In the start-up circle, people often roll their eyes at the mention of ‘planning’. They think that start-ups are too cool to plan. They say that the beauty of entrepreneurship lies in the uncertainty of everything. By the time they realized that they are heading for a disaster, it is already too late. More often than not, the reason turns out to be the lack of proper planning.
A start-up is as strong as the strategic planning behind it.
In this article, we will touch upon the topic of ‘strategic planning’ and shed light on the importance of the same.
Why does your start-up need strategic planning?
A strategic plan is a set of steps and strategies that a company needs to identify and implement at earlier stages in order to meet its predefined objectives.
Time and again, it has been observed that start-ups generate sales easily and covers the growth curve quickly. Then they hit the point of stagnation. At this stage, start-ups with a well-crafted strategic plan find their way out, while the start-ups ‘too cool to plan’ get stuck in the swamp of anonymity. With the help of this strategic plan, the founder of a company can define a growth path for themselves as well as the employees. Another major benefit of this plan is that it acts as a device to measure and re-calibrate success regularly. Lastly but most importantly, VCs are likely to fund a start-up with a strategic plan and clarity of goal as compare to start-ups with just ‘an idea that will change the world.’
Difference between Strategic Plans and Business Plans
A strategic plan is a kind of a business plan, but quite different from the business plan itself. A business plan is the literature of a start-up. It charts out the very definition of the company, how it is going to sell its product, at what price, etc. It is drafted in the initials phase of a company. On the other hand, a strategic plan is drafted for a company that has grown out of its initial phase and is an established venture now. The bigger the company gets the more crucial the need for a strategic plan gets. Another mistake that people make while making a strategic plan is that they think of it as a static plan. In reality, a strategic plan must be seen as a dynamic activity, that must be optimized as an when a challenge or an opportunity presents itself.
The building blocks of a Strategic Planning-:
- Vision: The vision defines what a company plans to become or achieve in the future. It is what drives a business and gives the employees a path. A well-crafted vision must answer these questions about the business – What business are we operating in? Who is our customer? What is success in the long and short-run? What is the company’s competitive advantage?
The beliefs and the founding principles of a company are its values. The values of a company are permanent. It has been found to be beneficial to write a core value statement.
- Mission Statement:
A mission statement states the core incentive for a firm to engage in business. It does not compose the strategic planning directly but creates the foundation by defining the strategic objectives. It differs from the vision statement in terms that it does not project a future goal for the company.
Goals are the results that we desire to get out of the company’s efforts and activities. Well-defines goals are specific, measurable, achievable, realistic, and time-bound. For example, the goal of increasing sales by 30% in 2 years will be more likely to be achieved as compared to the goal of selling more products rapidly.
Every company must be founded on the fact that they do something better than everyone. These activities that a company specializes in are termed as its core competencies. Every start-up must assess, define, hone its core competencies and associated skills.
A plan is useless if it can’t be evaluated in terms of performance and effectiveness. Therefore, every organization, established or start-up, must-have performance indicators against which it can measure its success.
Now, when we have discussed the composition, need, and importance of strategic planning, we believe that you have a better chance of taking a start-up to newer heights. In case, you have doubts that can’t be resolved with a strategic plan, then it is recommended that you do a pilot test of your core business idea. Participating in a start-up contest can be a good idea. Rajan Nanda Innovation Lab recently launched its Inter College Innovation Challenge – a start-up contest for the budding entrepreneurs of India. Students from colleges all over India with innovative technology solutions in agri-tech, rail-tech and infra-tech can submit their names for the contest. 10 most creative and innovative product ideas will win seed funding of Rs. 5 lakhs each.