Strategic Planning

The epitome of strategic planning can be summarised in the phrase 'fail to plan, plan to fail', because the failure to meticulously plan the direction of the products or services that you provide, will only increase the financial burden and risk upon the business. Successful businesses sell products and services that customers want, when they want them and in a manner they want to receive them, and they do this so efficiently that it appears seamless.

A perfect example of this is a business we came across a while ago. From the outside it was difficult to tell what problems lay beneath the surface, but on closer inspection we were surprised by the sheer lack of planning. The company made 'widgets', sales were at an all-time low and cash flow was in limited supply. Then one day, one of the Directors had a brief conversation with a close relative who suggested a new product for them to manufacture. So what did they do? Did they conduct any market research with potential customers in this entirely new market sector? Did they go to the manufacturers and cost up materials/machinery? Did they speak to competitors in the sector to solicit any jewels of information? Perhaps they made a mock-up and advertised it appropriately? No, unfortunately they didn't do any of this. What they did was to lock themselves away for two weeks making lots and lots of new 'widgets', stock piling in readiness for the huge demand about to come. Of course the demand failed to materialise.

The route they chose for their business was to make new products, for new markets almost a complete diversification from where they were. They could have chosen other routes which were less risky but being so close to the business they could not see the problem. There is no doubt that the pressures upon those Directors were huge, but the decisions they took only made matters worse for everyone concerned. Yes, it is good to get the ideas of a relative, they are free after all, but even if the idea had come from a 'Captain of British Industry' it should have been researched further before committing any cash. Unfortunately by the time we met them it was all too late and some weeks later the Company ceased trading.