GVL’s Guide to Strategic Planning for Small Businesses
GVL is the trusted partner for small and medium businesses. We provide professional services and help SMEs adopt business best practices
A small business can be defined as one with less than 50 employees.
For most businesses in this category, strategic planning is a strange concept. Very few are familiar with the term, and even fewer understand the importance of strategic planning.
A significant percentage of new businesses are destined to fail because of poor business practices. According to some statistics, the percentage of new businesses that fail within the first five years is 50%.
Fortunately, there’s a formula to good business. Entrepreneurs that apply certain best practices have higher chances of not only surviving but also thriving. At GVL, we have found these business best practices to be imperative to business success:
- A culture of customer-centricity, which facilitates a thorough understanding of your customer base and an unmatched ability to fulfill their needs,
- A well-articulated unique value proposition, whose benefits include lower price sensitivity, higher demand for your products, and the ability to be sustainably profitable,
- Leveraging technology to lower costs, devise new business models, and reach more customers,
- Strategic planning, which enables businesses to effectively capitalize on external opportunities and handle external threats with due consideration to internal strengths and weaknesses, and
- Effective leadership and management, which directly affects up to 50% of an organization’s performance, and which affects the successful execution of all the other business best practices.
Strategic planning is at the heart of business best practice. Read on to learn how to plan strategically for a small business and why it’s a priority if you want to survive and thrive.
Table of Contents
Why Is Strategic Planning Important for Business?
Assume your business is struggling to be profitable and you want to change that. Most small businesses give knee-jerk reactions and implement the first solution that comes to mind.
If a friend tells you that their business partnered with a social media influencer and sales have been off the charts since then, you’ll quickly find a social media influencer and get into a deal with them.
You might be lucky and the influencer partnership might work. But most times, knee-jerk reactions, which are basically gambles, leave you worse than they found you.
What would happen if you applied strategic planning?
It might emerge that you can significantly lower your cost of production by finding a better supplier or using current leverage to negotiate favorable deals with suppliers.
Or you may find out that there’s something wrong with your product, and no amount of marketing will solve the problem. Or maybe it’s not even your product — maybe the space you’re in is too saturated and you need to reinvent your business.
The point is this: You can’t choose the best option if you don’t stop to consider all available options, which strategic planning allows you to do.
Below are the key benefits of strategic planning for small businesses.
Strategic Planning Maximizes Return-on-Investment (ROI) for Business Resources
Strategic planning includes the analysis of all possible uses of the resources currently available to your business.
For example, while devising your strategic plan, it might emerge that focusing employees on the satisfaction of existing clients results in better ROI for the company than focusing their efforts on new client acquisition.
Alternatively, you may discover that investing in content marketing to increase brand awareness and trust among your target audience makes more sense for your business than paid ads on social media.
Without strategic planning, you’re likely to end up using scarce resources on the wrong initiatives, which increases the chances of your business failing.
Strategic Planning Enables Goal-Oriented Execution, Which Enhances the Probability of Success
Strategic planning allows you to settle on a few key goals that make the most sense for your business given your vision and mission.
When a strategic plan is executed properly, everything you do moves you closer to your stated goals. Such a goal-oriented approach significantly improves the chances of success.
Furthermore, clearly-defined strategic goals give you and your team a sense of purpose, which makes it easy to give your best.
Boring, routine and seemingly-disjointed activities become a thing of the past. Instead, everything your team does is connected to a larger objective, which infuses daily activities with meaning and gives team morale a significant boost.
Strategic Planning Helps Businesses Avoid Wastage
Most businesses without a strategic plan change direction like the wind.
For example, a business will spend resources on social media ads for one product this month (The ads probably weren’t part of a plan because there was no plan).
If they don’t work, without getting to the root cause of why the ads didn’t work as expected, the business will probably decide to spend more resources promoting a different product next month, hoping things will be better.
Such guess work results in a lot of waste.
Resources are put to better use when businesses take the time to carefully consider all options, set priorities, come up with a plan, and consistently execute it.
Strategic Planning Allows Businesses to Take Advantage of Time and Consistency
Strategically planning ahead allows businesses to unlock advantages that would be unavailable to them otherwise.
