Strategic Planning for MSMEs- the steps and why it’s important
Enterprises that are headed for success and have plans for continuity are able to tell where they want to be in the future. This means they have envisioned their growth and have seen how they will look like in a couple of years. Just like corporate governance,(refer to a previous article)strategic planning is unfortunately ignored by many micro, small and medium-size enterprises (MSMEs).
Why a strategic plan?
A strategic plan gives the vision of the enterprise for the next couple of years, usually for about five years. Strategic plans define the broad objectives the organization wants to achieve and provides a roadmap of how this will be achieved. A strategic plan gives a general direction for the organization and ensures that even with changes in personnel, it is possible and easy to communicate the vision of the organization to any stakeholder.
Steps in developing a strategic plan
Strategic planning is a circular process that starts with the idea of planning to finally monitoring and controlling the plan. Several scholars have looked at the cycle and the process of strategic planning. In this article I discuss 5 steps that would be key in successful strategic planning.
Step 1: Develop a vision
Developing a statement of vision, means being clear where you want to see the business in the future. A vision statement shows the ultimate goal of the business. It also allows business owners and employees to understand why they are working on what they do on a day to day basis. Developing a vision statement is also important in enabling different stakeholders to have a clear understanding of what the objectives of the organization are.
Step 2: Collect and analyze all the relevant information
At this stage it is important to collect all data on the area of interest for the business. You need to understand the environment the business is operating in. What has been the past performance of related businesses? Information on the legal and policy framework; the financial performance of similar companies; and the environmental, political and social factors that may affect the business- all this information is critical to the development of a strategy. It is equally essential to look into information on trends that may affect the future of the business. One needs to collect as much information as they can around the business in order to give a solid ground for the development of a plan for the organization.
Step 3: Conduct a gap analysis
Carrying out a gap analysis of the business is key to bringing out the essentials that the enterprise should achieve but has not yet achieved. Assess the gaps in regard to resources, capacity and performance. These are what will form the priorities that go into the strategic plan. The gap analysis is vital as it helps the organization to identify ways of improving performance. Ideally, the gap analysis looks at where the organization is and where it desires to be with an eye on what is separating the two.
Step 4: Formulate the strategy
Develop and write SMART goals. Develop the strategic objectives of the organization that show where the organization would want to be by the end of the strategic period. In developing the goals some of the key issues to consider are a SWOT analysis which examines an organization’s own strengths and weaknesses as well as external opportunities and threats. An analysis of the Political, Economic, Social, Technological, Environmental and Legal Environment, commonly referred to as a PESTEL analysis is also crucial in order to understand the environment that you are operating in. In developing the strategy involve the staff that are going to implement it. This creates early buy in and commitment to implementation of the strategy.
Step 5: Implementation and monitoring of the strategy
The final stage is the implementation and monitoring of the strategy. If the strategy is not implemented it will just remain as a good paper done by the organization with no impact. Continuous monitoring allows the organization to make changes where they are needed.
Planning is the first step to the success of an enterprise. You need to draw a roadmap to know where you want to go and how you will get there, hence the need for strategic planning for MSMEs.
By Sarah Makena.