Arguably, the leading cause of business failure is not having a strategic plan in place that is being well implemented. If a business has little idea where it is headed, it will wander aimlessly with priorities changing constantly and employees often confused about the purpose of their jobs.

Building a strategic plan is not difficult. It will take some thought and some feedback from customers and others, but businesses should be routinely garnering feedback from appropriate constituent groups on an ongoing basis anyway so this should not be an extraordinary effort. The process of developing a strategic plan should be rewarding for all involved and if carried out correctly it should have a significant impact on the future success of the organization. 

So, what exactly is strategic planning? The components of the strategic development process are relatively straightforward and the planning process should be kept simple. Essentially, these are the steps that will be followed in developing a sound strategic plan:

1. An internal analysis that encompasses assessing company strengths and weaknesses, financial performance, people, operational limitations, corporate culture, current positioning in the market(s), the overall characterization of the condition of the company and critical issues facing the organization.

2. An external analysis that focuses on analyzing competitors, assessing market opportunities and threats, evaluating changing technology that could impact the organization, analyzing regulatory or legislative concerns, changes and trends in the market(s) the company operates, in and other potential outside influences on the organization.

3. Summarizing the current situation or "state of the organization" based on the information and data gathered in steps one and two. This step is important because it brings together relevant and critical data and information and allows members of the planning team to more easily get a feel for what opportunities and obstacles lie ahead. Also, competitive advantage will be addressed in this step.  

4. Development of a mission, vision or purpose statement. It really doesn't matter what it is called, but this step is important as much because of the process that the team will go through as the words that eventually end up on paper. In this step, the team is starting the process of focusing the organization and its people on what the organization is all about and what is important to the organization.

5. Goal setting. Every organization needs goals. Goals that address key elements within the organization provide focus and focus is a critical element in the success of any business.

6. Defining objectives that support the goals. Objectives are more specific in nature and are supportive of the goal. They bring into even greater focus the goals of the organization.

7. Development of strategies. Strategies begin defining how the goals and objectives are going to be achieved. Establishing appropriate and difference-making strategies is the heart and soul of your plan.

8. While not all strategic plans include tactics, we believe it is critical to include development of tactics in the planning process. Tactics are the specific tasks associated with carrying out strategies. In some cases, tactics are more formally defined after the strategic plan has been developed or, in some cases, some tactics are included in the strategic plan while others are developed later in consultation with the individuals responsible for carrying out the tactics.

Once developed, the keys to making the plan work are a commitment to seeing it through and sound implementation. Many businesses have developed strategic plans only to put them on a shelf to gather dust. Managers need a well developed strategic plan in order to effectively establish expectations for their employees.

Without a plan, expectations are developed in a void and there is little or no alignment with common goals. A good strategic plan looks out 2 to 5 years and describes clearly how the business will grow and prosper over that planning horizon.

Please understand that it becomes difficult to project much beyond a few years. But having a plan does not mean that it won't be changed. In fact, your strategic plan should be revisited regularly to ensure that it continues to make sense given changes in the environment your business operates within.  

Take a look at your business. Does there seem to be a lack of focus on where the company is headed? Does everyone clearly understand the goals for the business? Strategically, how will the business achieve those goals? Is your current planning horizon longer than one year? Are you developing annual business/operating plans without a strategic plan in place? A strategic plan should drive operating plans. If you need detailed instructions about how to develop a strategic plan, click here for more information on The Strategic Planning Workbook.

There are many ways to compensate a sales force. But choosing the right plan for your business is a key factor in determining success. Why? Because sales activities are the life blood of most businesses. If the sales compensation plan fails to sufficiently motivate and reward your sales people, the overall success of your organization is compromised. And if the plan overcompensates the sales force, profits are unnecessarily eroded.

