planning should bring an improved competitive position.
to think strategically
it is hard to think ahead. But the rewards go to those who do.
(reprinted with permission)
Donald Reimer, CMC
& Ravi Nayar, CMC
problems are nothing new to the entrepre- neur. Sometimes he or
she may even feel that putting out fires is what a small business
is all about. Meeting the weekly payroll, collecting payments from
customers on a timely basis and ensuring that investors do not bloat
out of control are clearly important issues. But when the entrepreneur
is consumed by mere survival, he or she has little time to look
ahead to longer-term strategic issues facing the company.
fact is, people who create businesses often do so to respond to
an opportunity. They often do little or no planning. Overcoming
obstacles to growth after the initial start-up and adapting to market
changes become difficult without sufficient strategic planning.
Unlike the larger, publicly traded firm, the small, closely held
business has not had the pressure from its stockholders and lenders
to plan for uncertainty.
planning should bring an improved competitive position and long-term
profits to the company. The strategic process evolves from basic
financial planning, forecast-based market planning, externally oriented
plan- ning, and, finally, strategic management. It is this last
step that brings the resources of the company together to focus
on creating a competitive advantage as well as profitable groWth
in the future.
well-defined mission statement is where it all begins."
mission statement is where it all begins. Unfortunately, many owner/managers
of small companies move in too many different directions at the
same time. A well-defined mission can give focus and purpose. It
is often hard for the entrepreneur to take his or her vision and
convert it to long-term reality. Yet success comes to those who
lack of strategic thinking is common among smaller firms for
the following reasons:
The strategic planning is not a function that the owner/manager
is familiar or comfortable with.
The owner/manager fails to create a culture and climate within
the company that fosters strategic thinking.
Daily operational concerns have a high priority and therefore
leave little, if any, time for looking into the future.
Owners often believe that planning is too time-consuming and not
Lack of a functioning board of directors.
Ineffective priority-setting process.
should be done to foster strategic thinking? The first step should
be an assessment of the current situation as well as the development
of an action plan. Once you have a better understanding of the culture
and climate within the company, you can develop the appropriate
action to be taken. The assessment should include a complete evaluation
of both internal strengths and weaknesses as well as the external
opportunities and threats. Of course, you must develop a mission
statement. Without it, you are lost.
creation of an active board of directors can also help in planning
for the future of the company. They can participate in the overall
process. Outside board members bring both experience and a fresh
owner/manager should also consider seeking outside professional
assistance in this area. There are consultants who specialize in
planning. They bring with them the experience of other business
owners as well as their own qualifications in this area.
do you know if you have a problem? Some of the symptoms of the obstacles
to your growth are listed below. If you recognize any of these,
steps should be taken to think strategically.
Sales are increasing satisfactorily. Profits, however, have leveled
off or are on the decline.
Gross profit margins have been steadily on the decline. The bank
has watched this trend and is concerned about its loan.
The company is in a growing market, but sales and profits have
The market has been projected to be declining.
The company is about to buy another operation in its plan to increase
sales and profits, but some key managers are not sure that this
is a good move and that it has been carefully planned.
building of a strong management team becomes the number one task
of the growth-oriented owner-manager business. It is hard to achieve
profitable growth without a strong team in place. Often the owner/manager
believes he or she can do it all. Not so - this belief can be a
destructive force and must change.