A strategic business plan is very important to assuring the success of a business. Yet only 15 percent of small businesses actually have a plan! It may seem like a daunting task to write out the firm’s strategic business plan but after reading this article agency owners should understand why they have to have one. In today’s changing climate, an agency must have a strategic business plan to be successful and high-performing.
Agencies that incorporate an annual planning process tend to be more efficient, more profitable and highly-valued. Agencies without a plan are totally reactive to their environment and have little control over their future.
Strategic planning owes its development to the military. It is the science or art of long range planning and directing large-scale operations. Tactics on the other hand relate to the specific use or deployment of resources to meet a short-term objective. Too often business plans contain only tactics. An effective business plan should be based on a strategic plan.
An agency’s strategic direction is the big picture or the vision that guides the firm along the way. The best way to start the process is to create a mission statement, which should be a clear and specific summary that describes the firm’s purpose. This exercise is a crucial first step for mapping out the firm’s future direction and facilitating the planning process.
The next step is to determine the current status of the agency. Owners and key employees need to look within the firm; they must perform a self-assessment of the agency and its resources including an inventory of strengths and weaknesses. This allows the planning team members to create meaningful and reachable goals using appropriate tactics.
Well-written strategic business plans capitalize on the strengths of the organization and strive to minimize or eliminate the weaknesses. The major weaknesses can be turned into opportunities for improvement and these opportunities then become the agency’s goals for the coming year.
Strategic business plans are not only essential to proper agency management but they also are now often necessary in order for an agency to receive “preferred” status with carriers. There are many other reasons it is important to go through all the steps to have a strategic plan. Here are just a few that are the most important for agencies.
The first reason to have a strategic business plan is that it helps managers set specific goals and objectives for the business. When the firm knows what the plan is and what the firm wants to accomplish over the next year or so it makes it easier for management to make sure these tasks are completed. Good management needs to set goals and objectives and have a detailed plan to follow up on them.
Another reason an agency needs to have a strategic business plan is to see how much the agency is worth. This valuation of the business will be complete once all the steps in the strategic business plan are done. This means that there will be a detailed plan of where the business is now and how much it’s worth. The firm can then set goals on how much growth is wanted over the next year or so and how much the firm could potentially be worth once the goals are met.
This leads to being able to merge or sell a business. In order to do either of these the agency needs to have a strategic plan and valuation. If an agency is trying to sell a book of business to another agency, the buyer is going to be more interested if there is a business plan. A buyer is more likely to purchase a business where there is a plan and where it is clear how much the agency is worth.
One of most important reasons to have a strategic plan is to grow the existing business. A strategic business plan lets owners know where the business could grow over the next year or so. It gives them an opportunity to focus on sales, acquire new clients, and make sure existing clients are using the firm to its full potential. By doing these things the owners are making the most money in the most efficient and effortless way.
Competition is keen. Expenses must be controlled. Market cycles continue to cause havoc and agency value is at stake. An annual planning and self-assessment process is the key to success. If owners don’t know where they are going, how can they possibly know how to get there?
Make a choice. Take the time to plan ahead and be successful or be at the mercy of the winds of change.
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