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How to think strategically
Sometimes it is hard to think ahead. But the rewards go to those who do.
Corporate Detroit (reprinted with permission)
By Donald Reimer, CMC & Ravi Nayar, CMC

Day-to-day problems are nothing new to the entrepre- neur. Sometimes he or she may even feel that putting out fires is what a small business is all about. Meeting the weekly payroll, collecting payments from customers on a timely basis and ensuring that investors do not bloat out of control are clearly important issues. But when the entrepreneur is consumed by mere survival, he or she has little time to look ahead to longer-term strategic issues facing the company.

The fact is, people who create businesses often do so to respond to an opportunity. They often do little or no planning. Overcoming obstacles to growth after the initial start-up and adapting to market changes become difficult without sufficient strategic planning. Unlike the larger, publicly traded firm, the small, closely held business has not had the pressure from its stockholders and lenders to plan for uncertainty.

Strategic planning should bring an improved competitive position and long-term profits to the company. The strategic process evolves from basic financial planning, forecast-based market planning, externally oriented plan- ning, and, finally, strategic management. It is this last step that brings the resources of the company together to focus on creating a competitive advantage as well as profitable groWth in the future.

“A well-defined mission statement is where it all begins." 

A well-defined mission statement is where it all begins. Unfortunately, many owner/managers of small companies move in too many different directions at the same time. A well-defined mission can give focus and purpose. It is often hard for the entrepreneur to take his or her vision and convert it to long-term reality. Yet success comes to those who do.

The lack of strategic thinking is common among smaller firms for the following reasons:

• The strategic planning is not a function that the owner/manager is familiar or comfortable with. 

• The owner/manager fails to create a culture and climate within the company that fosters strategic thinking.

• Daily operational concerns have a high priority and therefore leave little, if any, time for looking into the future.

• Owners often believe that planning is too time-consuming and not results-oriented.

• Lack of a functioning board of directors.

• Ineffective priority-setting process.

What should be done to foster strategic thinking? The first step should be an assessment of the current situation as well as the development of an action plan. Once you have a better understanding of the culture and climate within the company, you can develop the appropriate action to be taken. The assessment should include a complete evaluation of both internal strengths and weaknesses as well as the external opportunities and threats. Of course, you must develop a mission statement. Without it, you are lost.

The creation of an active board of directors can also help in planning for the future of the company. They can participate in the overall process. Outside board members bring both experience and a fresh perspective. 

The owner/manager should also consider seeking outside professional assistance in this area. There are consultants who specialize in planning. They bring with them the experience of other business owners as well as their own qualifications in this area. 

How do you know if you have a problem? Some of the symptoms of the obstacles to your growth are listed below. If you recognize any of these, steps should be taken to think strategically.

• Sales are increasing satisfactorily. Profits, however, have leveled off or are on the decline.

• Gross profit margins have been steadily on the decline. The bank has watched this trend and is concerned about its loan.

• The company is in a growing market, but sales and profits have leveled off.

• The market has been projected to be declining.

• The company is about to buy another operation in its plan to increase sales and profits, but some key managers are not sure that this is a good move and that it has been carefully planned.

The building of a strong management team becomes the number one task of the growth-oriented owner-manager business. It is hard to achieve profitable growth without a strong team in place. Often the owner/manager believes he or she can do it all. Not so - this belief can be a destructive force and must change. •

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