What’s the Value of a Strategic Plan?
In order to qualify for a business loan, a strategic business plan must be submitted to the bank. This isn’t difficult for most entrepreneurs because they have a vision of what they want to create in the long-term, and have taken the time to think about the short-term steps required to start on that journey.
Most businesses follow this process even after they have been established. They keep a vision of their long-term goals and develop annual plans that ensure they continue progressing toward achievement of those goals. But this is a rare practice for most (non-national) professional services firms.
What is a Strategic Plan and How is it Used?
A strategic plan identifies longer term goals for a firm: how big it will be, what practice areas it will have, where it will reside and how many offices it will have, what its client base will look like, how it will manage itself, how it will differentiate itself in the marketplace, etc. From this declaration of future goals, a firm would then develop annual business objectives aimed at taking the firm one step closer to accomplishment of the goals in the strategic plan. Once annual business objectives are set, each practice group and administrative department within the firm would then build their own annual strategy that speaks to how they will contribute toward accomplishment of the firm’s one-year business goals.
This long and short term planning process is a standard business practice for most organizations, with the notable exception of professional services firms.
Why is The Planning Process Not Standard for Professional Services Firms?
For one thing, it takes time. Many professionals bill by the hour, and assess their value based on monthly productivity. Items of long-term investment are a hard sell to such individuals.
Next, firms may have attempted the process in the past and been unhappy with the result. The process might have been too conceptual or touchy feely. A plan might have been developed but no follow-through done. The process might have been done without sufficient buy-in throughout the organization, so too many people disagreed with the outcome, etc. I’ve often heard “we already tried that ten years ago. It didn’t work”. I’d caution firms not to judge the value of a business process by an event where it was done badly.
Some firms believe they have a strategic plan. When I ask to see it, I’m told “well, it’s here somewhere (suggesting they haven’t read it in a while)” or “we don’t actually have it written down”. When I ask for the highlights, I’m given general statements like “earn more money, get more clients, keep everyone here happy”. When I ask the same question of another member of the firm, I get a different list of goals. It’s ironic that these responses come from individuals with exceptionally high personal standards of delivery. Except, it appears, when it comes to running their business.
Those firms proceed year by year guided only by a loose understanding of their brand in the marketplace and revenue targets set by their staff accountant, trusting that as long as they continue to put in the hours and do good work for good clients, their business will thrive. But times have changed and it’s not that easy to run a thriving professional services practice anymore. Legislation changes, a new competitor gains market share, there’s increased competition for your work by people outside of your profession, and staff loyalty is at an all-time low. Further, I often receive calls from smaller firms that want to be more relevant within their target market, and can’t understand why, after years of their working hard within a particular community, if still feels like their competitors are more successful than them.
Their frustration is understandable because these firms haven’t been idle. They’ve spent money on marketing, staffing and technology; hired professionals; started new practice areas; paid for major advertising campaigns or new websites; even changed their brand. But in the absence of an overall strategy, these activities can end up being nothing more than hard costs. Action without strategy is like shooting at a target in the dark. You can certainly use all of your bullets, if that’s your measure of success. But if you were hoping to hit a target, you might be disappointed with the results.
Strategic Plans: Why They Work
Strategic plans (and resulting strategic annual plans) ensure that any activity or purchase undertaken in the coming year is focussed on working toward an intended objective. This means there is less guess work around what a firm or practice should and shouldn’t do; there is less wastage in funding activities; there is less times spent on useless activities; and there is a filter through which all new opportunities can be run to determine if they might be of value to the practice or firm. This degree of planning takes some time and investment at the front end, but the savings in time and funding throughout the year can be significant, and the chances of actually accomplishing a firm’s annual business objectives are astronomically improved. Doesn’t that sound like time well-spent?
About the Author
Heather Gray-Grant is a business strategist, marketing expert and executive coach focused on the legal profession. To learn more, go to www.heathergraygrant.com.