For many small businesses, the lack of a strategic plan is put down in part to their lack of resources to develop and implement it.
"I'm far too busy focusing on bringing in the sales and paying the bills to think about Strategy"
But the fact is, but omitting to consider the business on a strategic level can be a costly mistake. Here are 3 ways a lack of strategy can cost you money?
1. Strategy brings focus
One of the biggest issues in small businesses is a lack of focus, and the desire to be all things to all people. Usually driven by a fear of where the next sale is coming from, it is all to easy to say “yes” when asked if you can do something. Whilst this can bring short term gains in terms of revenue, it can be costly in the long term as delivering goods/services that are outside your core competences will lead to:
- Sub optimal delivery & potentially disappointed customers
- Additional costs as you have to learn new skills to deliver
- Distraction from the core business
Taking a more strategic view that defines your core competences & the way in which you will use these to drive growth makes to much easier to say “no” to more peripheral requests, and will allow you to build strategic partnerships with other organisations better placed to deliver what the customer wants.
2. Lack of strategy leads to costly “knee jerk” management
Marketing is a good example of this, as a lack of strategic direction means that marketing tends to be done on a piecemeal basis, centred around “The next big thing”. When you get the call from someone offering a service to solve all of your marketing issues based on the latest buzz word in Marketing (SEO, Social Media, Content Marketing, Pay Per Click, Video etc) its all to easy to get sucked into short term marketing activities that have little or no value. By having a clearly defined plan it is possible to look at these tools in the context of what you are trying to achieve at a strategic level and so make much more effective decisions as to which are or aren’t appropriate. Whilst many small businesses will say that they don’t have the resources to run managed marketing strategies, in reality running a strategic marketing programme can often be less expensive, and definitely more effective than ad hoc activities.
3. Planning for the future will bring down costs
Whether you are in a business that offers services or products, the fact is that delivering these takes resources, and the more efficient you are in this delivery the greater the profitability of the business. Strategic planning allows you to anticipate growth, and thus plan for expansion in resources required to deliver it. Without this planning, companies rely on short term, flexible solutions to develop capacity which are always going to be more expensive. Whilst in some cases, the flexibility offered by this approach can be advantageous, adding value to customers. By implementing it in a more strategic context these benefits/costs can be recognised and built into the marketing message & pricing structure of the business.
Lack of strategic planning can be expensive
I hate the term “We are a victim of our own success“. What it really means is “we didn’t anticipate/plan for the growth we are seeing”. Whilst in some cases growth can come unexpectedly out of left field, in most cases it can and should be planned for, By taking time out to create and implement a long term strategic plan, you can be sure that you are a beneficiary rather than a victim of success!
