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Business Planning Papers:
Developing a Strategic Plan

Page Contents

  1. Introduction to Strategic Planning
  2. Key Steps towards a Strategic Plan
  3. Use Hindsight when Strategic Planning
  4. Effect not Equal to Cause when Planning Strategy
  5. SWOTs - Keys to Business Strategies
  6. Simple & Short Strategic Plans
  7. Using the Strategic Planning Worksheet
  8. Strategic Planning Worksheet
  9. Introducing PlanWare
  10. Copyright & Legal Stuff
Free Online Strategic Planner

Free Online Strategic Planner for creating a 3-page strategic plan based on the structure used in this white paper. Use it to organize your thoughts, structure your ideas and compile a short but comprehensive strategic plan for any size and type of organization.

Recommendation: Review the paper on this page before using the planner.

Click here to see feedback from past users of this planning tool (opens in a new window) and click here to see a sample plan (use back button on browser to return to this page).


1. Introduction to Strategic Planning

If you don't know where your business is going, any road will get you there.

What is a Strategic Plan?

Entrepreneurs and business managers are often so preoccupied with immediate issues that they lose sight of their ultimate objectives. That's why a business review or preparation of a strategic plan is a virtual necessity. This may not be a recipe for success, but without it a business is much more likely to fail. A sound plan should:

  • Serve as a framework for decisions or for securing support/approval.
  • Provide a basis for more detailed planning.
  • Explain the business to others in order to inform, motivate & involve.
  • Assist benchmarking & performance monitoring.
  • Stimulate change and become building block for next plan.

For inspiration (and a few smiles), have a look at some of the quotations and examples of bad advice included in other pages!

A strategic plan should not be confused with a business plan. The former is likely to be a (very) short document whereas a business plan is usually a much more substantial and detailed document. A strategic plan can provide the foundation and frame work for a business plan. For more information about business plans, refer to How to Write a Business Plan, Insights into Business Planning and Free-Plan: Business Plan Guide & Template.

A strategic plan is not the same thing as an operational plan. The former should be visionary, conceptual and directional in contrast to an operational plan which is likely to be shorter term, tactical, focused, implementable and measurable. As an example, compare the process of planning a vacation (where, when, duration, budget, who goes, how travel are all strategic issues) with the final preparations (tasks, deadlines, funding, weather, packing, transport and so on are all operational matters).

A satisfactory strategic plan must be realistic and attainable so as to allow managers and entrepreneurs to think strategically and act operationally - see Devising Business Strategies for further insights.

Get Strategic Planning Help:

Free Online Strategic Planner for creating a 3-page strategic plan.

See Also: Expert tools for Assessing Business Ideas (US$ 229.95)
and Evaluating Marketing Strategies (US$ 795.00).

See a sample strategic plan - use the back button on your browser to return to this page.

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Basic Approach to Strategic Planning

A critical review of past performance by the owners and management of a business and the preparation of a plan beyond normal budgetary horizons require a certain attitude of mind and predisposition. Some essential points which should to be observed during the review and planning process include the following:

  • Relate to the medium term i.e. 2/4 years
  • Be undertaken by owners/directors
  • Focus on matters of strategic importance
  • Be separated from day-to-day work
  • Be realistic, detached and critical
  • Distinguish between cause and effect
  • Be reviewed periodically
  • Be written down.

As the precursor to developing a strategic plan, it is desirable to clearly identify the current status, objectives and strategies of an existing business or the latest thinking in respect of a new venture. Correctly defined, these can be used as the basis for a critical examination to probe existing or perceived Strengths, Weaknesses, Threats and Opportunities. This then leads to strategy development covering the following issues discussed in more detail below:

  • Vision
  • Mission
  • Values
  • Objectives
  • Strategies
  • Goals
  • Programs

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2. Key Steps towards a Strategic Plan

The preparation of a strategic plan is a multi-step process covering vision, mission, objectives, values, strategies, goals and programs. These are discussed below.

The Vision

The first step is to develop a realistic Vision for the business. This should be presented as a pen picture of the business in three or more years time in terms of its likely physical appearance, size, activities, structure, scale offerings etc. Answer the question: "if someone from Mars visited the business, what would they see (or sense)?" Consider its future products, markets, customers, processes, location, staffing etc. Here is a great example of a vision:

I will come to America, which is the country for me. Once there, I will become the greatest bodybuilder in history.......... I will go into movies as an actor, producer and eventually director. By the time I am 30 I will have starred in first movie and I will be a millionaire...... I will collect houses, art and automobiles. I will marry a glamorous and intelligent wife. By 32, I will have been invited to the White House. Attributed to Arnold Schwarzenegger who was elected Governor of the State of California in 2003.