You should be concerned, at a minimum, about each of the following issues when creating a sales compensation plan:

1. Motivation – the plan must motivate your sales force to high levels of performance.
2. Equity – the plan must be fair and create relatively equal opportunities for earning significant incomes.
3. Profit – your business cannot give away too much and must avoid falling prey to the mistaken notion that sales people are entitled to large portions of the revenue or gross profit they generate.
4. Ease of administration – avoid creating an overly complicated plan that will be difficult to administer.
5. Easy to understand – sales people and all other employees have to be able to understand how the plan works.
6. Reward – the plan must reward sales personnel in a manner that is consistent with their production.
7. Unintended windfalls – protection against paying for unearned sales (not associated with effort of sales person) must be built into the plan.
8. Recruitment and retention – the compensation plan has to be attractive enough to recruit and retain top notch talent.
9. Longevity – a good sales compensation plan will weather large increases in sales volume and be able to remain in place for long periods of time.

One of the challenges facing businesses hiring sales people is the fact that most sales compensation plans are poorly developed and either over or under compensate sales reps. This means that these sales people have certain biases and possibly some resentment about compensation.

And many sales people have had bad experiences with previous or current employers altering their sales compensation plans, territories or customer base when the employer believes they start making too much money. Having a well thought out and well developed plan that address each of the issues above is critical to being able to attract and retain excellent sales personnel.

At this juncture it is important to dispel the notion that people are not motivated by money. When college business students are taught Mazlow’s Hierarchy of Needs, they are often told that money is not important to people. While this is without question true for many people, it is rarely the case with good sales people. In fact, experience tells us clearly that it is not true for many employees, sales people or otherwise.

One thing you will want to avoid as much as possible is getting greedy with your employees. Remember that a good sales compensation plan will amply reward strong performers and their overall compensation could very well end up being substantial.

Avoid the jealous or greedy boss or owner syndrome characterized by a feeling that one or more employees is making too much money and needs a reduction in pay. This is almost always a very negative situation for you and your sales force and will usually result in high turnover and low morale.

There is a fair amount of psychology involved with motivating your employees. People are people and have certain needs and wants. And every person is just a little bit different from the next one. Crafting a sales compensation plan for people who tend to be high energy and high maintenance is sometimes not easy to do.

The Sales Compensation Handbook is an excellent resource to guide you through the process of developing a highly effective compensation plan for your sales force. It details how to build a plan that motivates and creates equity for all involved in a straightforward and logical manner.

It is no secret that most business plans are written to secure funding. Unfortunately too many business plans are poorly written, they do not include enough information and data to instill confidence in those who will be making important funding decisions, and/or they fail to address the most important issues. Many business plans are rejected by funding sources because they do not provide adequate and relevant information or data about the business.

In a nutshell, a well written and comprehensive business plan with solid assumptions and realistic projections will get the attention of the reader as long as the underlying business concept is sound. Too many sound business concepts get torpedoed by a poorly constructed or incomplete business plan.

A business plan is usually the first opportunity to impress funding sources. It is much like a resume. If a resume is poorly written or poorly constructed, it generally is thrown out. Business plans are very similar. Impress the reader and there is a good chance of getting to the next step. Disappoint the reader and getting to the next step is unlikely.

A business plan illustrates for the reader the extent to which the writer has done his or her homework. Most business plans fail to convey clearly what it is the business will do and how it will do it. Another major failure of business plans is the presentation of unrealistic financial projections.

It is sad to see people spend numerous hours preparing a business plan only to end up with a product that stands little chance of conveying the proper image and professionalism needed to be successful. One of the major culprits in this problem is the internet. While there are some decent resources available on the internet for preparing business plans, there are far more that mislead people. Too many Web sites provide samples of business plans that are sketchy and incomplete.

A business plan is not a ten page report. It is a presentation of your business concept, management, marketing, operations, financial projections and numerous other important facets of your business. It is important to avoid being misled into thinking that a summary of your business and a brief overview of financial information is adequate.