The basic question in any strategic planning process is this: Where do you want this business to be one year down the line (or whatever time frame you choose)?
Suppose your business is making losses and you want to have turned things around by the end of one year. With strategic planning, you can take advantage of medium-term initiatives.
For example, you may realize that having a newsletter and a healthy subscriber base can help you capture potential customers, keep them engaged, and nurture them till they’re ready to buy, which can significantly boost revenue.
But you then realize that growing a newsletter to the point where it’s generating significant business may take as long as six months.
If you’re working with a one-year strategic plan, it makes sense to start working on the newsletter today even if it won’t make you any money next month or the month after that. You know it will pay off six months down the line and will play an important part in helping you become profitable in a year’s time.
But if you’re not working with a strategic plan, you won’t start working on the newsletter because you’ll be looking for quick fixes. Even if you start the newsletter, you’ll probably do it wrong and fail because you’re in a hurry.
So it’s very likely that one year down the line, you’ll still not be profitable and you won’t be any closer to being profitable.
Strategic planning lets you realize that you’re in a marathon, not a sprint.
This seemingly-basic shift in mindset can drastically change the way you make decisions, resulting in higher-quality decisions that lead to a sustainably-successful business.
Building valuable businesses is a marathon, and your chances of building a successful business drastically diminish when you approach it as a sprint. Consider the following data about how long it took some of the most valuable companies in the world to become profitable:
- Amazon – 9 years
- Netflix – 6 years
- Tesla – 17 years
- Apple – 2 years
- Uber – 12 years
- Twitter – 12 years
- Spotify – 12 years
- Facebook – 3 years
- Google – 3 years
Most small businesses operate with the mindset that they’ll become sustainably profitable and successful within a short time after getting started. Ironically, this mindset pushes them to make decisions that push sustainable success further away.
With strategic planning, you can adopt a more realistic and longer-term view of your business, which enhances the chances of success.
How to Do Strategic Planning for Small Business – 5 Simple Steps
If you’ve never done it before, strategic planning is a daunting task. It gets even more difficult if planning is not part of your style as a person.
At GVL, we believe that you can’t reap the full benefits of strategic planning for small businesses if you don’t keep your process simple and manageable, which is why we advocate for the five-step strategic planning process below.
It’s great for small businesses and is meant to be easy to implement — even if you’re new to strategic planning.
Step 1: Define Your Vision, Mission, and Resultant Goals
Start by seeking to infuse the organization with a sense of purpose. Why do you exist? What is your business right now and what will it be in the future?
Have an Inspiring Vision Statement
Your vision should describe the ideal future for your business. Think of it as a guiding star.
A perfect example of a vision statement is Southwest Airlines’ vision statement: “To be the world’s most loved, most efficient, and most profitable airline.”
A great vision statement includes both the ideal future for the market you serve and for you as a business. Southwest Airlines wants to be loved and efficient (for the market). But they also want to be profitable (for them).
Clarify Your Mission
Your mission explains your business’s purpose—what you do, for whom, and why.
Again, Southwest Airlines’ mission statement is a perfect example. It reads: “To connect people to what’s important in their lives through friendly, reliable, and low-cost air travel.”
Derive SMART Strategic Goals from Your Vision and Mission:
The most important question in strategy is usually where you want to end up. Your vision and mission help you answer that question.
After that, the next most important question is: “How do we get from where we are to where we want to be?” Goals help you clarify the how. They form the substance of a strategic plan.
The best way to derive goals is from your mission and vision. Using Southwest Airlines as an example, we could have the following strategic goals:
- To figure out a way to deliver low-cost but quality air travel
- To make our services reliable
- To make our service delivery friendly
- To make our airline profitable
- To make our airline loved
It’s important to limit the number of strategic goals you settle on to keep the scope of your strategic plan manageable.
Once you have a rough draft of your strategic goals, it’s important to refine them with the SMART framework.
They should be:
- Specific: Define exactly what you aim to achieve. Example: Increase online sales.
- Measurable: Attach a metric to track progress. Example: Boost online sales by 25%.
- Achievable: Consider whether you have the resources to succeed. Example: Expand within your budget and workforce capacity.
