Stage One of Business Success: Planning Makes or Breaks a Company

I talk a lot about the 7 Stages of Business Success, and people ask me, “Which stage do businesses skip most often?” The answer is easy–Step One: The Strategic Planning Stage.

When you’re starting a business, you may think you have to create things, make things, or produce products before you can start selling. Planning may feel like a stalling tactic or even a waste of time. You want to make a bunch of stuff and then find people to buy it. And that’s one way to start a business.

However, it’s not the only way, and it’s usually not the most profitable approach. Many types of businesses require that you sell before you build. And this takes planning. Consultants like myself, for example, have to find customers before they can “create” anything. We sell ideas, promises, and results–not nuts and bolts.

But once you think about it, you’ll realize that we’re ALL selling things that we can’t touch or hold in our hands. We’re all selling the value of our business. So, if you want to start a business, grow an existing business, or get a company ready to sell, you must shift your focus from selling things (parts and services) to selling value.

How do you do that? It starts with strategic planning.

It’s Never Too Late to Create a Strategic Plan

Even if you’ve been in business 50 years, even if no one at your company has an MBA, even if the thought of creating a strategic plan exhausts you, your business can benefit from creating a formal business plan. 

Remember that everything your business does or doesn’t do, intentionally or unintentionally, is sending messages to your current and future customers. If you’re following a well-considered strategic plan, those messages will work together to create a strong foundation on which your business can grow. If you’re operating day to day, or without a roadmap, the messages your firm is sending may be inconsistent, contradictory, incompatible, or even destructive.

When you create a solid mission statement, a well-articulated vision, and a set of values, you have guidelines. These guidelines help you grow methodically, intentionally, and reliably. A strategic plan not only enables you to identify the things you should be doing, but it also allows you to understand why some things just don’t make sense for your business.

Case Study: The Marketing Agency That Grew Bigger and Smaller at the Same Time

A few years ago, an ad agency employee (let’s call him Sam) was able to buy the agency from the founder. It was a very profitable agency that seemed to make money hand over fist. At the time Sam purchased the marketing agency, the clients were mostly financial and construction product clients. Sam decided to run the agency just as the previous owner had and let the money roll in.

A group of employees in Sam’s company started to land big home design clients. These new clients wanted Sam’s agency to market their home appliances, cookware, and wallpaper. More and more attention was lavished on these exciting new clients.

At the same time, less attention was being paid to old reliable financial and construction clients. So, it isn’t surprising that those companies began to spend less money with the agency and eventually left altogether. 

Without the margins of financial and construction supply clients, the agency’s cash flow was reduced. So Sam looked for more revenue by looking for more clients in the home category and landed more accounts. But the new accounts were smaller, lower-margin clients and required more account reps to manage them. As a result, margins continued to get thinner.  

With so many home products on the roster, Sam found he had unintentionally become a home products specialist. With such a lopsided business roster, he was now unable to get new financial or construction clients.

After a few years, Sam found he was working harder than ever, with more employees, more clients, and more stress–but with much less income. Without a strategic plan in place to help him decide which types of clients he should pursue, the type of services to offer, or the margins he needed to maintain profitability, his agency had grown bigger and smaller in unexpected and unwanted ways.

Think Big: Create a Vision for Growth in Your Strategic Plan and Stick With it

Like Sam, many business owners without vision and focus suffer in the long run. The vision you create in the strategic planning process not only provides motivation, but it also helps you understand what you are building and how large and profitable you want your company to become.

Don’t be afraid to think big. While you may not reach your goal this week, you’ll be surprised how aggressive growth goals affect the way you run your business. Your plan will help you understand what you want your company to become, so you can stay on track, make decisions that lead you down your chosen path, and help end up with a successful seven- or eight-figure business. And the only way to get a clear vision is to develop a plan you can follow as your business expands.

Want to know more about strategic planning, mission statements, and vision? Check out my best-selling business book, The 7 Stages of Small Business Success, or contact me at my consulting firm, 7 Stages Advisors.