Entrepreneur

Strategic planning: 5 reasons to invest time

Did you know that 70% of companies in Colombia fail in their first five years of life? And that in Mexico, 75% of SMEs do not survive their second year of operations? So is. That is why if you are already starting or planning to do so soon, you should stop for a second to evaluate the planning and strategic management of your business. Why? Here we tell you 5 reasons!

  1. We establish a clear roadmap

    To begin with, it is important to be clear that doing business is not easy, no matter how much you know about the market or the sector in which you work. Managing a company requires strategic planning that allows us to be clear about the mission, vision, and aspiration of the company; its reason for being; what is the heart of your business; the objectives to be achieved in the short, medium, and long term; how these goals are going to be achieved and what resources, both capital, and human, we have for it. This planning must also be reflected in a transversal way in all areas: financial, accounting, marketing, human resources, among others.The Global Failure Index carried out an analysis on the case of Mexico and showed that in addition to the resources to survive, the ventures fail due to poor financial, fiscal, operational, and personal planning, which leads to deficient analysis processes and organizational structures; lack of indicators, execution problems, shareholder conflicts, and poor time management. This further reaffirms the need to plan before executing.
  2. The failure of companies in the initial stage is reduced It

    is important that strategic planning is done in the initial stage of organizations, because this is where companies fail the most, as shown by the figures of the annual report of The Failure Institute, on the phases in which ventures fail: ARGENTINA
    Initial stage: 50%
    Establishment: 8.33%
    Maturity: 8.33%COLOMBIA
    Initial stage: 56.41%
    Establishment: 15.38%
    Maturity: 10.26%

    MEXICO
    Initial stage: 32.73%
    Establishment: 18.06%
    Maturity: 12%

    To this is added the relevance that this is not an exclusive matter of one or two countries, but of the way of doing business :

    * The United States, 30% of companies fail in their first three years;
    * In Spain, 80% bankrupt in the first five years;
    * In Argentina, only 7% reach the second year of operations;
    * In Chile, 25% disappear in the first year;
    * In Mexico, 75% closes after two years.

  3. Define the KPIs that are going to be measured.

    With the defined indicators, we will be able to know how we are progressing on different fronts of the organization and how often it is prudent to evaluate progress on each one.
    According to Ignacio Martínez, coach in leadership and strategy, there are two types of KPIs: operational and strategic. The first allows establishing what happens with the activities of the company day by day and, the second, to assess where the organization is in the face of the desired future.

  4. You identify the strengths, opportunities, weaknesses, and threats

    As part of strategic planning, you will need to make a matrix to identify the sector in which you operate, your strengths, and the added value that you will offer to your clients, compared to the competition. But at the same time, you will be able to identify what risks you face, who your competitors are, and what are weak points that you have in front of them.
    This will help you make strategic decisions to take advantage of strengths and opportunities and improve on the fronts that you still need to do.
  5. Focuses on the team and works for the same objectives

    Every company manager must be able to provide his team with a clear direction. In this sense, strategic planning will not only define the objectives and the time in which it is projected to achieve them, but it also establishes how each area can contribute on that path.
    This has several benefits: it provides workers with certainty about the future of the company, involves the entire team of collaborators in that strategy, and focuses all efforts on achieving goals.
  6. What are the phases of strategic planning?To carry out successful strategic planning, Gabriel Roncancio, Business Intelligent Consultant at Pensemos, gives us the following steps:

    • Planning the strategy:
       based on a strategic map, define the company’s objectives, which go hand in hand with the measurement indicators and the time in which they will be achieved. A short-term action plan and estimated budget should also be drawn up to get started. “Set up a charge that ensures a follow-up of the entire execution of the strategy.”

    • Align the organization with the strategy:
       communicate to the whole team the roadmap that has been drawn and how each area plays an important role in it. It is important to motivate the participation of each collaborator, both internal and external. Additionally, it identifies which business units are aligned with each other and which should be more closely linked.

    • Plan the operation of the organization:
       structure a plan that answers the following two questions: Which improvements to the business processes are the most critical for the success of the strategy? And how can you relate the strategy to operational plans and budgets?

    • Control and learn from the operation:
       manage short-term operations review meetings to evaluate the results. “This will help you to examine in detail the performance of each of the departments and the functions that must be implemented to solve new problems or existing problems,” says Roncancio.

    • Test and adapt the strategy:
      after a prudent period of execution of the new strategy, establish evaluation meetings to monitor the indicators, evaluate results, and question whether the indicated strategy is being executed. If necessary, make changes on the fronts that identify little progress.

    If you want to leverage the growth of your company through excellent strategic planning, with AlfaRoyale you will learn about the four types of growth strategies: by entry, by scale, through innovation, and by acquisition or merger.

    Discover our Strategic Management course, explore the content, sign up, and get certified to work hand in hand with business experts. Reach new opportunities and put your company to fly!

  7. Create the strategy: define the mission, vision, and values ​​that govern your organization. An analysis of the environment must also be carried out, defining the aspects to achieve better competition and making a SWOT matrix.

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