The Mission

The nature of a business is often expressed in terms of its Mission which indicates in a factual way the purpose and activities of the business in terms of operations, (unique) characteristics, functions, customers, offerings, sectors/segments, scale/scope/penetration, methodologies, technologies, resources etc. Just answer the questions as to what the business really is and does in qualitative terms. If planning for a startup, base the mission statement on the business as it would be once operational - be realistic and practical rather than aspirational.

For example, "to design, develop, manufacture and market specific product lines for sale on the basis of certain features to meet the identified needs of specified customer groups via certain distribution channels in particular geographic areas". A statement along these lines indicates what the business is about and is infinitely clearer than saying, for instance, "we're in electronics" or worse still, "we are in business to make money" (assuming that the business is not a mint !).

Also, some people confuse mission statements with value statements (see below) - the former should be very hard-nosed while the latter can deal with 'softer' issues surrounding the business. The following table contrasts hard and soft mission statements.

Hard Soft
What business is/does
Primary products/services
Key processes & technologies
Main customer groups
Primary markets/segments
Principal channels/outlets
Reason for existence
Competitive advantages
Unique/distinctive features
Important philosophical/social issues
Image, quality, style, standards
Stakeholder concerns

Compare the following statements:

Hard Statement Soft Statement
X Corp. designs, develops, assembles and markets systems for data base management. These systems integrate its proprietary operating system software with hardware supplied by major manufacturers, and are sold to small, medium and large-sized companies for a range of business applications. Its systems are distinguished by a sophisticated operating system, which permits use without trained data-processing personnel. Our mission is to enhance our customers' business by providing the very highest quality products and services possible. Our customer support strategy is based upon total, no-compromise customer satisfaction and we continually strive to offer a complete package of up-to-date value added solutions to meet our customers' needs. We value above all our long term customer relations.

Intel's original plan, written on the back of a menu (view copy), is an excellent example of a hard statement:

The company will engage in research, development, and manufacture and sales of integrated electronic structures to fulfill the needs of electronic systems manufacturers. This will include thin films, thick films, semiconductor devices, and ......... A variety of processes will be established, both at a laboratory and production level ...... as well as the development and manufacture of special processing and test equipment required to carry out these processes. Products may include dioded transistors ....... Principal customers for these products are expected to be the manufacturers of advanced electronic systems ..... It is anticipated that many of these customers will be located outside California.

If you'd prefer a soft statement, use the Dilbert Mission Statement Generator.

When drafting a mission statement, critically examine every noun, adjective and verb to ensure that they are focused, realistic and justified.

The Values

The next element is to address the Values governing the operation of the business and its conduct or relationships with society at large, customers, suppliers, employees, local community and other stakeholders.

The Objectives

The third key element is to explicitly state the business's Objectives in terms of the results it needs/wants to achieve in the medium/long term. Aside from presumably indicating a necessity to achieve regular profits (expressed as return on shareholders' funds), objectives should relate to the expectations and requirements of all the major stakeholders, including employees, and should reflect the underlying reasons for running the business. These objectives could cover growth, profitability, technology, offerings and markets.

The Strategies

Next are the Strategies - the rules and guidelines by which the mission, objectives etc. may be achieved. They can cover the business as a whole including such matters as diversification, organic growth, or acquisition plans, or they can relate to primary matters in key functional areas, for example:

    • The company's internal cash flow will fund all future growth.
    • New products will progressively replace existing ones over the next 3 years.
    • All assembly work will be contracted out to lower the company's break-even point.

Use SWOTs to help identify possible strategies by building on strengths, resolving weaknesses, exploiting opportunities and avoiding threats.

For further discussion on strategies, refer to the paper on Devising Business Strategies as well as these items below: Use Hindsight when Strategic Planning, Effect not Equal to Cause when Planning Strategy and SWOTs - Keys to Business Strategies.

The Goals

Next come the Goals. These are specific interim or ultimate time-based measurements to be achieved by implementing strategies in pursuit of the company's objectives, for example, to achieve sales of $3m in three years time. Goals should be quantifiable, consistent, realistic and achievable. They can relate to factors like market (sizes and shares), products, finances, profitability, utilization, efficiency.

The Programs

The final elements are the Programs which set out the implementation plans for the key strategies. These should cover resources, objectives, time-scales, deadlines, budgets and performance targets.

