Strategic Planning in the Small Business

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Strategic Planning in the Small Business
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Why Do Strategic Planning?

• The process
• The analysis
• Big picture thinking
• Communication tool
• Provides outsiders a concise snapshot of the
  business

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Strategic Planning Process

• Determine mission of company
• Analyze competition, industry, economy
• Analyze firms capabilities
• Determine long-term goals
• Develop overall strategies
• Develop short-term goals
• Develop functional level strategies
• Implement strategies review progress

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Developing the Mission Statement(Deciding who
you really are)

• Describe business, its products, and its
  customers
• Describe the philosophy of the business (how we
  think, how we treat customers, how we treat
  employees)

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Create a Mission Statement for your company

• 1.________________________________________________
  __________________________________________________
  _________________________________________
• 2.________________________________________________
  __________________________________________________
  ______

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Look at Your Environment

• General Environment
• Industry, competitive, and community environment

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General Environment

• Political / legal changes
• Technological changes
• Economic changes
• Social changes
• Demographic changes
• Draw from census data

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Demographics

• What is happening to our target markets?
• What changes can we expect?
• Look at the baby boom for example.
• Consider the Snake and the Rat

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The Snake and the Rat
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The Snake and the Rat
1960s 1970s 1980s
1990s 2000s
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The Snake and the Rat
1960s 1970s 1980s
1990s 2000s
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The Snake and the Rat
1960s 1970s 1980s
1990s 2000s
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The Snake and the Rat
1960s 1970s 1980s
1990s 2000s
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The Snake and the Rat
1960s 1970s 1980s
1990s 2000s
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The Snake and the Rat
1980s
1990s 2000s
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Look at Census Data Within Peoria

• Which areas have grown?
• Which areas have shrunk?
• What changes are there within an area even if the
  total population has stayed roughly the same?
• How does that affect your business?

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Other changes in the community?

• Crime?
• Shopping patterns?
• Streets Roads (Interstate development?)
• Schools?

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Industry and Competition

• Is the industry really growing?
• Who are your competitors?
• Are any of them growing unusually fast?
• Are any of them leaving or in trouble?

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• List your competitors their strengths
  ______________ _______________________
  ______________ _______________________
  ______________ _______________________
  ______________ _______________________
  ______________ _______________________
  ______________ _______________________

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What Are Your Weaknesses

• Inadequate finances
• Inadequate marketing
• Inadequate human resources
• Inadequate equipment
• Inadequate time

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What Are Your Key Strengths?

• Good customer service
• Good technical skills
• Good quality products or service
• Good image

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What do you do Better than your Competitors?

• A distinctive competency is anything that you do
  significantly better than your competitors --
  that is meaningful and valued by your customers.
• A sustainable competency is one that your
  competitors can not duplicate.

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Developing Strategies for Your Business
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Strategies are different for each business

• Collision Repair
• Bingo Hall
• Restaurant
• Upholstery
• Liquor
• Publications
• Pizza
• Sand Gravel
• Quilting
• Communications Systems

• Window Cleaning
• Maintenance
• Transmission Repair
• Mini-storage
• Power Generators
• Printing

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Growth Strategies

• There are only three ways to increase profits
• Increase price
• Decrease cost
• Increase sales

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Possible Growth Strategies

• Focus -- Sell more of the same stuff to the same
  group of people
• Market Development -- Sell the same stuff to
  different people
• Product Development -- Sell new stuff to the same
  people
• Diversification -- Sell new stuff to different
  people

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Market Development

• Selling products or services in new territories
• Selling to different people
• Selling investments to women
• Selling computers to senior citizens
• Selling on the web
• Forming a strategic alliance
• Doing transmission work for auto dealers
• Selling/repairing quilts for motels
• Selling pizza to grade schools
• Washing windows for Caterpillar

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Product Development

• Selling different products to the same people
• Selling drapery in addition to upholstery
• Selling window quilts
• Broadening the menu at a restaurant
• Adding pick-up and delivery to mini-storage
• Adding design work to manufacturing work

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• Market Development Strategies ____________________
  __________________________________________________
  __________________________________________________
  ____________________
• Product Development Strategies ___________________
  __________________________________________________
  __________________________________________________
  _____________________

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Diversification

• Skill-based diversification
• Equipment-based diversification
• Starting/buying a totally unrelated business (may
  or may not be good)

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Developing Functional Strategies

• Marketing/Advertising
• Human Resources
• Operations
• Financing

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Writing the Plan on Paper

• Writing the plan commits you more than just
  thinking about it
• Writing the plan serves as a benchmark for the
  future
• Writing the plan serves as a communications tool.