The 7 Traps of Strategic Planning

04 November 2018 by National Bank
Les 6 pièges de la planification stratégique

As mentioned in the article 4 Steps to a Strategic Plan, the strategic planning process is a necessary foundation for a company's success. However, there are some things to watch out for.

To help identify the traps you should avoid, we’ve followed the advice of Michel Grenier, Executive Director of Centre d’entrepreneuriat ESG-UQAM, and Guy Dallaire, Associate Vice President, Sales and Business Services at National Bank.

Trap #1: Thinking you can do without

Some entrepreneurs mistakenly believe that strategic planning is only for large companies—and that the big guys are the only ones who can afford it.

Not to be confused with a business plan, strategic planning is important at every stage of a company’s existence, from startup through periods of growth or major change.

Strategic planning should be an automatic reflex for entrepreneurs. It lets them decide in advance where they want be in the short or long term, determine the necessary steps to get there, and be proactive instead of reactive. This essential road map will help the entrepreneur stay on course, even in tough times.

Trap #2: Not being thorough

Guy Dallaire stresses that strategic planning is the key time to review a number of things.

“You can analyze current and potential customers, take stock of accounts payable, and check whether the terms of payment meet industry standards or not. You can review productivity and determine if your workforce is big enough to successfully complete new projects.”

Michel Grenier adds, “You may also want to look more closely at your company’s results, the state of the market, and the competition.”

Trap #3: Relying on “natural” growth

Small and medium-sized businesses that want to grow have a deep-rooted interest in implementing a strategic planning process.

“If you’re aiming for growth—whether it’s by acquiring another company, purchasing assets or equipment, or capturing new markets—strategic planning is a must. Without it you’re flying blind,” explains Guy Dallaire.

In any case, it’s important to substantiate the assumptions you’re making in your budget forecasts. For example, if you want to acquire equipment, you have to assess the financing rate, the amortization period, and any other relevant details.

Trap #4: Thinking the exercise is over

Once you’ve prioritized your projects, you’ll need to conduct regular monitoring and make adjustments as you track implementation and progress.

For a short-term action plan with a one-year horizon, monitoring should take place on a monthly basis. For a long-term plan and projects lasting three to ten years, evaluations should take place annually. A scorecard can also help make decisions easier.

Trap #5: It’s not worth it for smaller companies

Don’t be fooled, strategic planning can be beneficial for any organization, big or small. Strategic planning doesn’t necessarily have to be expensive. Even a minimal investment of time in strategic planning will increase your projects’ chances of success.

Trap #6: Working in a silo

Sometimes it’s better to entrust strategic planning to an external consultant who can take an unbiased and objective look at the organization. However, if you’re doing it in-house, who should be in charge of the process? A team of key players who have the full support of the CEO.

Trap #7: No second-guessing past decisions

Once the exercise is complete, it’s time to ask the real questions. Strategies have to evolve to take changing realities into account. For example, a printing company will need to change its roadmap to keep up with new technologies.

Ultimately, by helping you make informed decisions, a detailed and well-structured vision of your company’s expansion projects increases your odds of success—so long as you avoid the traps.

To help you start, grow, or reposition your business, try our My Business Model

Legal disclaimer

Any reproduction, in whole or in part, is strictly prohibited without the prior written consent of National Bank of Canada.

The articles and information on this website are protected by the copyright laws in effect in Canada or other countries, as applicable. The copyrights on the articles and information belong to the National Bank of Canada or other persons. Any reproduction, redistribution, electronic communication, including indirectly via a hyperlink, in whole or in part, of these articles and information and any other use thereof that is not explicitly authorized is prohibited without the prior written consent of the copyright owner.

The contents of this website must not be interpreted, considered or used as if it were financial, legal, fiscal, or other advice. National Bank and its partners in contents will not be liable for any damages that you may incur from such use.

This article is provided by National Bank, its subsidiaries and group entities for information purposes only, and creates no legal or contractual obligation for National Bank, its subsidiaries and group entities. The details of this service offering and the conditions herein are subject to change.

The hyperlinks in this article may redirect to external websites not administered by National Bank. The Bank cannot be held liable for the content of external websites or any damages caused by their use.

Views expressed in this article are those of the person being interviewed. They do not necessarily reflect the opinions of National Bank or its subsidiaries. For financial or business advice, please consult your National Bank advisor, financial planner or an industry professional (e.g., accountant, tax specialist or lawyer).

Tags :