Another trap that some fall into is purchasing ready made business plans for a particular type of business. It is critical that you write your business plan from scratch. Why? There are two key reasons. One of those reasons is simply because you will better understand what is being written and be able to respond to difficult questions about your plan and your business. Another reason relates to a potential mismatch of what has been written to your specific business concept.

A boiler plate business plan will not likely match the specifics of your business. So in the end, you will be forced to write the plan essentially from scratch anyway. Another important point is that most astute readers will recognize a plan that is mass marketed. Make the plan your plan.If you want to create an impressive business plan, write it from scratch. Certainly some of the sample plans available can be helpful. But avoid relying on them too much.

There are certain elements that all good business plans contain. Based on years of experience in writing, reviewing and assessing business plans, the consultants of Applied Training Systems have developed a comprehensive and straightforward workbook that will guide you through the entire process of developing a sound business plan. Click here for more information.

• Enhances coaching and mentoring opportunities for managers and supervisors.
• Clarifies the performance criteria that are important for employees to understand as important in doing their respective jobs.
• Defines a clear basis for wage increases, promotions, disciplinary action, and other important job related issues.
• Reinforces that performance and pay or incentives are rationally tied together.
• Serves as motivation to continue to focus on improving performance.
• Brings consistency to the organization in terms of how employees’ job performance is measured.
• Creates a means for clear and complete documentation of job performance.
• Helps identify training and development needs.
• Assists in associating company goals and objectives with employee goals.
• Communicates important information to the employee about how they are perceived relative to the work they do on a daily basis.

All organizations should have some sort of performance management system in place. Many “systems” in place are not well defined and/or they do not address critical performance variables (competencies) commonly associated with work.

 Employers should understand that personal biases enter into the overall perceptions about employees. What many managers believe is factual about an employee is often nothing more than their own biased perception of the employee’s performance.

Assessing an employee is sometimes a very unfair process. In most businesses, there are often misperceptions about various employees. And unfortunately there are a lot of managers and supervisors who are just not good mentors and coaches and, therefore, the employee does not have the benefit of correcting performance issues prior to their annual performance reviews.

Adding to the problems associated with personal bias, misperceptions, and poor coaching is the fact that many performance review sessions (the actual meetings to review performance) are poorly conducted by the manager. 

It is important that reviewing performance be taken seriously because it is a critical feedback mechanism for employees and a chance for managers and employees to share valuable information. But keep in mind that formal performance reviews are not the only time that feedback to employees should be given.

If you are looking to build a performance review system or enhance your current system, the Performance Review Manual provides everything you will need to do both.

One of the primary problems in most businesses is a lack of qualified management personnel. Bear in mind that people are the key factor in the success of any business and it all starts with the management team. Too many organizations do little or nothing to advance the skills of management personnel and even fewer make the tough decision to terminate managers and supervisors when necessary.

But when it is time to identify someone for a management position, it helps immensely to look for certain attributes that tend to be found in good managers. The following list is certainly not a complete one, but it seems to form a good foundation in terms of identifying what attributes are common among good managers:

• They possess strong people skills in terms of understanding and relating well to them.
• They have strong communication skills, both verbal and written.
• They maintain a sense of fairness in dealing with people and issues.
• They are consistent in dealing with issues and people.
• They understand and behave in a manner that conveys a belief that employees are more important to his/her and the company's success than he/she is.
• They are honest.
• They are willing to seek input from employees and build consensus.
• They maintain an open mind.
• They are flexible.
• They have a well controlled ego.
• They are self confident.
• They are good listeners.
• They are able to be direct when needed without being abusive or offensive.
• They have a sincere interest in people and their well being.
• They possess good perceptive/intuitive abilities.
• They are mature.  
• They allow others to get credit for positive outcomes.
• They understand that hiring good people is critical to their success and they do not micromanage.  
• They are willing to admit to their own shortcomings and mistakes and do not feel a persistent need to be right.

