something that can be done in a very efficient way. Whether you’re planning to turn the business over in six months or six years, having this plan in place is key to making sure everything happens in an orderly way.

Consider how you handle other issues- for weight loss and fitness, you have a personal trainer. For tax preparation and guidance, you have a Certified Public Accountant. Preparation in any case is an important factor in success.

So, it only makes sense that you would want someone on your side when it comes down to making sure that the transfer goes as smoothly as possible. There are a variety of ways to do this, but asking yourself and those involved some questions about your existing set up can help.

It does not matter if your business is a large scale retailer, or even just an internet business income. You can benefit from having something set up in case of a need to transfer. The consequences of not doing so may be worse than you imagine- from tax issues to debt, perhaps even the business closing down. Taxes, especially estate taxes are the cause of many businesses closing their doors.

There are a couple of things you can do up front, easily. Life insurance, annuities and disability insurance in place can help. But also, think about the capital that would be needed to continue running your business. Consider what sort of plan you can set in place to be sure things go ahead in an efficient and productive manner, were you to not be around for whatever reason.

You may also consider what will happen to your existing client or customer base. Will they stop utilizing your businesses’ services or stop purchasing products when you are no longer the owner? This is an important factor to consider in capital. Also, making sure that if the business is a partnership, there is a way for the other partner to take control if need be is vital. Managing all of this prior to it happening may save more than you realize.

Once you have taken a look at the situations that can happen, proper planning is next. Think through possible scenarios and consider each and every possible solution. Once you are able to do all of this, if there is a reason to transfer your business, it can be handled in a much better way.

Can you use this kind of improvement in your portfolio companies?

· Telecom – Increased revenue by 33% in 7 months

· Manufacturing – Improved productivity by 62% in three months

· Aerospace – Reduced cost by 20% in 6 months

· Financial Services – Increased Sales by 20% in 3 months

· Construction – Reduced costs by 20% in 6 months

· Healthcare – Increased Patient Satisfaction (10%) & Reduced Staff Turnover (36%) in 6 months

These are just a few recent results that a change to participative based management has allowed companies to achieve.

The use of Participative Management tools in your portfolio companies quickly increase bottom line results.   Benefits to the Portfolio Manager include:

1) Leveraging an asset that few companies utilize effectively – human capital.

2) Dramatically increasing performance in portfolio companies.

3) Measuring and improving employee commitment, motivation, and other lead indicators which directly impact your bottom-line.

“Private Equity needs to create sustainable and fundamental value beyond financial engineering” – World Economic Forum 2008

Traditional financial engineering and improved technology will only get you so far.  Utilize an untapped resource in your portfolio companies — human capital.Conventional management models will realize typical operational ability and may not take advantage of organizational resources.  As Boston Consulting Group experts Heino Meerkatt and Heinrich Liechtenstein advise,“ . . . [Private-Equity firms] should prepare all their portfolio companies for a long and deep recession, focusing on operational improvements. As the peak-performing private-equity companies have demonstrated, operational value formation contains the solution empowering success in this economy.   This will be the most critical differentiator in today’s recession, especially for the 50 percent of private-equity firms that are hovering between survival and extinction.”

Experts agree that in order to achieve excellence in the workplace, creativity and innovation are critical. 

“The key to survival and success does not lie in the rational quantitative approaches, but rather in a commitment to irrational, difficult to measure things like people, quality, creativity, innovation, and developing the flexibility to meet changing conditions” – Tom Peters and Bob Waterman

Peters and Waterman tell us we need to look beyond traditional metrics and harness intangible resources such as human commitment, motivation and trust. These intangibles (lead indicators) impact our tangible business results (lag indicators).Until just recently it was determined too intricate to monitor and calculate intangibles.  However, even the National Accounting Standards Board( NASB) recommends that metrics for intangibles appear on financial reports.

At hand is a demonstrated practice that makes best use of tangible and intangible assets.  We call it the “secret sauce,” it is very distinct from other management models because it utilizes tools and methods focused on human performance – a frequently overlooked factor that directly impacts the bottom line. Using strategic management tools, forward-thinking businesses obtain fast and powerful results.Rather than the carrot and stick method or taking a laissez faire approach this method provides a stable foundation that is easy and productive. Participative Management make optimum use of an organization’s human capital by providing people in the workplace innovative tools that allow them to increase company performance.Moreover, it imbues a sense of ownership amongst employees, which elicits worker dedication and fervor.

Motivation the Catalyst in Profit Formula – National Underwriter

John C. Bower, executive vice-president of Fidelity Union Life, noted, “a motivated workforce is essential strategy for enhancing company profits.  Highly motivated employees have a tendency to be more productive, which enhances profitability . . . Companies with the productivity edge usually outperform their competition.”

