What Is Effective Strategic Planning for Small Business

Having a strategy is vital for any small business. A strategy defines your plan for moving from where you are today to where you want your business to be in the future. On a more tactical level, having a clearly articulated business strategy is essential to being able to prioritize, build consensus, make decisions, and assess progress toward your goals.

Unfortunately, the “classic” approach to strategic planning doesn’t work very well for small businesses.  The traditional methods found in textbooks are designed for large organizations. Small businesses don’t need the same kind of plan that a large corporation does, and they certainly don’t need the types of plans that global corporations produce. Using the wrong methods for strategic planning can cause a lot of frustration for small business owners as well as wasted time, effort, and resources.

So then, what is the right amount of strategic planning for a small business? What should you focus on? Who should be involved? What should the final plan look like? How much planning is too much?

As a small business owner myself, I understand what it feels like to struggle with these questions. And as someone who coaches business owners and advises small businesses, I have seen owners and leadership teams make planning mistakes that have resulted in missed opportunities, poor decisions, and confusion.

That’s why I’m writing this post – to give owners of small businesses a simple and effective process for performing strategic planning. Let’s start by taking a look at some common issues small businesses run into with strategic planning, the most important elements of planning that small business should focus on, and concrete steps to tackling strategic planning the right way.

The most obvious mistake that small business owners can make is to avoid strategic planning entirely. If you’re reading this post, I assume you already know that this isn’t a great idea. While I’m going to make the argument that you don’t need anything too fancy, you definitely need something. At the least, you need a few foundational elements that I’ll address later.

The other general mistake small business owners make is to over-plan. By over-planning, I mean putting more time and energy into the strategic planning process than you’ll ever get back in terms of results. This happens when small business owners try to follow a process designed for a much larger and more complex organization. This leads to developing a plan that is more than what is actually needed. Over-planning shows up in several recognizable and interrelated ways:

  1. Seeking Planning Perfection – This is an easy trap to get caught in. Understandably, you want everything in your plan to be just right. You can spend a lot of time wordsmithing a mission statement and shuffling goals around. The problem with this is that there is no such thing as a perfect plan. Business owners seeking a perfect strategy and plan get caught in endless revisions, procrastinate, and become frustrated with the planning process. A large company can use a team of experts and writers to fine tune a plan; small businesses can’t. You need to feel confident in your planning, but it’s never going to be perfect, and it doesn’t need to be. Remember, the plan itself is not nearly as important as the conversations and agreement that are fostered in the planning process.
  2. Creating a Marketing Document – If you are writing your strategic plan to impress people outside of the organization, you’re asking for trouble. Large companies and organizations publish plans to an audience of shareholders. For a small business, your plan can look and sound good but won’t be of much help to you if it is lacking in substance. There will be opportunities later to align your branding and marking to your plan. (Note – you may need to develop a Business Plan to appease potential lenders or investors. While important, that’s not the specific type of document we are focusing on here. This post is about an internal strategic plan to guide your business and leadership team.)
  3. Planning for the “Long Term” – Large corporations often develop strategic plans addressing a 3 to 5-year period. They write goals that will take many years to accomplish. This is too long of a time horizon for a small business to tackle. You don’t have enough information to look that far into the future. Things are going to change, and you will need to make frequent adjustments. A three to six-month time period is more realistic and manageable for a small business.

To summarize, trying to replicate a strategic planning process that is designed for a large organization, one that has the resources for days of off-site meetings, extensive market research, and professional writers, isn’t going to help a smaller business. You don’t need a glossy 30-page plan to publish to the world, so check and make sure you aren’t getting hung up on perfection and by trying to predict far into the future. Instead, let’s take a look at the critical elements you should focus on; ones that will help you make decisions, guide your business, and keep you and your team on track.

