Strategic Planning for Small Business, Without a Strategy Team

The plan in the drawer

Picture the owner of a 60-person commercial cleaning company. Three years ago the bank wanted a business plan before extending a credit line. It took a month of evenings: market analysis, an organization chart, five years of projections. The loan came through. The plan went in a drawer and has not been opened since.

Meanwhile the decisions that shaped the company were made somewhere else. Whether to bid on the hospital contract was settled in a truck between job sites. Whether to open in the next city came down to a conversation with a foreman who wanted to move there. Nobody wrote either one down, and nobody compared them.

Here is the direct answer. Strategic planning for a small business is deciding, on purpose and a few times a year, the handful of choices that will shape the company: where it competes, how it wins there and what it will stop doing. It does not need a strategy department or a thick document. It needs real options, one person who decides, one page that records the choice and a date to check whether it was right.

The thesis of this page: big companies plan to coordinate; a small company plans to choose. Most of what a corporate planning process does is coordination you do not need. Skip the process. Keep the decisions.

A big company plans to coordinate. A small one plans to choose.

A business plan is not a strategy

The document in the drawer did its job. The US Small Business Administration says plainly that business plans can help you get funding or bring on partners, and that lenders and investors commonly request the traditional format, which can run to dozens of pages ¹. A business plan is written to persuade someone outside the company.

A strategy is written to make choices inside it. Richard Rumelt puts the core of the work this way: “Strategy involves focus and, therefore, choice. And choice means setting aside some goals in favor of others” ². A plan for the bank describes the business you have. A strategy says which of the businesses you could become you are going to build, and which you are going to turn down.

The two can share a page. The SBA also describes a lean format that can take as little as an hour and is typically a single page ¹. But a one-page business plan is still a description unless it records a choice that rules something out. The test is simple: could a manager use the page to say no to a reasonable-sounding opportunity? If not, it is not yet a strategy. The Lexicon entry on the strategic plan covers the general concept.

What the big-company process is really for

Look at what a corporate strategy team spends its year on and most of it is coordination. Michael Mankins and Richard Steele describe the typical process: an annual cycle that unfolds unit by unit, with executive committee members visiting one business at a time on what they call “business tours” ³. Templates, calendars, review meetings and consolidation exist because twenty units have to plan in a way that adds up.

A company with one business and one leadership table does not have that problem. What it shares with the large company is the part that, by Mankins and Steele's account, the large company tends to lose: the decisions. Executives frustrated with the formal process routinely sidestep it, they write, making ad hoc decisions on scanty analysis and meager debate ³.

Amar Bhidé made the related point about start-ups in 1994: a comprehensive analytical approach to planning does not suit most of them, because founders lack the time and money for it, and too much analysis can be harmful when an opportunity may be gone by the time it has been fully investigated ⁴. That is not permission to skip thinking. It is a reason to think about fewer things, harder.

Who plays which role when there is no team

A strategy department bundles five jobs. In a small company they still need doing; they are just spread across people who have day jobs. Name them, by person, before the first meeting.

The role most often missing is the challenger. Inside a small company nearly everyone reports to the decider, which makes disagreement expensive. One outsider who owes the owner nothing is the cheapest strategy department there is.

The minimum process: one choosing day and three short reviews

You do not need a planning season. You need one day a year to make the big choices and three short reviews to check them. The design borrows from a large company that did it well: at Textron, as Mankins and Steele describe, each strategic issue was settled in two sessions, the first to agree the facts and generate several viable alternatives, the second to evaluate them and choose ³. A small company can run the same sequence in a fraction of the time.

1. Two weeks before: pick the decisionsThe decider lists the two or three choices that would most change the company in the next three years, each written as a question with real answers. “Should we enter healthcare cleaning, and if so through which contracts?” is a decision. “Growth” is a topic.
2. One week before: the numbers and the optionsThe numbers person brings the facts each decision turns on. For each decision, write at least three real alternatives, not variations on one theme; Mankins recommends evaluating at least three viable options before approving any strategy ⁵. Include doing nothing if it is a real option.
3. The choosing day, morning: agree the factsSettle the numbers before anyone argues for an option. If a fact is disputed, write down what would settle it and who will check.
4. The choosing day, afternoon: chooseTest each option against the facts and against one question: what would have to be true for this to work? Then the decider decides, out loud, and names what the company will stop doing to make room.
5. Within two days: write the pageOne page, in the format below. Send it to everyone who was there and to the managers who will act on it.
6. Every quarter: a 90-minute reviewThree questions only. Did we do what we decided? Is the assumption behind each choice still holding? Is there a new decision we need to add? Change the page when the answer to the second question is no.

