A strategic business plan is very important to make sure that the business is successful. So why is it that only 15% of small businesses actually have a plan! It may seem like a daunting task to write out the firm’s strategic business plan but after reading this blog it will be understood why the firm has to have one.
Strategic Business Plans are essential to proper agency management and are now often necessary to receive “preferred” status with carriers. In today’s changing climate, to be a successful high-performing firm, an agency must have a Strategic Business Plan.
An agency’s strategic direction is the big picture or the vision needed to guide the firm along the way. The best way to start the process is to create a mission statement. The agency’s mission statement is a clear and specific summary that describes the firm’s purpose. This exercise is a crucial first step to map out the direction of the firm’s future and assist in the planning process.
The next step is to determine the current status of the agency. Owners and key employee need to look within the firm — a self-assessment of the agency and its resources including an inventory of strengths and weaknesses. This allows the planning team members to create meaningful and reachable goals using appropriate tactics.
Well-written Strategic Business Plans capitalize on the strengths of the organization and strive to minimize or eliminate the weaknesses. The major weaknesses identified can be turned into opportunities for improvement. These opportunities then become the agency’s goals of the coming year.
So why is it important to go through all the steps to have a strategic business plan? Well, there are many reasons but we are only going to touch on the ones that seem to be most important for an agency.
The first reason to have a Strategic Business Plan is that it helps managers set specific goals and objectives for the business. When the firm knows what the plan is and what the firm wants to accomplish over the next year or so it makes it easier for management to make sure these tasks are completed. Good management needs to set goals and objectives and they need to have a detailed plan to follow up on them.
Another reason why an agency needs to have a Strategic Business Plan is to see how much the agency is worth. This is also called the valuation of the business. Once all the steps Strategic Business Plan are done so will the valuation of the business. This means that there will be a detailed plan of where the business is now and how much its worth. Goals can then be set for the firm as to how much growth is wanted over the next year or so and how much the firm could potentially be worth once the goals are met.
This leads to being able to merge or sell a business, and in order to do either of these the agency needs to have a Strategic Business Plan and valuation. If a book of business is trying to be sold to another agency, the better the business plan the more the buyer is going to want to buy the book of business. If the buyer can see clearly how much the agency is worth the buyers are more likely to purchase this agency then another that doesn’t have such a plan.
One of the last and most important reasons to have a strategic business plan is to grow the existing business. From the Strategic Business Plan an owner would know where the business could grow over the next year or so. Because of this the owners will be able to focus on sales, acquiring new clients, and making sure existing clients are using the firm to its full potential. By doing these things the owners are making the most money in the most efficient and effortless way.
In conclusion competition is keen. Expenses need to be well controlled. Market cycles continue to cause havoc and agency value is at stake. This annual planning process and self-assessment is the key to success. If owners don’t know where they are going, how can one possibly plan for tomorrow and know how to get there? Agencies without a plan are totally reactive to their environment and have little control over their future. Firms that incorporate an annual planning process tend to be more efficient, more profitable and highly valued businesses. Make a choice. Take the time to plan ahead and be successful or be at the mercy of the winds of change.
At Oak & Associates a perfect tool has just been developed to make planning easy! We have just launched “The One Page Strategic Business Plan” through Oak & Associates’ website. The plan walks owners and managers through all the steps to make sure that the business plan is up to date and to has set goals. This plan also shows owners how to achieve them. Make sure to order a copy of “The One Page Strategic Business Plan” by emailing Oak & Associates at firstname.lastname@example.org.