Get Strategic Planning Help:

Free Online Strategic Planner for creating a 3-page strategic plan.

See Also: Expert tools for Assessing Business Ideas (US$ 229.95)
and Evaluating Marketing Strategies (US$ 795.00).


It goes without saying that the mission, objectives, values, strategies and goals must be inter-linked and consistent with each other. This is much easier said than done because many businesses which are set up with the clear objective of making their owners wealthy often lack strategies, realistic goals or concise missions.

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3. Use Hindsight when Strategic Planning

Statements on vision, mission, objectives, values, strategies and goals are not just elements of future planning. They also provide benchmarks for a historic review. Most managers will find it exceedingly difficult to develop a future strategy for a business without knowing its current strategies and measuring their success to date.

Assess Current Position

The starting point must be to determine a company's existing (implicit or explicit) vision, mission, objectives and strategies. Then judge these against actual performance along the following lines:

  • Is the current vision being realized?
  • How has the company's mission and objectives changed over the past say, three years? Why have the changes occurred or why have no changes occurred? Identify primary reasons and categorize them as either internal or external.
  • Describe the actual strategies followed over the past few years in respect of products/services, operations, finance, marketing, technology, management etc.
  • Critically examine each strategy statement by reference to activities and actions in key functional areas covering such matters as:
    • How has the company been managed?
    • How has the company been funded?
    • How has the company sought to increase sales and market share?
    • How have productivity/costs moved?

Take each element and quantify by reference to actual performance. Ask of each "why not"?, "why only"?, or "why so"? and locate the reasons for differences between the actual and desired performance.

Drill Down

A useful technique for exploring performance shortfalls is to review the business's financial return and to drill down through the components of this return to locate and assess the key determinants of performance. For example, return on shareholders' funds is a key measure of profitability which can be expressed as:

Net income
------------
Sales
X Sales
-----------
Shareholders' funds

Take each item in this formula, explore its contents and derive performance measures or ratios. For example:

Sales break down into sales values, units, prices, discounts, commissions, bad debts and so on.
Net income is derived by deducting costs (materials, labor, power etc.), expenses, interest and depreciation from sales revenue.
Shareholders' funds are based on the value of fixed assets, current assets, current liabilities, debt etc.

Click to display full sizeUse of cascading ratios is illustrated in this DuPont-type profitability chart (click thumb opposite) which is automatically generated by more powerful versions of Exl-Plan to show the impact of specific changes in key variables and assumptions on overall profitability.

Subject the resultant ratios to critical examination and attempt to compare them with industry norms. The paper entitled Managing Working Capital explains key working capital ratios.

Note that the Exl-Plan financial planners generate extensive ratios based on projected P&Ls, cashflow forecasts and balance sheets for 1-3-5-7 years ahead.

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4. Effect not Equal to Cause when Planning Strategy

When reviewing a business it is essential to cut through the symptoms of problems and reach the underlying causes. Questions which can assist in revealing the real causes include the following:

  • "What stopped the business from?"
  • "What caused the cause of?"
  • "Why didn't the business achieve a 25% return?"

By way of an example consider why this company may be unable to increase its market share:

Because it cannot penetrate major customers because its product range is too narrow because the company doesn't have the capability to produce additional products because of shortcomings in R & D because of a lack of expertise and resource because R & D is not an immediate priority because of a lack of profits because of a high interest burden because the company is over-reliant on borrowings because the shareholders won't/can't raise additional permanent capital.

The moral in this case is that there are no major customers due to under-capitalization !

Also have a look at the discussion on causes of business failure in Devising Business Strategies.

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5. SWOTs - Keys to Business Strategies

Having built up a picture of the company's past aims and achievements, the all-important SWOT (strengths, weaknesses, opportunities and threats) analysis can commence.

Strengths & Weaknesses

Strengths and weaknesses are essentially internal to the organization and relate to matters concerning resources, programs and organization in key areas. These include:

  • Sales - marketing - distribution - promotion - support;
  • Management - systems - expertise - resources;
  • Operations - efficiency - capacity - processes;
  • Products - services - quality - pricing - features - range - competitiveness;
  • Finances - resources - performance;
  • R&D - effort - direction - resources;
  • Costs - productivity - purchasing;
  • Systems - organization - structures.

If a startup is being planned, the strengths and weaknesses are related mainly to the promoter(s) - their experience, expertise and management abilities - rather than to the project.

