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PLANTING THE SEEDS:

A practical guide on

Strategic Thinking

Table of ContentsIntroduction..................................................................................................................3Overview...................................................................................................................... 4What is your vision?.....................................................................................................5Setting Goals.................................................................................................................6Stepping Stones (a.k.a. Milestones).............................................................................7What is your motivation?.............................................................................................8Resources.....................................................................................................................9What resources do you need?....................................................................................11Costs: Start-up............................................................................................................13

Costs: Cashflow Forecast........................................................................................14Who are my Customers?............................................................................................15Who are my Competitors?.........................................................................................16How do I set my sales targets?...................................................................................17Year 1 (Start-up) - Drawing a line in the sand.............................................................18Reaching your customers - Marketing & Distribution................................................19

Marketing Plan.......................................................................................................20Risk Management.......................................................................................................21Major Milestone – Action Plan...................................................................................22Final thought..............................................................................................................23

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Introduction

Strategic thinking can be a scary concept to many who feel that they don’t have the ability or relevant experience to think strategically. This is nonsense, as this skill can be gained through learning and practice.

I left school when I was 16, securing barely enough GCSE passes to get a place in college to study A-Levels. When I got to college, after a summer job that I enjoyed, I decided to I preferred work and pay to homework and pocket money.

Luckily for me and my future career I landed a temporary job with the British Council, a large international NGO with the ambitious task of creating mutually beneficial opportunities for Britain around the world. I didn’t even know what that meant for my first few years there.

It was during my time at the British Council that I was exposed to strategic thinking and became involved in the planning

and implementation of various strategies from improving staff performance through new HR practices to coordinating significant reductions in operational budgets whilst

minimising the impact on operational output.

I have used this learning throughout my career when completing projects for my clients like developing the 3 year £5m business case for the London 2012 Paralympic Legacy, managing the resources and progress of my own business and personal development to achieve specific goals.

This guidance and training programme will breakdown the components of strategic thinking to help you develop a robust business and financial plan to help you ensure that your enterprise is a rewarding and successful venture.

I wish you good luck on your journey and remember that your plan is a guide and if one path

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ends, there is always another path for you to follow if you trust your instincts and listen to your heart and your head.

Ben CrouchDirector – Strong Roots CIC

OverviewThe table below is to help you capture all the key components of your enterprise idea so that it is easily presentable for your benefit and any important people who need to become involved in your enterprise. It is a snapshot and will need to be updated as your business plan changes idea progresses.

Organisation / Group / Product / Project Name:What is the PURPOSE (your Vision / Mission) of enterprise and what improvements do you want to achieve (your Aims / Goals)?Vision/Mission:

Aim / Goal 1:

Aim / Goal 2:

Aim / Goal 3:

How will it benefit these major stakeholder groups?Customers:

Society:

Staff:

Key Statistics: Year 1 Year 2 Year 3IncomeExpenditureProfit / Loss

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EmployeesVolunteers

Bank Account Details: Accountant Details: Insurance Details:

What is your vision?This can be quite an off-putting question for many people but all it is simply asking is ‘what are you trying to create?’ By setting out your vision it gives you a clear expectation of what you are trying to achieve, can help keep you inspired and motivated when the going gets tough and will help influence your decision making as opportunities and challenges arise.

Your vision should be easy to articulate so people instantly understand what you are doing and why. The easier it is for them to understand the easier it will be for them to support you.

It is a vision so visualise it. Use the space below to draw / collage / photograph what you are trying to create. What will it look like in five years time?

Now describe what you are trying to create in a paragraph making sure that it is easy to understand and inspiring.

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Setting GoalsStrategic aims / goals are articulating specifically what you are trying to accomplish. They should be linked to your vision but provide some clarity about how you might get there. They are different to objectives which are more detailed and should be linked to achieving your major goals.

Use the space below to brainstorm (write anything that pops into your head) what are your Strategic Goals?

Once you have completed your brainstorm number the ideas in order of importance. Number 1 will be the most important and the higher the number the less important it becomes. On review you might see that certain ideas combine to make a strategic goal. Draw the connections.

When you have prioritised your goals from your brainstorm exercise, describe the top three in the table below ensuring that they are ambitious and motivating, yet clear and concise.

