Strategic planning is a systematic process that helps you set an ambition for your business' future and determine how best to achieve it. Its primary purpose is to connect three key areas:
- your mission - defining your business' purpose
- your vision - describing what you want to achieve
- your plan - outlining how you want to achieve your ultimate goals
Strategic planning is different to business planning. It requires stepping back from your day-to-day operations and articulating where your business is heading, by setting long-term goals, objectives and priorities for the future.
Importance of strategic planning
Strategic planning is necessary to determine the direction of your organisation. It focuses your efforts and ensures that everyone in the business is working towards a common goal. It also helps you:
- agree actions that will contribute to business growth
- align resources for optimal results
- prioritise financial needs
- build competitive advantage
- engage with your staff and communicate what needs to be done
Another key purpose of strategic planning is to help you manage and reduce business risks. Growing a business is inherently risky. Detailed planning may help you to:
- remove uncertainty
- analyse potential risks
- implement risk control measures
- consider how to minimise the impact of risks, should they occur
Read more about risk management.
What is a strategic plan?
Effective planning usually results in a written strategic plan. This is a formalised document that describes your business goals, and the actions needed to achieve them.
You can use a variety of models and approaches in strategic planning. Many businesses include a SWOT analysis or a PESTLE analysis as key elements of their strategic plan.
Other common elements are:
- vision and mission statements
- core values
- clearly defined goals and objectives
- action plans
You may also want to include an implementation schedule, key performance indicators (KPIs) and other accountability measures.Learn more about the key elements of strategic planning.
Difference between a strategic plan and a business plan
Both strategic and business plan documents are essential planning tools for your business. However, depending on the business stage and goals, one may be more useful than the other.
Strategic plan
A strategic plan is for a 3-5 year period and sets out the tasks, the milestones and the steps needed to drive your business forward. Find out how to develop a strategic plan.
Business plan
A business plan focuses on a shorter term, usually no more than a year, and serves a specific goal - eg starting a business, getting funding, or directing operations.See how to prepare a business plan for growth.
FAQs
A strategic plan helps to define the direction in which an organization must travel, and aids in establishing realistic objectives and goals that are in line with the vision and mission charted out for it. But it also creates a sense of collaboration and collective responsibility.
What is the main purpose of strategic planning? ›
Strategic planning is necessary to determine the direction of your organisation. It focuses your efforts and ensures that everyone in the business is working towards a common goal. It also helps you: agree actions that will contribute to business growth.
What is the goal of strategic planning _____________ and requires __________? ›
The goal of strategic planning is long-run profitability and growth. Thus, strategic decisions require long-term commitments of resources. Strategic planning provides a long-term vision and thus guides long-term commitment of resources.
How to answer questions about strategic planning? ›
Sample answer: “In strategic planning, it's crucial to strike a balance between the big picture and the details. I always start by developing a clear vision and setting strategic goals. From there, I break down the plan into specific objectives, actions, and timelines.
What is the purpose statement of strategic planning? ›
Purpose, Mission, and Vision Statements explain why a company exists, how it plans to achieve its goals, and what the business will ultimately achieve. A Purpose Statement is an explanation of the company's motivations and reasons for being, and why it works the way it does.
What are the four main points of strategic planning? ›
The four most widely accepted key components of corporate strategy are visioning, objective setting, resource allocation, and prioritization.
What is strategic planning in simple words? ›
Strategic planning is a process in which an organization's leaders define their vision for the future and identify their organization's goals and objectives. The process includes establishing the sequence in which those goals should be realized so the organization can reach its stated vision.
What is the most important in strategic planning? ›
Best practices for effective strategic planning include involving key stakeholders in the process and conducting thorough environmental scans to fully understand all aspects of a company that will be impacted. This can be done through a SWOT analysis.
What are the 3 keys to effective strategic planning? ›
Treat it as Process, Not a Document The strategic planning process should involve: Collecting relevant facts. Setting priorities. Weighing competing alternatives.
What are the 3 ideas of strategic planning? ›
Effective strategic planning is a process that should be broken down into three separate, equally important components: strategic thinking, long-range planning, and operational planning.
Successful strategic plans require clear, measurable, purpose-driven goals and full team buy-in. That way, individuals can be motivated to embrace their role in reaching larger strategic goals that can make a company thrive.
What are the three main activities of strategic planning? ›
Effective strategic planning is a process that should be broken down into three separate, equally important components: strategic thinking, long-range planning, and operational planning.
What is the most important element of the strategic planning process? ›
It's important to make sure your strategic plan stays on course by indulging in objectives that are right for your business. When considering goals it is important to keep in mind these few guidelines. Goals should be measurable, realistic, and have a dedicated chain of communication.
