Most business owners would agree that having a business strategy is important and necessary for every business to grow and compete effectively.
Overall, strategic planning helps to increase operational efficiency, market share and profitability of your business. In the long run, the exercise makes the business more sustainable as it has taken into account the potential opportunities, trends and threats that might affect it.
To help business owners get a better understanding about the importance of having a business strategy, we are sharing our insights on the 5 benefits your business could derive from strategic planning.
1) Creates a sense of direction
A strategic plan helps to creates a sense of purpose and to define the direction in which an organisation must travel, and aids in establishing realistic objectives and goals that are in line with the vision and mission charted out for it. It also creates the necessary foundation and boundaries to determine resource allocation and efficient decision-making in the following areas (e.g. budget allocation, hiring decisions, operational processes, marketing strategy etc.)
2) Increase operational efficiency
With a clear plan and direction in place, resources could be channelled and monitored more effectively to ensure that effectiveness is enhanced and wastage is reduced. Effective goals and KPIs could be set and measured to determine the progress and growth of the organisation.
3) Increase market share and profitability
By crafting and adopting a dedicated strategic plan, organisations can get valuable insights on market trends, consumer segments, buying behaviour/patterns. With a well-planned and targeted approach, a clear strategic intent could be channeled into sales and marketing efforts, leading onto a higher possibility of increasing profitability and market share.
4) Increase durability and sustainability
Businesses are constantly adapting to change, especially in a digitally-led economy. The purpose of strategic planning is to flag out potential internal/external shocks and prepare the business to be more effective in adapting. With industry trends and consumer demands constantly changing, organisations that lack a strong foundation, focus and foresight will have difficulties riding the next wave.
5) Being proactive instead of reactive
The current dynamic business environment requires every business to be equipped with a good strategic plan. Strategic planning enables your business to stay ahead of the curve and be on top of the competition. It will also enable your business to find and benefit from potential opportunities present in the market.