- Relevant: Align goals with your mission. Example: Focus on underserved customer segments, in line with your mission.
- Time-bound: Set deadlines to create urgency. Example: Achieve a 25% increase in online sales within six months.
Applying the SMART framework to our example strategic goals, we could have the following:
- Lower the average cost of our air tickets by 10% by December 2025
- Bring the rate of flight delays down from 5% to 2.5% by September 2025
- Achieve an average cabin crew rating by customers of 4.5 out of 5 by December 2025
- Raise gross profit by 20% by December 2026
- Improve our annual rating in the World Airline Awards from 70 in December 2024 to 60 in December 2025
Step 2. Assess Your Current Situation
Begin by understanding where your business stands. This foundational step ensures your strategy is built on reality, not assumptions.
Conduct a SWOT Analysis
SWOT (Strengths, Weaknesses, Opportunities, and Threats) is a simple yet powerful framework for assessing both internal and external factors:
- Strengths: What are you good at? What unique resources or skills does your business possess? For example, having a loyal customer base or a highly skilled team.
- Weaknesses: Where are you falling short? Examples might include lack of brand recognition, insufficient funding, or outdated systems.
- Opportunities: What trends or changes in the market can you leverage? For instance, growing demand for eco-friendly products or new government incentives for small businesses.
- Threats: What external challenges could harm your business? These might include new competitors, regulatory changes, or economic downturns.
Document these insights in a simple table or use online SWOT tools for organization.
Analyze Financial Performance
Dive into your financial records to understand cash flow, profitability, and revenue trends. Are there unnecessary expenses you could cut? Are you over-reliant on one source of income? Tools like Google Sheets or accounting software can simplify this.
Gather Stakeholder Feedback
Employees, customers, and other stakeholders often see things from perspectives you may miss.
You can gather feedback through simple methods like surveys, interviews, or informal conversations.
You might ask questions like:
- Employees—“What tools or processes could make your work easier?”
- Customers—“What do you love about our business, and what could we improve?”
This comprehensive assessment will form the backbone of your strategic plan.
Step 3: Prioritize a Few Initiatives to Achieve Each of Your Strategic Goals
We started by understanding where we are (SWOT analysis) and clarifying where we want to go (vision and mission statement). We then came up with SMART goals, which allowed us to break our vision down into constituent elements.
The next step is specifying what we will do in the day-to-day running of our business to achieve the strategic goals and, ultimately, our vision.
For each of your identified strategic goals, you should come up with a few initiatives. In the spirit of keeping it simple, three or four initiatives would do.
Let’s pick one of the strategic goals we identified above as an example: Raise gross profit by 20% by December 2026.
Identify All Potential Interventions
There are many ways an airline could raise its gross profit. To identify the ways that make the most sense in a certain situation, we must first list all options before evaluating them.
Possible interventions to raise the gross profit of an airline might include:
- Expanding the fleet of airplanes to allow the airline to serve more clients
- Launching operations in new routes
- Adjusting ticket prices upwards
- Building customer loyalty to drive repeat business and revenue
- Workforce adjustment to cut the wage bill
- Revisiting contracts with existing suppliers to uncover opportunities such as volume discounts
At this stage, it’s important to be comprehensive. If there’s any chance that an action could raise profit, you want to include it in this list. Ignore all prevailing assumptions and biases and commit to keeping an open mind.
Objectively Assess the Interventions to Remain With the Best
As objectively as you can, you’ll want to review each of the possible interventions.
From our example list above, we could try to raise gross profit by adjusting ticket prices upwards. That might clash with our vision of being a profitable airline. Additionally, raising prices without justification may work against us.
However, we may be able to raise prices if we offer additional value and give our clients the chance to choose the package that suits them. Also, if our prices are already lower than other industry players, we may be able to raise prices without losing customers.
Perform such assessments, weeding out all options that seem inappropriate.
Prioritize Suitable Interventions Based on Current Resources
After doing analysis, you should remain with a list of suitable interventions. Unfortunately, rarely will you be able to implement them all. Your business, like most businesses, has limited resources.
You need to prioritize. What initiative will we implement first?
