Strategic planning and KPIs are powerful tools for achieving sustainable business success. Strategic business planning is the process through which corporate executives devise a strategy to fulfill the company’s main purpose. First, the business owners state the main purpose or objective that the company is meant to achieve – mission and vision statements are written down to set the company’s overall direction and philosophy. This is followed by an analysis of the company’s strengths, weaknesses, opportunities, threats, competitors, collaborators and target consumers. Then long-term strategic goals or objectives are set for the entire company and its major divisions. Finally, short-term tactics are formulated to achieve these corporate objectives.
An effective planning process will enable business owners to take charge of their company’s future and focus on the most important factors that deliver outstanding performance. The performance of the business can be effectively monitored and improved through the use of appropriate KPIs. In this post, we will be discussing the process of creating strategic business plans and KPIs that will produce the desired business growth and success.
Define the Vision and Core Values of the Company
Start your strategic planning by creating a vision statement. A vision statement defines the company’s primary purpose. This is done in terms of the company’s values – the guiding beliefs about what to do and how it should be done. The vision statement gives direction to employees and inspires them to offer their best. It also helps customers to appreciate the company’s focus and how they should work with the company.
Your company’s vision statement should include the core values of the company. You should identify what your stakeholders and customers will really value about the achievements of your company. Then combine it with a statement of your purpose until you end up with a statement that will inspire and motivate people within and outside your company.
State Your Primary Mission
To define your company’s mission statement, first discover your company’s winning approach. This is the approach which will help your company to stand out among its competitors. And it is the reason why your customers will patronize you rather than your competitors. At this point, you should also identify some measures or indicators of success. Combine them with your winning approach to obtain a measurable goal. The final statement should be precise and concise.
For example, the mission statement of a fresh whole milk retailer/distributor could be:
“To be the number one fresh milk retailer on 1st Avenue by selling the best quality, fresh whole milk within 24 hours and with 99% customer satisfaction.”
Set Corporate and Departmental Goals
After defining your corporate mission and vision statements, you need to set strategic goals. And the best approach to goal setting is to set smart goals. Smart goals help everyone in your company to know exactly what to do, how to do it and when to do it.
Smart goals are specific, measureable, achievable, reasonable and time-bound. Goals that are not smart simply express your desire for improvement. For instance, in a company that produces hardware, an ordinary goal statement could be: “we want to make more bearings.” But a smart goal statement by the same company could be: the bearing department will increase bearing production by 25% by November this year.
In the first goal statement, there are many unanswered questions. For instance, nobody knows who is responsible for producing the bearings and there’s no means of knowing when the goal is achieved. For corporate goals to serve as instruments for monitoring a company’s progress, they should state the exact type of performance required and the time it should be accomplished.
Do a Situation Analysis
Do a strategic situation analysis to assess the internal and external business environment. This makes it easier to understand your company’s capabilities, consumers and business environment. Some of the common tools used for situation analysis include SWOT Analysis and 5Cs Analysis.
SWOT Analysis examines the internal environment of the company by evaluating its strengths and weaknesses. But the external environment is analyzed by considering opportunities and threats in the market. When using SWOT Analysis, you should analyze both current and expected future situations. This will help you to build on your company’s strengths and reduce your weaknesses.
The 5C analysis can also be used to study the internal and external environment of the company. This involves the close examination of the company, competitors, customers, collaborators and climate.
Set Out Your Business Plan
After the situation analysis, you can put together a tentative business plan that consists of the results of the strategic planning, mission and vision statements, corporate and departmental goals, and the results from the situation analysis.
Set up Key Performance Indicators
The main reason for choosing performance indicators is to measure, track and improve business performance. KPIs will enable you to quickly observe the departments and elements of your business that are performing well. They will also highlight those which are under-performing.
It is vital to choose KPIs that are relevant to the corporate and departmental goals of your company. And all the KPIs should be controllable within the internal environment of the business. Examples of well known KPIs are return on investment, sales figures, appointments, customer complaints, website visitors, and conversions. After choosing your KPIs, you should use KPI software to collate data and manage the reporting of data in real time.
Strategic planning provides an essential blue print for business success. It also helps to provide well defined goals and performance indicators that will be used to monitor and improve performance and promote sustainable business growth.
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