The Importance of Strategic Planning for Manufacturers
Strategic planning sets the course for where your company is going. It is the over-arching plan that affects all other plans. A good plan informs employees about the direction the company is taking, and this master plan is also useful for guiding day-to-day operations and daily decision-making. Careful thought is given to strategic objectives, measureable goals and quantifiable benchmarks for evaluating results. It is unimaginable to manage without this powerful planning tool!
Four Qualities of a Good Strategic Plan
Every company, no matter how big or small, needs a strategic plan. It is a misconception that strategic plans are only for large public companies. The depth of the plan and its detail will vary based on the size and complexity of the company, but each business needs this valuable roadmap to grow and prosper.
- A good strategic plan is Each department of the company should be included in strategic planning. Participation in the planning process builds a sense of inclusion and teamwork. One way to ensure the plan’s success is to have a large diverse group of people draft the plan. Many companies make the mistake of asking a small silloed group of people to develop the plan.
- A good strategic plan is built “top down” and “bottom up”.Senior management should take the lead and begin the planning process by providing operating assumptions. The viability of these assumptions can be changed and adapted as the planning process evolves. Encourage department managers to challenge these assumptions. Open discussion usually leads to better planning
- A good strategic plan offers guidance to management when tough decisions need to be made. Managers often need to decide between alternative courses of action.
- A strong strategic plan tells the company’s story. The strategic plan should speak to a varied audience. New managers find it helpful to learn about the company during their orientation period. Potential lenders and investors are impressed with a solid strategic plan with quantifiable and measurable goals. The financing decision becomes easier for lenders when criteria for success are spelled out.
A Few Tips
Provide executive summary and key financial targets at the beginning of the plan. Many plans are discarded because the key information is buried in reams of analysis and not readily available to the typical user. The use of graphs and charts in the summary is a great help as well.
Strategic plans need to be quantifiable and measureable. Progress towards plan objectives need to be measured each quarter, just as the budget and management incentives are measured each quarter. Annual budget and management incentives need to be tied to the strategic plan. A good one will provide detailed information regarding performance expectations.
Finally, revise and reassess the plan on an annual basis. However, learn from the experience and do not continually make the same forecasting and planning mistakes. The idea is to learn and grow from past practice.
NJMEP and its resources will help your company work through the strategic planning process. Contact NJMEP to learn more. Schedule a free evaluation by calling us at (973) 998-9801 or connect with us at https://www.njmep.org/contact-us/
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