You could prioritize based on ease of implementation, level of expected impact, and so on. The important thing is to choose what is best to work on now and add everything else to a wish-list to be implemented later.
Step 4: Outline an Action Plan
Let’s assume that after assessment and prioritization, we settled on only one intervention to help us achieve the strategic goal of “raising gross profit by 20% by December 2026,” which is “building customer loyalty to drive repeat business and revenue.”
An action plan to implement this intervention might look something like this:
| What? | Who? | When? |
| Design a frequent flier loyalty program | Tony & Jane from Customer Relations | By 31st January, 2025 |
| Collect feedback about the program from other departments and adjust accordingly | Tony & Jane from Customer Relations | By 28th February, 2025 |
| Raise awareness and create anticipation for the program launch | Jackie & Judy from Marketing | From 1st February to 31st March 2025 |
| Have a launch event for the frequent flyer program | Jackie & Judy from Marketing | 31st March 2025 |
| Meet to review the performance of the program and make necessary adjustments | Tony & Jane from Customer Relations, and Jackie & Judy from Marketing | First week of every new quarter |
By assigning responsibility for actions to people and defining the timelines by which those actions should be completed, you ensure things will get done and in time.
Without an action plan, there’s a high likelihood that the strategic plan will never make it out of the document that outlines it.
Step 5: Monitor Progress and Adapt
Strategic planning doesn’t end once the document is written—it’s a living process. Regular monitoring ensures your business stays on track and can adapt to changes.
Set KPIs (Key Performance Indicators)
These metrics will help you measure success and identify areas for improvement.
For example, we could monitor the progress of our frequent flyer program through the following KPIs:
- Number of customers who’ve signed up for the program
- The average number of flights per customer each month
Keeping an eye on the two metrics above would help us know whether the initiative is working and whether we need to course-correct.
Conduct Regular Reviews
Schedule monthly or quarterly check-ins to evaluate progress against your plan. Are you hitting your KPIs? Are there unexpected challenges or opportunities?
Stay Flexible
If circumstances change—like a new competitor entering the market or a shift in customer needs—adjust your strategy.
Flexibility is especially crucial for small businesses operating in dynamic environments.
Helpful Tips to Successfully Implement Business Strategy
Unite the Business Firmly Behind the Strategy
For a business strategy to be successfully implemented, the entire organization should be firmly behind its implementation. This doesn’t happen automatically. It’s up to you as the business leader to ensure it happens. It’s a crucial part of effective leadership.
A prerequisite to successful strategy implementation is infusing the organization with a sense of purpose. If everyone believes in the mission of the business, it will be easier to implement the strategy that will help fulfill the mission.
Once this precondition is met, the business leadership have to ensure an organization-wide drive to implement the strategy. They need to:
- Ensure budgetary support for the strategic initiatives
- Find ways to keep team morale high in the execution of the strategy
- Tie the organization’s reward structure to the achievement of targets in the strategic plan
- Create a work environment that is conducive for the implementation of the strategy
- Put in place strategies and procedures that support the successful implementation of the strategy
Remember That Strategic Management is Critical to Business Success
Devising and properly executing a powerful strategy will propel your business to a position far beyond your competitors, give you strong profits, and make your products and services the industry standard.
Make no mistake about it: The alternative to strategic business management (managing your business with improvisation and gut-feeling and going along with the flow) will lead to failure, sooner or later.
Think about it this way: To a large extent, your competitors operate in the same conditions you do. The difference between your level of success and theirs depends on the thoroughness and commitment with which you and your competitors develop and execute strategies for the future.
First-rate strategic operation will give your business the following advantages:
- It will help senior management be more aware of change, new opportunities, and threatening developments
- It will help senior management be more objective in deciding which competing budgetary interests and staff requests to consider. Helpful tip: As long as it aligns with strategy, prioritize it.
- It will unify all the efforts across a business towards one strategic direction. The alternative is to have different units within the business working towards different goals and moving in scattered directions.
- It will help management adopt a more proactive management posture as opposed to a reactive and defensive posture. High-performing businesses initiate and lead in addition to reacting and defending.
- It will help your business secure a sustainable competitive advantage
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