The Power of Long-Term Strategies for Business Owners
Business owners and entrepreneurs recognize the value of setting clear goals to steer the company towards success. However, the true impact of a well-crafted long-term strategy might not always be fully considered. This article explores the importance of developing a long-term strategy for your business and family.
Creating Focus and Purpose Through a Long-Term Strategy
Every successful business requires a clear vision, and a long-term strategy plays a pivotal role in providing the much-needed focus, purpose, and direction. It enables sustained growth and profitability by defining the type of growth that aligns with a business owner’s long-term objectives, whether it be profitability, market share capture, or targeted expansion.
For Michael Black, partner at Richter, there’s a lot of power in taking the time to conceptualize and develop a business plan: “Ultimately a well-crafted plan creates purpose and a sense of direction for everyone — owners, employees, and other stakeholders. Going through an exercise to understand where you want to take your business over the next 3-5 years is an essential first step to answer some of the questions surrounding your growth.”
Furthermore, not all growth is equal, nor delivers equivalent value. Developing a strategy will help you differentiate between good and bad growth, avoiding unprofitable operations or overtaxing your personnel or capital. A well-thought-out strategy will have carefully assessed your options and choose the path that aligns to your long-term objectives. Most importantly, it should not only guide your decisions and resource allocation across what you will do, but also what you will not do.
Many people hold the common misconception that strategies are rigid and unchanging. However, your strategy should create a framework to effectively navigate changing circumstances. It ensures alignment among stakeholders and enables them to address challenges proactively and coherently. Ultimately, the key is to create a plan that allows management to adapt when conditions change. One example we often see is when a senior employee leaves the business and finding a replacement becomes a necessity. Having a business plan will articulate the company’s goals and how candidates potentially fit and contribute to the business.
“There are three core elements that a business owner gets out of a strategy: a clearly defined direction for the organization, an established roadmap to help guide resource allocation, and a concrete tool that can be used to align stakeholders behind a company’s common vision,” Garrett Bangsboll, Vice-President, explains. “The final product will be valuable to owners and management to guide the organization, to employees to feel buy-in behind a unified direction, and for engaging with external partners.”
To bring this unified sense of direction to life, effective strategic planning requires active support from relevant stakeholders. Garrett explains it well: “It’s important to bring the right people to the table and have candid and honest open conversations early in the planning process. Equally important is the on-going tracking of operational execution and key performance indicators – both for the goals of the business and how they relate to owner objectives.”
Aligning Business and Personal/Family Goals
Many entrepreneurs and business owners live and breathe their business. It’s an important part of their lives, and they know that, as such, business is never just business, and that it will inevitably have an impact on their personal lives.
“For business owners, the reality is that their business is tightly wrapped with their personal and family life,” says Michael. “In that sense, it becomes critical to make sure the goals are aligned. Taking a step back and asking questions about their business and personal interests to get a sense for how their actions are serving their goals.”
Some of these questions could be:
- What have I accomplished?
- What do I want to accomplish, going forward?
- How do I prioritize all the opportunities coming my way?
- How do I filter the noise and ensure we’re helping the business?
Taking the time to focus on these important business questions doesn’t mean setting family and personal aspirations aside. It’s quite the opposite: transparent conversations with family members involved in the business help harmonize family interests with business objectives. “Important conversations such as this can often present challenges within the family,” says Bill McLean, Family Advisory partner at Richter. “Establishing a respectful approach that affords everyone the opportunity to share their perspective, and ultimately determine the best possible course of action sometimes requires an experienced facilitator providing this support to the family.”
Leveraging External Expertise for Objective Insights
Many business owners leverage their peer networks to understand changing market and competitive dynamics. These insights inform the daily decisions made by management and owners; however, relying solely on an industry peer-network to provide such expertise can potentially create or reinforce biases. Independent advisors can bring objective perspectives and highlight potential blind spots as well as help create capacity for management to focus on daily operations. At Richter, part of this process also involves analyzing and synthesizing extensive market research to give business owners the objective perspectives required to make informed decisions concerning their business.
“As consultants, we aren’t in the day-to-day, so we can step back and try to see the forest through the trees,” says Michael. “And because of the breadth of projects and clients that we work with, we bring that knowledge and expertise to every engagement. There are always lessons to learn from other businesses, both within and outside any particular industry.”
Strategic Planning: Where to Start
When reflecting on the need for a formalized business plan, business owners and management should ask themselves the following questions:
- How well does the team understand the vision and direction of the organization?
- How do we allocate resources and prioritize activities to meet our objectives?
- How can a business plan enable strategic initiatives and interactions with partners?
- How are we navigating external market forces? What are our blind spots?
The most important thing to remember is that crafting a long-term strategy is paramount for the success of your business and family. By embracing a focused and purpose-driven approach, you can align interests, navigate complexities, and drive sustainable growth. Once you’ve decided to develop a strategy, the next step focuses on how to develop and execute it.
At Richter, we understand the significance of charting a path to success, and our team is here to guide you every step of the way. Whether it’s helping you understand your starting point, reviewing and enhancing your existing plans, or planning your next big move, Richter can guide the conversation and ensure your plan brings you to the next chapter in your story. Let us help you shape your legacy and unlock the full potential of your business for generations to come.
Interested in learning more? Michael Black, partner at Richter, will be participating in a Globe and Mail panel on “Growth Through Acquisition” on October 24, 2023. Register now to attend.