Seven Reasons (At Least) that You Need a Strategic Plan
Look, would you climb a 14,000 foot mountain without vetting your optimal route given current weather conditions or making sure you have the right supplies and physical training?
Would you go on a 200 mile bike ride without planning your route, bringing spare tubes, and knowing how much food and water to bring?
These are easy examples of activities where the need for advanced planning is blindingly obvious even to novices precisely because the activity is intuitively beyond our current capabilities. Even those of us who don’t know what these plans should contain know that having some kind of plan is a must. But look, it’s easy to understand the need for planning, training, and preparing for something we aren’t good at and don’t even fucking care about because there’s not much at stake in confessing we suck at it. But when there’s a lot at stake, such as when we are running an early-stage CPG venture, the can-do scrappy, hustling attitude of the entrepreneur easily blinds us from seeing the value of professional strategic planning.
- Accountability – Just the revenue target of a strategic plan creates brutal accountability. Without this cold number, it’s very easy to finish the year and find some way to declare it a success, even if major avoidable mistakes caused needless underperformance.
- Empowering You to Say No – Serial entrepreneurs will tell you that the most dangerous emails are the ones that get you the most excited. The ones from national retail chains. Is this the right retailer for your brand and offering at all? Is now the right time for this retailer? Can you even service them? Do you understand the retailer’s corporate strategy and where you really fit in? Do you have a team and resources to support a national rollout in at least a few markets? If this list of questions frightens you, you understand why ‘not right now’ is such a critical phrase to deploy early on.
- Depersonalize Decision-making – A good strategic plan can swoop in and force everybody fighting in the room to get beyond their egos and to transcend any unacknowledged and personal issues. It forces you back to quantifiable KPIs to settle internal debates as objectively as possible.
- Focuses You on the Long Game – Look, you can’t necessarily predict your market results. I cannot be paid to do it for you either, but you can plan a business like an experiment tied to KPIs, accustomed to strategic iterations, and pursuing reasonable growth. A plan anchored to reasonable year-over-year growth targets will keep you on the path to long-term healthy growth, not just chasing accounts and getting caught up in unicorn fantasies that the media continue to force feed us.
- Garnering Stakeholder Respect – You may be surprised to learn that the people who get professional sources of funding generally get it because they convince somebody that they have a plan. Look, the plan may not be a crystal ball, but it indicates that the owner is at least serious about certain revenue targets and believes they know how to get there. Retailers and distributors are more likely to believe a company’s promise to generate accelerated profits for them if they can see the plan to get there. Nobody invests very much in hope alone, or they charge substantial fees to do so.
- Stand-Out With Buyers – stand out with buyers who rarely see them from small companies. Look, if you were a retail buyer flooded with inquiries by premium CPG entrepreneurs, to which of the following companies would you give preference after a meeting? The company who came in and talked a lot about their product, chest beat, chest beat about their product and unit margins, but didn’t seem to have a clear vision of where they were going, what they were facing, let alone what they could offer you the retailer in terms of supporting services to drive sales? Or would you be more interested in the company who had a three-year strategic plan, which featured you at the core of a careful natural expansion with carefully thought out banners and locations in a smart, consumer marketing plan? The organized, visionary, and ambitious generally win out, folks, over the passionate, well-intentioned wheel spinners. The former will have more negotiating leverage, even the same level of gross sales.
- Scientific Validation of Your Idea – Real validation requires more than just topline growth itself. It requires more specific KPIs and disciplined analysis of them. A strategic plan is a formal process that forces you to define what product validation really means as a brutal capitalist exercise. It then is no longer an ego activity.
If this sounds like something you want to develop, or if you want to update your plans, then I encourage you to register for my second quarter strategic planning webinar – Riding the Ramp. Plenty of slots still available, but they will go fast, and I only let 20 folks in each time.