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Why Strategic Planning is Important for Small Businesses

Updated: Jan 14, 2021

By Rick Barkley, Minneapolis Business Mentors.

About the only constant small business owners can count on these days is change. The interdependent nature of today’s market lace means the ripple effect of events in China or Wall Street may reach your small business.

That’s why ongoing strategic planning is essential to the long-term viability of a small business. Keeping on top of current and emerging trends and evaluating them in the context of your business goals, allows you to anticipate and respond more quickly to shifts in the business landscape.

Many small business owners think the path to success is doing one thing and then doing more of it. If the market falls off, your instinct is to make more sales. But you can’t make more sales if there’s no market. That’s why you need to continually be aware of things that can affect your business.

Your business plan is the foundation of your business’s strategic planning efforts. It should be reviewed at least once a year. Along with assessing the marketplace and how it’s being influenced, perform a SWOT analysis on your business (Strengths, weaknesses, opportunities and threats). Identify strengths – the areas that are giving you an advantage, how they can be enhanced, and consider whether they’ll remain as positives in the future. Also examine weaknesses – areas where your business may not match up well and what can be done to address them.

Similarly, look for immediate and emerging opportunities that you can capitalize on and threats that might compromise your operations and profitability, both now and in the future.

As you translate your strategic planning into actions, don’t be afraid to experiment. Making mistakes is part of the business game. Keep trying new things. Some will stick, some won’t.

Finally, to attain a sustainable profitable business, you must achieve a competitive advantage. Experts suggest a competitive strategy is about being different where you deliberately choose a set of actions to deliver unique value.

In terms of strategies to be successful, there are basically three choices each business can select from, they include:

  • A cost advantage where you provide the same benefits but at a lower cost.

  • A differentiation advantage where you offer superior benefits at the same cost

  • A differentiation advantage at the same cost but where you focus on a specific value, product or market.

If you're a small business in need to assistance with your business planning - contact us for FREE help.

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