Recent Scholarly Work Supports These Critical Principles:

Improving Business Failure Prediction: Benchmarking Financial Models with Human and Social Capital –Journal of Private Equity 2009

“Research on entrepreneurship and firm performance indicates that human and social capital has emerged with strong predictive ability for business continuation.”

As little as 1/3 to ½ of most companies’ stock market value is accountable for today by hard assets such as , property, plant and equipment. The growing share of value lies in intangible assets—Harvard Business Review 1998

We are moving from the Information Age to the Intellectual Age according to Richard Barrett (management consultant-business). Prosperity creation will progressively derive from the enhancement in value of intangibles. Examples of intangibles are human motivation, commitment, and trust.

In the recent article, “Human Capital Formation and Foreign Direct Investment in Foreign Countries” Koji Miyamoto writes:

“One of the characteristics of rich industrial economies is the availability of a workforce with a high level of human capital. . . [L]ong time series trends in educational attainment and economic growth during the last century indicate that [Human Resource Development] and economic prosperity went hand in hand.”

“Private Equity Companies need better management practices in their portfolio companies –“ World Economic Forum 2008

During this recession Private Equity firms will have to hold on to their portfolio companies longer and adapt their business models to accommodate the downturn.  Private Equity firms can adapt their business models by focusing on improving operational performance and internal capabilities for sustained long-term results. 

Caridas Consulting International (management consultant-business)

Many complaints about strategy range from the fact that it is difficult to determine, it gets messy and unfinished, and many people involved either do not contribute or attempt to dominate proceedings and a general feeling of the future and the failure of any future chosen path.

Broadly speaking, some schools of thought hold with notion that there are three main reasons for a failure of strategy.

Managers often fail to realise what these differences are; business schools talk about corporate-centre strategy and business-unit strategy. Business-unit strategy is for controlled organisations that may be part of conglomerates or single-business units whereas the other is for conglomerates planning growth through the use of single business units.

Another is often no clarity of purpose; for example there is no point in using models that are simply intellectually attractive when the purpose of the task is to discover options and directions and gather proof to support decisions about the future.

The business – unit level requires methods that are relatively straightforward and the only real obstacles are intimidation by “professionals” and their jargon. Most means of analysis are in excess of 35 years old but there is a general lack of understanding of them amongst business people and most of them do not know how to use them.

So how do we correct this anomaly?
Initially, the ground rules need to be set so participants need to arrive with open,clear minds. Strategy may be likened to seeing everything around, from every angle available and even into the future and the following requirements must be met to be successful: Customers are paramount and form the basis of market uuderstanding, practicality must take priority over theory, the business needs of now and the future need to be thought about and the strategy needs to be measurable.

It is worth at this point to touch on the philosophy behind a strategy.

The best place to start is to take the old adage of begin with where you want to be and work backwards to where you are now.

If, on the other hand, one believes that strategy is an analytical process then start with where you are and work forwards. However there is a difficulty with this approach as straightforward arithmetical thinking stifles creativity.
Perhaps, in the real world, a combination of both methods is probably a necessity.

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When it comes to switching to electronic procurement, many companies misuse the concept of strategic sourcing. They actually use the term to mean something else – a sort-of cover up for another corporate move. They use the term “strategic sourcing” in place of saying they are streamlining costs.

Strategic sourcing, in the core essence of the term, pertains to the attempts and efforts of the buyers to be extremely cautious in evaluating and establishing long-term relationship with their suppliers. This, in itself, is the “strategy” that a company can claim – how its buyers create that lasting interrelationship with the suppliers – because it entails cultural reconciliation between the buyer and the supplier. For an interrelationship to become mutually beneficial, either or both parties have to embrace change in attitude, tradition, and perhaps some beliefs. This approach requires profound and far-reaching planning, and other management considerations. The strategic configuration, because of its specific processes, can be considered in practice within a company.

The key to reaching a long-term plan is adopting and forming an operational process that will navigate the procurement group to the right and relevant track. It is critical for the development and implementation of the strategy.

From any company’s statements of income, specifically a manufacturing company, much of the revenue or sales of the business is reduced because of the cost of goods. Most of the time, ¾ of the company’s sales reduction is caused by the requirement to purchase raw materials for product manufacturing. So what can be done? A company can form a team which will serve as the enforcer of procurement strategy. The responsibility of the team is to ensure proper implementation of the operational processes involving supplier relations. Such will absolutely increase the business’ net income.

Adopting strategic sourcing requires critical decision making, hence should be planned out well properly. Long operational processes are expected to be undergone by the company since strategic sourcing is a long-term endeavour. Strategic sourcing does not end and is not achieved by merely using the term with the intention of cutting costs.