Strategy and planning only work when consistently applied over a long period, which means that you can’t implement strategy without following a long-term plan.
However, blindly following a long-term plan can also kill a company that stubbornly insists on following a plan that isn’t working.
A review process monitors the difference between the plan and actual results. It points to where assumptions were inaccurate or need to change.
Your annual review is an important part of the process but so is the discipline of regularly putting aside time, in year, to monitor how things are going and make appropriate adjustments.
Our four top tips for an annual review your strategy and plan:
Know where you are making your money
Look at your monthly management information to study the difference between planned results, actual results and the prior year for your sales, profits, balance sheet and cash. For each line item you should have a column for the plan, the actual results, the difference between plan and actual as a percentage. Prior year results and the difference between actual and prior year can also be quite revealing!
- Have you seen product mix changes? Is the market changing?
- Have your cost of goods increased / decreased?
- Are your overhead costs under control or are you spending your gross profits?
- Are there trends in the data pointing you to opportunity or a looming threat?
Review customers and markets
Things change all the time and when you are in the thick of things the changes can go un-noticed. Looking back at trends is like scaling a hill to take in the view – it gives you a sense of perspective:
- Review your value proposition; is it still relevant or have new technology or competitors undermined your position?
- What are your customers buying; has there been a change? Why are they buying from you?
- Who are your biggest customers and what proportion of your business do they account for?
- Look at the larger potential market for the problems that need solutions.
- Look at adjacent businesses; are there opportunities for your products and services or threats from others encroaching into your space?
- Look at changing trends and technologies; is there anything that can help you succeed or that will trip you up?
Consider you strategies and plans
Look at the activities, projects and planned results that don’t fall neatly into the financials but can have a profound impact on them. Review all your more detailed plans (eg marketing, operational, funding etc.). Are they still SMART and are they still relevant? Do they still represent the priorities or do you need to make adjustments?
There are many tools available to help businesses plan. One of the simplest is the SWOT. Used well it can also be very profound. SWOT Analysis helps you to understand your Strengths and Weaknesses, and identify Opportunities and Threats.
SWOT used thoughtfully is particularly powerful, helping you identify opportunities that you are well-placed to exploit and mitigate weaknesses that would otherwise catch you unawares.
Using the SWOT framework, you can craft a strategy that helps you distinguish yourself from your competitors, so that you can compete successfully in your market.
A bonus fifth tip
Reviewing and managing your plan requires judgment and impartial eyes. The owners and managers of the business have the responsibility of distinguishing between consistently applying long-term strategy and blindly following a failing plan; has the real world changed the assumptions on which your strategy is based?
This kind of subjective judgment is what makes business management so important and where independent views can add so much value through constructive challenge and input. Many larger companies have non-executive directors to help with this process, but for smaller companies this is often not practical. We specialise in helping in these situations by bringing impartial eyes to your situation and then working alongside you to help make it all happen. Book a complimentary session to understand more and bring it to life!