How do you and other managers/supervisors working in your organization stack up against each of these attributes? Using a five point scale with 1 being little of a particular attribute and 5 being a lot, rate yourself against this list. If you feel comfortable doing so, have others do the same and compare your perception of the attributes you bring to the workplace to the perceptions of co-workers and subordinates.

If you would like to learn more about managing for excellence, click here for more information on Managing People For High Performance, a detailed self-study workbook that was developed as part of the award winning workshop by the same name.

1. Making poor hiring and promotion decisions and repeating this process over and over again. It is truly amazing the number of organizations that do not have a sound hiring process in place. It is equally amazing that most organizations do a very poor job of matching people to jobs. Having too many people mis-matched for the job they hold is more common than many people want to believe. 

2. Lack of accountability. In addition to poor hiring and promotion decisions, employees are often not held accountable for meeting reasonable, but demanding expectations. This impacts the organization in many ways, but most importantly in overall performance, employee morale and customer service.

3. Operating without a good long-range strategic plan. Too many companies live for today. Some have developed plans, but they often lack vision and substance. Others have no plan in place. Developing and carefully implementing a sound long-range strategic plan is critical to the success of any organization.

4. Managing with a short-term mentality. At the expense of the long-term viability of the company, management is too often focused on maximizing profits over the short-term. A short-term mentality very often leads to numerous operating and customer service problems that do significant damage to the company's credibility and image. This is often caused by cuts in the workforce that are too deep or simply unwarranted, an unwillingness to spend money on activities or infrastructure that might be important, and a focus on the compensation of management which is often directly tied to short-term profits.

5. Lack of cost controls. In too many organizations, money is spent on the wrong things and not spent on the things it should be spent on. Far too often, budgets are prepared without good assumptions and justification leading to overruns and missed profit targets. This can obviously have an adverse impact on banking and investor relationships. The balance between cost control and maintaining a long-term mentality can be difficult for managers not well trained or well prepared to deal with these issues.

There are some things that business owners and managers do during difficult times that sometimes just don't make sense. Here are five of those that you should be careful to avoid:

1. Don't panic! Panic is the root of many business problems because emotions overtake logic. When that happens, decisions become short-sighted and are based on short-term results. Stay calm and evaluate the impact of the changing economy on your business over the immediate-term as well as the long-term using sound logic and realistic scenarios that might play out. Certainly you should consider worst case scenarios, but be careful not to immediately assume that they will play out. How you handle things will in a large way determine to what extent the economy impacts your bottom line.

2. Don't jump to terminate good employees. While it may be necessary to lay off some employees when things slow down significantly, be very careful which ones you let go and which ones you keep. Cutting loose great employees can actually exacerbate the impact of a bad economy because your ability to manage through it is compromised. Good people can help weather a rough economic cycle. And you also should consider what happens when the economy improves. Ask yourself if you will be able to replace strong employees with equally strong or stronger employees when you need to rehire. And running too lean can lead to other problems in terms of productivity and customer service leading to long-term problems from which you may not be able to easily recover. Carefully consider what impact any substantial layoffs could have on your business.

3. Don't assume that marketing expenditures should be the first things cut. Too many companies jump immediately to marketing and sales items when cutting expenses. If there are marketing expenditures that are yielding marginal returns on your investment, certainly look hard at those. But there are times when marketing expenditures must be increased during difficult times to help power through the cycle. A mistake that many businesses make is that they cut marketing and sales efforts and fail to cut less important activities and expenditures. Look closely at how any cut in your marketing and sales efforts will impact your business.

4. Don't be afraid to renegotiate! Whether it is your bank, your landlord, your suppliers, and anyone else you may be paying on a regular basis. Can you restructure loans? Will your bank lower your rate? Ask your landlord to reduce your rent to keep you as a tenant if you are nearing the end of your lease. Talk to your suppliers and let them know they will need to bend on pricing or discounts. In general, talk to anyone you make payments to and let them know you need some relief.

