Business Strategic Planning
One of the core components of developing a strategic business plan is to understand the forces at work in favor of and against your business. This includes shifts in the size of your demographic market, the overall cultural attitude towards your business or industry, political shifts that will endanger the size of your market, its availability, or your ability to reach it and/or changes to the environment or nature that will impact those same variables. What most business owners want to know; however, is how these or any changes will impact their profit.
There are essentially two things that establish the profitability of a business – its industry and the business’s position within that industry. These two things will help drive many portions of the strategic business plan. It actually comes as no surprise that some industries have low profits while others offer excellent profits. Companies that are strong competitors in industries marked by high profits have the greatest profits. Companies that are poor competitors in industry with low profit potential have the smallest profits.
Michael Porter’s Five Forces have become the measure for evaluating an industry’s potential for profitability. The Five Forces include the following:
- Buyers’ power
- Suppliers’ power
- Competition within the existing industry
- Emergence of new competitors
- Potential for substitution/obsolescence.
The stronger these forces are within an industry, the lower the profit potential of that industry becomes. Industry evaluation can be used to help guide your strategic business plan. Some of the ways that a well-implemented industry evaluation can benefit your strategic business plan are by providing an understanding of your competitors, providing an evaluation of growth opportunities, and the foundation for the development of profit strategies, power and competitiveness within your industry.
Of course the scope of strategic business plan is not limited to the industry. The strategic business also encompasses a variety of areas to determine their impact on your business, but understanding the industry is an outstanding place to begin to think about the business planning process. Once you’ve determined what direction should go, you’ll want to begin to lay out the details of your strategic business plan. A strategic business plan is truly about strategy so when once you’ve decided what you want to have happen; you need to determine how to make it happen.
For instance, if part of your strategic business plan is to gain a 22% share of the business, you’ll want to show how that can be accomplished and over what amount of time. You may, for instance, increase the amount of promotion that your business is doing in the industry. This could involve increasing the amount of online advertising that you are doing on industry based sites and online industry magazines by 35% with a goal of capturing new 30 new customers over the course of the year. It could also involve upping your telemarketing/sales efforts with a goal of gaining 12-20 new accounts and these efforts could be combined with other direct marketing efforts such as a direct mailers or email blasts designed to not only back up the message of the other two promotions but also provide a modest increase in new customers. Depending on the size of the industry, the amount of promotion and the strength of the message, this could provide the means for increasing your market share. The actual numbers used in your strategic plan will vary based on the industry and your company’s budget.
If these type of skills are ones you would like to develop and know more about, one of our online business courses might be just what you need. We offer a variety of business courses tailored to suit your specific situation. If you are starting a new business and would like to implement strategic planning the Certificate IV in Small Business Management (New Business), Diploma of the Business, Diploma of Management (Business Development), or the Advanced Diploma of Management would be an ideal option. Please feel free to contact us for more information about relevant business courses, business planning or business strategies you need assistance with. Global Training Institute is a Registered Training Organisation that has high quality accredited training in accordance with AQF standards.