The old adage ‘failure to plan is planning to fail’ seems to hold true for many small and medium enterprises (SMEs).
Most people who venture into business have some serious idea of what they want to achieve and the fact that they started means they were convinced it is worth it.
Why is it then that a sizeable number of entrepreneurs die a still birth? One reason is the lack of well laid down strategic plans.
Most SMEs seem not to take strategic planning seriously. Business is approached in a reactive manner. It is more of “let’s see what happens”. This kind of approach is obviously not sustainable as more often you encounter circumstances that appear all unique and for which you had no ready answers or solutions for.
All this can be averted with well documented strategic plans to which you can constantly refer and monitor whether your business is progressing as intended in relation to prevailing circumstances.
Put simply, business strategy describes a set of initiatives that are taken in order to achieve your business goals. For small entrepreneurs what is required in simple terms is to put down all that you are thinking about your business or project.
Putting it down gives you an opportunity to think through it and possibly improve it. By way of an example, suppose you are thinking of getting into poultry, there are a lot of questions for which answers must be sought.
Where do you want to situate your project and why? How many birds should you start with? Is there a ready market for your birds? How many birds can you sell at each time?
How much labour do you need?
What are the related risks for this project and how can you mitigate them? What other costs are involved?
The list of questions can be long and the answers to such questions can provide you with clear strategic plans for your project.
If you do not ask these questions and come up with answers then you will get confused when certain situations arise.
A strategic plan gives you the opportunity to have a thorough understanding of what you have set yourself to do and also presenting a firm base upon which to continuously evaluate the progress of your venture. One thing should be clear though, that is, your set plans should not be treated as fixed. The volatile business environment requires you to constantly assess the relevance of your strategies to ensure they remain compatible with prevailing conditions.
Remember, what you set are intended strategies which are premised on circumstances prevailing at the time of formulation. These get overtaken by events and you need to improve or even change them to fit current circumstances. You can only be able to improve or revise your strategies because you had written them down and that you have been frequently referring to them. This would not have been possible had the strategies not been written down.
Strategic planning is therefore one of the most important things that SMEs must embrace. Many people think that it is money that is more important for one to start and succeed in business. On the contrary the most essential thing in business is the idea, the business concept.
You may have a lot of money but without a well conceptualised business idea nothing may come out of it. In fact experience has it that with a well presented business concept there are many financiers out there.
One quick example that comes to mind is the story of Strive Masiyiwa.
I had the opportunity to go through a research case study titled Resisting Political Corruption: Econet Wireless Zimbabwe authored by Ramakrishna Velamuri, an associate professor with China Europe International Business School (CEIBS).
In that write-up it is reported that Dr Nkosana Moyo who, then, was the managing director of the merchant banking division of Standard Chartered Bank in Zimbabwe, sanctioned the largest loan his bank had ever sanctioned — ZW$120 million (approximately US$40 million) to Retrofit (Masiyiwa’s investment vehicle) to launch the cellular telephone business on the basis that “it was a self-evident technology”. On his part Masiyiwa himself confidently asserted that, “…I saw an opportunity to provide a service in a way that had never been provided before”. To date, Econet is one of the largest mobile phone operators in Africa. It is obvious that this business concept was well documented in a way that enabled the bank to make a thorough assessment of the viability of the project.
In another classic example, Napoleon Hill, in his book The Law of Success, refers to The Armour Institute of Technology as having been founded out of the mere imagination of a young clergyman, Dr Gunsaulus, who announced in the newspapers of Chicago that he would preach a sermon titled What I Would Do If I Had a Million Dollars.
The announcement caught the eye of Phillip D Armour, the wealthy packing-house king who decided to attend the presentation.
In his sermon Dr Gunsaulus pictured a great school of technology where young men and women could be taught how to succeed in life by developing the ability to think in practical rather than theoretical terms.
The sermon impressed Armour who offered to sponsor the initiative. That was the beginning of the Armour Institute of Technology, one of the very practical schools in the United States of America today.
These two examples surely are testimony to the fact that ideas can get you business capital if well presented. In Napoleon Hill’s own words, “there is always plenty of capital for those who can create practical plans for using it”.
In fact, Napoleon Hill believes it is the thought and desire to do something that matters for one to succeed in business. In the opening paragraph of the first chapter of one of his many books Think and Grow Rich, Hill declares that “thoughts are things”, and powerful things at that, when they are mixed with definiteness of purpose, persistence and a burning desire for their translation into riches, or other material objects.
The point I am pushing here is that entrepreneurs must be clear in their minds as to what exactly they intend to do. What is critical is for one to put down your thoughts into some form of a guiding strategy document which populates one’s vision, mission, objectives and strategic initiatives.
The definite advantage is that you will always have a reference point of all the activities that you do. There should be no haphazard way of doing things.
The outputs and outcomes of all the activities can be noticeable in the well-described business journey. The strategy document will also offer you an opportunity to assess the relevance and practicability of thoughts, enabling you to make feasible adjustments and/or improvements as you progress towards the realisation of your dream.
In one of the contributions towards the entrepreneurship debate, Nhamo Kwaramba, through this column in the Zimbabwe Independent of 26 May 2017, asserted that “entrepreneurship thinking, focus and auctioning needs to be nurtured, promoted and supported”.
He further wrote that “… the government needs to minimise the constraints on entrepreneurship.
It should take strong strides in addressing, assisting and empowering entrepreneurs who now form the majority of trading taking place in the country”. One way the government can do this is to impart strategic planning skills in the entrepreneurs or at least engage consultants who can assist them in formulating business strategies and implementing them.
The Bible says: “Where there is no vision, the people perish: but he that keepeth the law, happy is he”, Proverbs 29:18 King James Version. Your thought or business idea is your vision, it is your dream, that, if you pursue it, you can get to the Promised Land. But this does not happen automatically. What is important, therefore, is to commit to and follow simple business practice by creating and cultivating a culture of documenting your business plans and use them as a basis for the evaluation of your business or project.
Chatsama is the leading organisational development and training and leadership development consultant with ProSource Global Consultants. He is passionate about entrepreneurship development. These New Perspectives articles are co-ordinated by Lovemore Kadenge, President of the Zimbabwe Economics Society. E-mail: email@example.com and cell number +263 772 382 852.