Strategic Planning: Your Key to Navigating Change

We all know that nothing stays constant in business. The key to managing change is anticipating what kinds of situations might impact business and planning options to manage those scenarios.

This doesn’t mean only preparing for negative events; it also means being ready to take advantage of good opportunities when they arise. One of the best ways for a business to be ready for change – good or bad – is to do regular strategic planning.

Our Founder and CEO Rick Dennen recently spoke with Matt Staninger, a market research analyst at Oak Street, about strategic planning and a variety of other topics in our recent webinar. Here are some of the high points from their conversation:

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Why is strategic planning so important?

Working without a strategic plan is like setting off on a trip without a destination loaded into the GPS or going to the grocery without a list. You can waste a lot of time going around in circles and not really get anywhere. A strategic plan gets all the parts of a company moving in the same direction and gives everyone a clear idea of what the business’s goals and objectives are.

A company may only create a new strategic plan every few years. Remember, reviewing it annually and making tweaks is worthwhile. This practice makes sure that changes in the industry or the economy are addressed. It’s also a good idea to involve a wide range of team members, especially those who may be new to the company, so they will all feel ownership in the new plan and can target their work toward achieving its goals.

Where should a strategic plan start?

A good strategic plan should be based on a mission and a vision. These elements should define what the business hopes to accomplish. The mission statement should capture what the business does, and the vision statement should paint a picture of how the company wants itself to be perceived. For example, a CPA firm’s mission statement might be, “to provide impeccable tax, audit, and advisory services to our clients,” while its vision statement could say, “XYZ Accounting Services will be the most-trusted CPA firm in the greater Chicago area.”

A fundamental component of strategic plan is a SWOT analysis – a review of Strengths, Weaknesses, Opportunities, and Threats. Each component of the SWOT analysis should indicate how well or poorly the company is doing in reaching its mission and vision. Where is it excelling (strengths) and where is it falling behind (weaknesses)? What areas of growth (opportunities) are waiting to be developed? What dangers – such as new competitors or falling behind in technology – are lurking around the next bend (threats)?

Setting goals and planning to achieve them

The key elements of strategic planning are identifying objectives and making plans for how to achieve them. Keeping the list reasonably short – perhaps three to four objectives – keeps projects manageable and increases the likelihood they’ll been seen through to completion. The list should also be prioritized so if situations arise in which two objectives are competing for limited resources, everyone knows which goal is primary and which is secondary.

Several elements go into determining how to achieve each goal:

• • Technology – does the firm have the necessary technological tools to pursue the opportunity in question? What new equipment or upgrades will need to be obtained?
  • Talent – Does the current team have the bandwidth to take on the new project? Does it require specialized skills that necessitate training? Will more and/or specialized staff need to be hired?
  • Financial resources – How will the firm pay for the project? What will the return on investment be?
  • Who will be responsible for the project?

Strategic plans in action

Example 1: Let’s say the owner and staff go through strategic planning for their insurance agency and identify the following potential threats and opportunities:

• • Threat – the owner is planning to retire in the next three to five years. He or she is concerned that the business may not thrive under new management from outside the company, potentially cutting into the owner’s earnout payments.
  • Opportunity – A younger team member is eager to get into ownership and wants to be mentored by the owner until he or she is ready to take the reins.
  • Objective – Develop a succession plan that provides time for the younger staffer to learn the necessary skills for ownership and creates a financial path to ownership.
  • Process – Work with a lender such as Oak Street that is experienced with succession loans for insurance agencies to plan a phased buyout that will provide retirement income for the owner and an affordable route to ownership for the buyer.

Example 2: An RIA firm learns from its strategic planning that it hasn’t done enough to differentiate itself from its competitors. The company identifies these issues:

• • Threat – Potential clients could be lost because of the similarities in marketing messages and services offered between this company and competitors.
  • Opportunity – New clients could be gained by offering specialized services and improving marketing efforts.
  • Process – Identify new investment tools and the equipment needed to deploy them. Hire additional members for the marketing team or hire an outside marketing agency to rebrand. To finance these efforts, work with a lender who can create a working capital loan based on cash flow.

Leveraging debt to achieve company aims

Whatever goals and objectives a company identifies through their strategic planning, smart debt financing can help bring them to reality. New technology such as AI can improve the client experience and increase staff productivity. Investments in training and benefits programs can help attract top talent which, in turn, can lead to organic growth. Making an acquisition can expand a company’s footprint, build its client base, and open up new areas of service.

All of these aims can be met through prudent loan solutions. Contact Oak Street Funding today to see how we can help your business meet its goals.