What You Need in a Strategic Plan

A small business’ Strategic Plan only needs to address three things to be effective and meaningful. The three elements are:

  1. A clear description of purpose and a vision of where you’d like the business to be in the future. Purpose is critical because it serves as a foundation from which you will align your team, solutions, and marketing. It fosters clarity and consensus on why the business exists.
  2. An understanding of where the business is now. Having a snapshot of where the business is today establishes a baseline that will help you plan what needs to happen next.
  3. A small number of actions that will help you bridge the gap between now and the future. Committing to short-term, specific actions designed to move your business toward its purpose will help you stay focused and aligned while minimizing distractions.

3 Steps to Developing a Small Business Strategy

If you’re starting from scratch, you’ll need about 6 – 8 hours of planning time with your leadership team to create a first version of a Strategic Plan. If you already have a solid purpose statement for your business in hand, you can update your plan in a few hours of collaborative discussion.

If things are too busy to sit down and dedicate a full day of planning, you can take an incremental approach by breaking up your efforts into a series of smaller meetings and informal discussions. What’s more important than your exact planning process is that you’re having conversations about these essential aspects of planning.

Now let’s walk through the specific steps you can take to create your plan.

Step 1 – State Your Purpose

Companies wrestle endlessly trying to come up with innovative vision and mission statements. In theory, they are helpful. In practice, they too often are generic, filled with jargon, and have little emotional impact. That’s why we recommend striving for a simple statement of purpose. It can be just one sentence. But it needs to be the right sentence.

Your purpose should be the foundation of all your planning activities. Any goals or actions you set should be directly aligned with your purpose and should advance you closer to achieving it.


In his book The Advantage, author Patrick Lencioni argues that purpose is essential to creating clarity and alignment in any business. Referring to another classic book, Built to Last, he states “successful, enduring organizations understand the fundamental reason they were founded and why they exist, and they stay true to that reason. This helps them avoid losing their way.”

Lencioni goes on to offer some guidelines for developing a meaningful purpose statement and to avoid the “blather” that many companies create when writing a traditional mission statement. They are:

  1. Purpose should be completely idealistic. Accept that all organizations exist to make people’s lives better, even if it’s only in small, subtle ways.
  2. Purpose must be true. It should be based on the real motivations of the business’s leaders, not something that sounds good on paper.
  3. Start by asking the question, “How do we contribute to a better world?” Although this question may sound “soft” to some business owners, it is essential to ask as the beginning of the clarity process.
  4. Once you have your initial answer to this question, drill deeper by asking “why?” Continue asking “why?” until you and your team have identified the most idealistic reason for the business.

Most purpose statements will fall into a category oriented to an area such as customer, industry, greater cause, community, or employees. It doesn’t matter which one your business goes with it is as long as it is an accurate reflection of what is important and true to you and your colleagues.


  • A hospital – “to alleviate pain and suffering in the world.”
  • A paving company – “helping poor, first-generation Americans finds good jobs.”
  • Modern da Vinci – “we exist to help small business owners grow with purpose and speed.”

Your purpose statement doesn’t have to be perfect. Take some time with your leadership team and have an open and honest discussion following the steps above. Come up with a purpose statement that resonates with your leaders, employees, and customers.

Step 2 – Assess Where You Are Today

If you think of your strategic plan as a map that leads you to a destination, this step is the one that helps you to plot out your starting point accurately. For example, if you are planning a trip to the North Pole, it’s hard to decide your first steps unless you know which city you will be leaving from.

The classic way to assess your business’s current position is via a SWOT analysis. A SWOT may sound mundane to some business owners, but it’s a quick, low-tech, and collaborative way to learn more about your business while spotting critical challenges that need to be addressed as well as assets to build on.

To complete a SWOT on your small business, bring your key leaders and team members together for a one or two-hour session. All you need is a whiteboard, flip chart, or computer and someone to capture notes during the discussion. Ask your team to brainstorm the Strengths and Weaknesses they perceive in the business as well as Opportunities and Threats that may emerge in the near future.

Strengths and weaknesses are primarily internal to the organization and relate to matters concerning resources, programs, and organization in the following areas: Leadership/ManagementOperationsProducts/ServicesBudget/FinancesR&DSalesCostsSystems, and Processes.