Goal Description:

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Your Enterprise

No:1

2

3

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Stepping Stones (a.k.a. Milestones)The key to strategic thinking is to THINK BIG, then plan small. There will be numerous steps to complete before you can progress to the next. Use this table to set major milestones of what will need to be achieved by when to arrive at your ultimate vision. If you need more than 10 you’re being too detailed.

No Milestone Date to be Completed

1 I will complete my business plan and present it to someone who can help me make achieve my ambition.

2

3

4

5

6

7

8

9

10 My vision is a reality and I’m very happy and fulfilled.

Set a realistic date of completion for Step 10. It is unlikely that you will achieve everything that you really want in less than 12 months. So be kind on yourself and give yourself enough time to achieve the milestones one by one without causing undue stress and anxiety.

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What is your motivation?

Starting up a new enterprise is hard work and often you will find yourself knocking on a door that won’t open or in some cases gets slammed in your face. It is during these times that you will need to draw on your personal motivators and remind yourself why you set out on this journey.

Motiving factors can include individuals or organisations that you respect and aspire to be like (e.g. people in business, celebrities or sporting heroes) or they can be the positive difference you are trying to make in the world. It can also be pure hard cash although maybe what you’d like to spend that cash on is more motivating?

Whatever they are make sure you capture them and also make a note of WHY they are motivational to you. I guarantee that at some point in the future you’ll thank me for making you spend the time on doing this.

Motivational Hall of Fame:

Why? Why?

Why? Why?

Why? Why?

Use this Hall of Fame to draw out key characteristics of how you want your enterprise to behave and be perceived by your customers.

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Resources

Now you have visualised and articulated what you are trying to create, what major steps you’ll need to complete to get there and what is motivating you to succeed, it is important to reflect on where you are now and what resources you have available to you. A structured way of doing this is to undertake a SWOT analysis where you reflect on your own Strengths, Weaknesses (Internal & Current), Opportunities and Threats (External & Future) in relation to your enterprise idea.

What are your unique Strengths, Weaknesses, Opportunities and Threats that you need to be aware of to help you transform your vision into your reality?

Strengths Weaknesses

Opportunities Threats

The way to use a SWOT is to maintain your strengths and to take the necessary actions to transform an important Weakness, Opportunity or Threat into a Strength.

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Using the table below, prioritise the five most IMPORTANT challenges facing you and your enterprise and create a SMART (Specific, Measurable, Achievable, Realistic and Time-specific) objective that will transform a negative into a Strength.

No The challenge? Who? Will do what? By when? Completed?1.

2.

3.

4.

5.

Now do them! Set the deadline, schedule in the time and then get on with the work that you need to do to complete it. This is an Action Plan – so take action.

What resources do you need?

For some of us this question is easy to answer. For example, Strong Roots consultancy business we just need a laptop, printer, phone and somewhere to work from. But what else is needed? What about a website and email address? Business Cards? A logo! Putting the right resources in places takes money and / or time. So it is important to be really clear about what resources you need as these will inform your financial plans.

Use the table below to list all of the resources that you will need to have in place at the point each of your MAJOR MILESTONES (pg.7) have been achieved. Don’t double count. So if you’ve bought something and don’t intend to replace it, it doesn’t need to be mentioned again.

No: 1 2 3 4 5 6 7 8 9 10

RESO

URC

ES

Now think about what you are selling. What are the resources (e.g. your time, staff time, equipment, professional support etc) that you’ll need to have in place so that you can produce then sell your product / service?What is the Product / Service? What resources do you need to be able to sell it?

You have now gone through the various parts of your business and identified your resource requirements. Now to help you with your strategic thinking, you need to KNOW what these resources will cost so you can then plan WHEN and HOW you’ll buy them in.

Costs: Start-upFor any new enterprise there is always going to be costs involved in starting-up. What is important is that you know what you want, why you want it and how much it is going to cost. Go through the previous two tables and highlight (either circle or highlight in green) those resources that are essential for you to start trading your product.

Now list them in the table below, research/estimate the costs, the number of units you need, calculate the budget line and then the TOTAL BUDGET.

Items (start-up) Estimated Unit Cost (£)

No of Units

Budget (£)

Total:

Remember the above are just estimates. You can come back to these and revise them up or down after you have done some work calculating your sales targets, pricing and profit margins.

