A strategy is a set of goals and objectives that define the direction of the business in the coming months and years. It should be developed and agreed upon by the management team so that they have complete ‘buy-in’ to the strategy.
All of the goals in the strategy should be SMART goals (Specific, Measurable, Achievable, Realistic and Timely) and documented so they can be compared to actual performance.
Once the strategy has been set, it should be reviewed on a periodic basis so that it can be adjusted (if required) to deal with changes in the actual business environment.
The strategy must include documented financial targets e.g. sales targets, a budget by division, cashflow projection, etc. plus other targets like website hits, quote conversion rates, etc. Explicit targets will make comparisons to actual performance that much easier.
The strategy must be fully integrated into the business operations, otherwise the benefits of developing the plan will not be achieved. This means the business operations, including systems and processes must be capable of delivering the strategy.
Consider these questions for your business:
- Do you have a business strategy for the next 3 years?
- Is your strategy documented and does it include SMART goals?
- When was the last time you reviewed and updated your strategy?
- Does your management team know the strategy and how it is to be implemented?
- Have you set your financial and non-financial goals? Are they measured against actual performance?