The external threats and opportunities confronting a company can exist or develop in the following areas: Economic, Industry, Political/Legal, Public Opinion, Competition, Technology.

You can use the following table as a reference to facilitate discussion among your team:


•        What do we do exceptionally well?

•        What advantages do we have?

•        What valuable assets and resources do we            have?

•        What do members/customers identify as              our strengths?


•        What could we do better?

•        What are we criticized for or receive                        complaints about?

•        Where are we vulnerable?


•        What opportunities do we know about,
but have not been able to address?

•        Are there emerging trends on which we                  can capitalize?


•        Are any of our weaknesses likely to make              us critically vulnerable?

•        What external roadblocks exist that block              our progress?

•        Are our competitors doing anything                        different?

•        Is technology dramatically changing the                sector and services to it?

•        Are economic conditions affecting our                    financial viability?

Your team may share ideas that overlap in one or more of the areas. That’s ok – it’s a brainstorming session, and there are no wrong answers. Once you have discussed each area and captured everyone’s input, see if you can draw out 3 – 5 strategic themes that stand out from the overall analysis. These will be helpful when you are ready to design action. Save the results of the SWOT so you can revisit it in the future and assess what is changing.

Step 3 – Set SMART Goals to Plan the Journey

With your purpose in hand and a snapshot of where your business stands today, you’re ready to plan what happens next. This is an important step; the goals and actions you choose to design will guide where you prioritize your business’s efforts and resources over the coming months.

As with the Purpose and SWOT exercises, this is another opportunity to engage your fellow leaders and colleagues in the planning process. Bring your team together and ask the question – “what are the top three goals and actions that will lead us toward purpose while leveraging strengths and shoring up weaknesses?” Reflect on the themes drawn from the SWOT as a starting point.

For example, if through the SWOT your team identified a weakness of lost productivity due to antiquated technology systems, it makes sense to draft a goal around improving or replacing the system, implementing a workaround, or changing the underlying process. The initial version of the goal could state “improve our productivity by fixing our technology issues.”

Once you’ve come up with a list of potential goals, narrow the list down to three to five that are you are ready to commit to as the top priorities for the business. As the business owner, you can ask your team to vote on which are most important or you can choose yourself. The next step is to refine each goal further until it meets the standards of a SMART goal; one that is Specific, Measurable, Achievable, Relevant, and Time-Bound. In the case of our sample goal, it could be improved and focused to state, “improve our productivity by 10% by replacing our CRM system within four months.”

Finally, it’s helpful to break each goal down into very specific tactical action items that you can easily assign and track. You can accomplish this by decomposing each of your top goals into a list of tasks. The tasks should have a short duration (no more than two weeks is a good rule of thumb) and should be written at a level where it will be easy to observe when they are complete. You’ll know you have the right list of tasks when you can assert that finishing each of them will allow you to check the box that the overarching goal is complete.

Continuing with our sample goal, a first task might be “Perform a rapid evaluation of CRM systems that are available in our market and identify the top three candidates for further assessment.” This task could be assigned to the COO with a due date of 10 days.

Put Your Plan into Action

By following the process described in this post, you can develop an effective small business strategy that fits on one or two pages. And you can have it ready to go after investing as few as six to eight hours of planning time. Between your purpose, SWOT, and goals, you’ll have the key foundational pieces that you need to create alignment, focus, and consensus in your small business.

Where possible, give ownership of goals and tasks to the leaders in your business to encourage commitment and ownership.  Revisit the plan at least monthly to assess your progress and make adjustments as needed.  Remember, things are going to change, and you need to be prepared to make adjustments as your move forward and learn.

As Mike Tyson once said “Everyone has a plan ’till they get punched in the mouth.”

You can formally repeat the planning process quarterly, semi-annually, or annually depending on the needs of your business and team.

This article was written by Seth Sinclair and originally appeared on Modern da Vinci