Take a moment to complete or view the results of this survey.

Survey about Strengths & Weaknesses of Businesses

The objective is to build up a picture of the outstanding good and bad points, achievements and failures and other critical features within the company.

Threats & Opportunities

The external threats and opportunities confronting a company, can exist or develop in the following areas:

  • The company's own industry where structural changes may be occurring
    (Size and segmentation; growth patterns and maturity; established patterns and relationships, emergence/contraction of niches; international dimensions; relative attractiveness of segments)
  • The marketplace which may be altering due to economic or social factors (Customers; distribution channels; economic factors, social/demographic issues; political & environmental factors)
  • Competition which may be creating new threats or opportunities
    (Identities, performances, market shares, likely plans, aggressiveness, strengths & weaknesses)
  • New technologies which may be causing fundamental changes in products, processes, etc.
    (Substitute products, alternative solutions, shifting channels, cost savings etc.)

Against an uncertain and shifting background, the objective must be to identify and prioritize the key SWOTs in a one-handed manner (Don't say "on the one hand ...........but on the other hand.........").

Develop Business Strategies

Once the SWOT review is complete, the future strategy may be readily apparent or, as is more likely the case, a series of strategies or combinations of tactics will suggest themselves. Use the SWOTs to help identify possible strategies as follows:

  • Build on strengths
  • Resolve weaknesses
  • Exploit opportunities
  • Avoid threats

The resulting strategies can then be filtered and moulded to form the basis of a realistic strategic plan - see also Devising Business Strategies for further insights into the development of strategies.

Need More Help with your Strategic Planning ? Have a look at:

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6. Simple & Short Strategic Plans

Notwithstanding that "battles are often lost for want of nails", a company rarely succeeds or fails for minor or trivial reasons. The causes are usually substantial and are often self-evident, at least to an outsider. For example, the business was completely over-borrowed; management was weak; a major new product opportunity was identified; legislation changed; a major competitor went bust or expanded; the company never reinvested.

It should be possible in the course of a few pages to set down the main elements of a business's vision, mission, values, objectives, goals, strategies, SWOTs etc. The compilation of a short report along these lines is likely to prove much more difficult than a lengthy dissertation which mixes up details and principles, and confuses the broad picture. See a sample strategic plan - use the back button on your browser to return to this page.

Get Strategic Planning Help:

Free Online Strategic Planner for creating a 3-page strategic plan.

See Also: Expert tools for Assessing Business Ideas (US$ 229.95)
and Evaluating Marketing Strategies (US$ 795.00).

Independent advisers or non-executive directors can play a valuable role in this process because they can readily adopt the role of devil's advocate and also bring external knowledge and expertise to bear. The worksheet presented below may also assist.

For further information on business planning issues, refer to other papers in this series which cover business ideas, business strategies, financial planning, cashflow forecasting and business planning.

Free Tools from PlanWare
  • Business financial planner for high-level, integrated 2-year projections using Excel - details and download links for Exl-Plan Free.
  • Excel-based, comprehensive, rolling 6-month cash flow planner - details and download links for Cashflow Plan Free.
  • Business plan template & guidelines (Word format) - details & download link for Free-Plan.
  • Online strategic planner for creating a 3-page strategic plan - details and sample plan.
  • More free tools here.

Need More Assistance? Have a look at:

Exl-Plan Multi-year Financial Projections (with Excel)
Cashflow Plan Short-term Cashflow Forecasts (with Excel)
Plan Write Comprehensive Business Planner
Plan Write Marketing Planner
Plan Write Expert Business Planner
Quick Insight Business Idea Assessor
Business Insight Business Strategy Evaluator


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7. Using the Strategic Planning Worksheet

When using the Strategic Planning Worksheet below, note the following suggestions:

  1. Relate the planning exercise to a specific company or, if diversified, to individual strategic business units.
  2. Ideally the worksheet should be compiled by a multi-discipline management group, or separately by 2/3 groups and then discussed in plenary session if a large business unit is involved.
  3. If working on your own, complete the worksheet and then return to it a few times over the following few days and critically review what you wrote - why, why, why etc. and ask yourself whether you have seen the "wood for trees".
  4. A completed worksheet should be edited down into a 1-2 page document and reviewed by the group(s). The final form of the document need not follow the worksheet's layout provided all the matters are covered.
  5. All ideas, issues etc. should be internally consistent and realistic.
  6. You need a very good understanding of the market, competitors etc. in order to make a clear assessment of your SWOTs. If you haven't got this insight, suspend work on your strategic plan until you have done this basic research.
  7. Allow enough time as you may find it much more difficult to write a short plan than a long one !!!!