5. Don't sit back and do nothing. Look at your expenses and see what can be trimmed without negatively impacting the business. If you don't have a sound strategic plan in place, get one in place immediately and begin executing it. How about annual business and marketing plans? If you don't have those developed, work on preparing them now. If you have unproductive people, get them productive or replace them if they can't get productive. If you can raise prices even slightly without impacting demand for your product, do so to enhance margins. If you have to decrease prices due to reduced demand, do so very carefully and don't lower them more than necessary. Shop around for better pricing on things you buy. Look at your processes. Can they be improved and made more efficient?  Do you have managers or supervisors who are ineffective? Get them some help or replace them. Is your customer service lacking? Work hard to improve it.

Avoiding these mistakes can enhance your chances of withstanding a slow or troubled economy. A downward trend in the economy can have an impact on any business. Don't exacerbate the impact of the economy by making bad decisions out of fear or panic. At the same time, don't ignore the economy and what your business can do to withstand a downturn. The good news is that most businesses can survive a tough economy with appropriate action and decision making.

It is not at all uncommon for organizations to develop sound goals and marketing objectives only to then proceed to create marginal strategies that simply do not effectively support the goals and objectives. It is this failure to carefully craft viable and differentiating strategies that ultimately dooms many businesses.

On every planning team, there should be individuals who are good strategic thinkers. The ability to digest available data and information and draw accurate inferences, assess the markets the business operates within, identify potential competitive advantages, and “think outside the box” are all important to the development of strategies that will give the business the best possible chance of being successful.

Too often strategies are developed hastily and/or they are based on flawed or incomplete information/data. Or they are not based on what could offer the organization some sort of competitive advantage.

Also, strategies should be fluid in terms of adjusting to competitors’ changes and strategies. Certainly any strategies you develop should be profit-oriented and take into account budgetary limitations.

Your strategies will cover each of the functional marketing and sales areas of your organization in order to provide direction to all involved. Some marketing “experts” like to point to the 4 P’s of marketing as the basis for developing strategies. Those four P’s; price, product, promotion, and place (distribution) certainly represent the broad areas around which strategies will be created. But within each “P” are numerous possible sub-categories.

For example, if you are addressing your product(s), there here are a few of the possible sub-categories around which specific strategies might be written:

• Packaging
• Design
• Functionality
• Color
• Technical features
• Life Span/Obsolescence
• Size/dimensions
• Merchandising features/capabilities
• Quality

This list represents only some of the possible areas around which strategies may need to be addressed. Competition and market demands will drive where you might focus your efforts.

Taking this a step further as a means of presenting several examples of strategies, the following might represent possible strategies for a few of the sub-categories shown above:

• Create unique merchandising features that will differentiate our treadmill line from the competition by allowing retailers to display the product while minimizing space required.
• Incorporate functionality into our treadmill line that allows users to custom program their own exercise routine into each machine and by including MP3 capabilities in our higher end treadmills.
• Upgrade the quality of our treadmill line by changing the belt and rotator configuration.

These examples illustrate how strategies are created incrementally for each product line and for one variable…..product. The last one borders on being more tactical than strategic, but the distinction is not all that important.

Some planners recommend adding tactics to support each strategy and that isn’t a bad idea since tactics describe the specifics of how to implement strategies. A couple of examples follow for the strategy “Create unique merchandising features that will differentiate our treadmill line from the competition by allowing retailers to display the product while minimizing space required.”:

• Shorten and narrow the “footprint” of each treadmill by roughly 10% (engineering will need to evaluate to ensure favorable user functionality).
• Change the size and color of the user panel and use complimentary colors for labeling the panel.

As you can see, these tactics are very specific. However, if you choose to blend your strategies and tactics into one section labeled “Marketing Strategies”, that is an option that is acceptable in most marketing circles. However, if you would like to separate your tactics from strategies, it is recommended that you specifically delineate them in your marketing plan.

To learn more about creating effective strategies and developing a sound marketing plan, click here for more information on The Marketing Plan Manual.