That is about two days of leadership time a year, less than large companies give it: Mankins reported in 2004 that most leadership teams spend just three hours per month making strategic decisions, and that many spend those hours on unfocused, inconclusive discussion ⁵. The difference is that you can spend all of yours on decisions.

The one page

Six blocks. Each one exists because a small company tends to skip it.

Notice block 4. The company cannot win clinics while its best crew leads are scattered across tiny offices on Saturday mornings. A choice that does not cost anything has not been made.

Where small-company planning goes wrong

• Filling in the template. Rumelt describes template-style planning, filling in the blanks with vision, mission, values and strategies, as one of two roots of bad strategy he singles out ². A small company that copies the corporate template gets the paperwork without the choices. Start with the problem, not the vision.
• The budget as the plan. Next year's revenue target, split by month, is a forecast. It becomes a strategy only when it says where the growth will come from and what you will stop doing to get it.
• The owner's project is off the list. Every owner has a favorite: the new product line, the second location. If it is not on the page with its options, it will quietly take the time the chosen decisions need.
• Too many priorities. A 20-person company with seven strategic priorities has none. Three decisions a year is plenty.
• No date to look again. A decision without a review date is defended forever, because reopening it feels like admitting a mistake. A review on the calendar turns that into routine.

The case for not planning at all

The strongest objection comes from successful owners: small companies win by speed and opportunism, and planning slows them down. Bhidé's argument supports part of it: too much analysis can be harmful when an opportunity may be gone by the time it has been fully investigated ⁴.

Take the objection seriously and it argues for this page, not against it. Opportunism without a filter says yes to everything, which is how the cleaning company ended up with 140 contracts at 6%. The one page is the filter. It lets the company move fast on opportunities that fit the choice and say no quickly to the ones that do not. The plan that slows a small company down is the 40-page one, and that is the one this page tells you to skip.

There is a point where the big-company process starts to earn its cost: when the company has several units whose plans have to add up, and coordination, not choosing, becomes the bottleneck. That is usually when the first strategy hire makes sense. The corporate strategy team and strategy manager role pages describe what that person does; the consultant decision guide covers the alternative of buying the help for a single question.

Until then, the owner is the strategy team. The job is not to produce a plan. It is to make a few choices on purpose, write them down where everyone can see them, and look again on a date set in advance.

What to do this month

Write down the two or three decisions that would most change your company in the next three years. For each one, list three real options. Name the person who will make the call, and one outsider who will argue with it. Put a day on the calendar.

Then open the drawer, take out the business plan, and ask one question of it: what does this tell us to turn down? If the answer is nothing, you have a plan for the bank. Now go make the strategy.

Questions

How do you do strategic planning for a small business?

Pick the two or three decisions that would most change the company, write at least three real options for each, agree the key facts first, then let one named person choose. Record the choices, what you will stop doing, three measures and the assumption behind each choice on one page. Review it every quarter for about 90 minutes.

What is the difference between a business plan and a strategic plan?

A business plan describes the business to persuade an outsider, such as a lender or investor, and the SBA notes lenders commonly request the detailed format. A strategic plan records choices: where the company will compete, how it will win and what it will turn down. A one-page business plan becomes strategic only when it rules something out.

Who should be involved in small business strategic planning?

Five roles, played by people with day jobs: the owner or CEO as decider, someone who owns the numbers, someone close to customers and crews, an outside challenger with no reporting line to the owner, and a scribe who writes the page. The outside challenger is the role most often missing and the cheapest to add.

When does a small company need a dedicated strategy person?

Usually when it has several units or locations whose plans must add up, so that coordination rather than choosing becomes the bottleneck. Before that point, the owner plus a light annual process can cover the work. For a single hard question, a time-limited outside engagement may be cheaper than a hire.

Where to go next

• Strategic Plan Template: One Page of Choices, Then the Full Plan
• Strategy Statement Builder
• Should We Hire Consultants? A Decision Guide
• Strategic Plan: Definition & Examples
• Business Plan: The 7 Components