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8. Strategic Planning Worksheet

To start using the worksheet below, copy the headings marked in red onto a blank sheet of paper (or page in a word processor) and enter short statements about each item as per the guidelines above.

Note: This worksheet is available as a free Online Strategic Planner. See sample strategic plan - you may wish to print it for reference purposes. (Use the back button on your browser to return to this page.)

Contents of the Strategic Plan

1. Assess the business's EXISTING strengths, weaknesses, threats and opportunities:
(Strengths & Weaknesses are internal to the business and Opportunities & Threats are external. All SWOTs should be 'one-handed' - something is either a Strength or a Weakness but cannot be both. Enter up to six items under each heading and then rank them in order of importance. If you are planning a new business, consider the project's and its promoters' existing SWOTs):

Internal Strengths

Internal Weaknesses

External Threats

External Opportunities



Take a moment to complete or view the results of this survey.

Survey about Strengths & Weaknesses of Businesses

2. Vision of business in 3/4 years time:
(What will the business look like? If a visitor from Mars dropped in what would be seen and evident. Write in future tense. Maximum of 150 words)

3. Mission/purpose statement for business to cover next 3/4 years:
(What will the business really, really be doing? What activities will it perform, where, how etc.? What makes the business special/competitive? Every noun, adjective and verb in the statement is important and must be justified. Maximum of 150 words)

4. Statement of corporate values and beliefs:
(Covers employees, customers, environment etc. etc. Maximum of 150 words)

5. Set out key long-term objectives:
(These are the primary underlying reasons for being involved in the business, and are not specific targets - these come later)

5a Shareholders

5b Management (If different from shareholders)

5c Business (Relative to competitors etc.)

6. Identify key strategies for business and major functional areas:
(Build on strengths, resolve threats, exploit opportunities and avoid threats. Add any new dimensions revealed by Vision and Mission. List and prioritize up to ten or so major strategies. See Devising Business Strategies for further insights.)

7. Assess possible FUTURE strengths, weaknesses, threats and opportunities:
(Do the foregoing strategies improve the initial SWOTs? If they don't, then they should have done so)

Internal Strengths

Internal Weaknesses

External Threats

External Opportunities

8. Review your vision, mission, values and objectives:
(Refine and revise/restate key strategies to deal with the perceived FUTURE SWOTs)

9. Specify major goals achievable over the next 3/4 years:
(Quantify in terms of sales, market shares, finances, operations etc.)

10. Define strategic action programs:
(Indicate who, what, where, when, how etc. Set targets and prioritize)

Note: This worksheet is available as a free Online Strategic Planner.

Next Steps in Developing a Strategic Plan

If you have prepared a strategic plan along the lines suggested above, you have several possible pathways. These include the preparation of a full-blown business plan, compilation of financial projections, undertaking market research, product development, management team-building etc. etc. You may also wish to refer to some other papers in this series which cover business ideas, business strategies, cashflow forecasting and managing working capital.

If preparing a business plan, look at Free-Plan. This is a free Business Plan Template for Word (48 pages) and a complementary Guide (supplied as a 90+ topic Help file and as a 100+ page PDF file for printing. Note that a strategic plan based on the structure in the Strategic Planning Worksheet (above) is ideal for inclusion in edited form in Section 3. Strategic Overview of this Template.

If you need to produce financial projections as part of a strategic plan or for use on their own, take a look at our extensive range of Excel-based financial planners - Exl-Plan - which can be used to prepare 3/5-year financial projections (P&Ls, cashflows, balance sheets, ratio analyses and graphs). It incorporates a Quik-Plan facility for doing quick and dirty projections. If you seek a very simple solution, look at Exl-Plan Basic (US$ 29) which generates comprehensive "high-level" 5-year projections based on annual assumptions (in contrast to the more detailed monthly and quarterly assumptions used by other versions in the Exl-Plan range). Get the details and free trial downloads.

If you need to go into more detail with your strategic plan, have a look at the following software-based expert systems:
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9. Introducing PlanWare

PlanWare develops and sells a range of financial planning packages - Exl-Plan and Cashflow Plan - for businesses of all sizes & types. Trial versions of all products can be downloaded from our PlanWare site and many other sources on the 'Net.

We also offer an extensive range of commercial software for writing business plans, market planning, assessing business ideas and evaluating strategies.

PlanWare also features:

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