The budgets calculated above will be either one-off costs or ongoing (e.g. salaries). You now need to develop a cashflow forecast. Essential for any successful business.

Costs: Cashflow Forecast

Items Start-Up Ongoing costs (by month) Total1 2 3 4 5 6 7 8 9 10 11 12

Total:

This table is just to estimate your first year costs. To manage your cashflow (income and expenditure) plus get automatic calculations when altering budgets, you should use a suitable tool like Excel. The purpose of a cashflow forecast is to estimate and monitor your monthly costs to make sure that you’re generating enough income to cover yours costs. It will highlight ‘tight’ months and help you plan when you can afford to make certain purchases or need to increase your sales.

Who are my Customers?

Every enterprise needs to know who they are targeting. People will buy your product if they think it will benefit them somehow. Different people have different desires, tastes and aspirations. Therefore to make the best use of your limited resources it is important that you try to describe the profile of your customers. You might have just one target group (e.g. working Mums) but even then there are bound to be different characteristics within that group that are worth you exploring (e.g. age, ethnicity, and affluence). The human race is a collection of tribes, so what tribes will want to buy what you are selling?

Who are your TARGET MARKET and what BENEFIT(S) will your product / service have on them?

Target Group (Tribe name).

Special Characteristics (e.g. age range, ethnicity, geographical location).

Impact or benefit (what products/services would they buy and WHY?).

How much will they pay?

1.

2.

3.

4.

5.

The information you have captured above will inform both your marketing plans, sales targets and your cashflow forecast. But before you set the price of your product / service based on what you think your customers will pay, you need to check out your competitors.

Who are my Competitors?

It is important for any enterprise to know who you are competing against. There is a finite pool of customers and you want them to buy off you. So to make sure that your enterprise is making the right offer you must complete a Competitor Analysis. Your “market” will probably already have strong dominant players in it. Assessing them will help you be clear about what are your strengths and how best to stand out.

What’s a competitor analysis?

• It is a data gathering exercise to benchmark your product / service / organisation against a similar offer.

• Researching your competitors will help you get a good sense of what is going on “out there” in the business world.

• It will enable you to make better informed decisions about how to package and price your products / services.

Who are your Top 5 competitors?

Who are they? Why are they a competitor?

Where are they better than you?

How will you be better than them?

1.

2.

3.

4.

5.

The points in the ‘Where you could be better than them’ column are your Unique Selling Points (USPs). What makes you a more attractive offer to the customers you and your competitors share in the market. Your USPs will influence your marketing materials and how you communicate to your potential customers to increase your share of the market.

How do I set my sales targets?There are a number of variables that will influence your sales targets including your cost of production, price and whether your product or service is popular with consumers.

In your plan and with influenced by your market research (specifically the price of competitors products / services) you can do some rough calculations based on your estimated annual costs and estimated pricing for your target customers (tribes).

To estimate your current break-even position you can calculate:

Annual Costs divided by Estimated Price equals Number of Units to Sell.

Use the table below to calculate your sales targets:

Source / Calculations ResultsA) Annual Cost Expenditure cashflow forecast (pg

14).B) Average Price for Product / Service

Estimate an average per customer. Use target market table (pg 15) and evidence from competitor analysis.

C) Annual Sales Target Row A) divided by Row B).D) Monthly Sales Target Row C) divided by 12 months.E) Weekly Sales Target Row C) divided by 52 weeks.F) Daily Sales Targets Row C) divided by your working days

(e.g. 5 days x 52 weeks = 260 days).

What are your immediate reactions to these calculations? Ask yourself the following questions:

Question? Your AnswerAre the targets roughly what you were expecting?Do you have any concerns about these targets?

To decrease the number of sales / generate a profit you can do adjust the following variables:

Costs Reduce these so production of your product / service costs less but you sell the same volume at the same price. You should always aim to monitor your costs and ensure they support efficient and effective practices.

Price Increase your price but be sure that your target market are willing and able to pay.

Volume of sales

Increase productivity so more sales can be made without increasing expenditure (unless required and can pay for itself). Savings could at times be passed onto customers.

Year 1 (Start-up) - Drawing a line in the sand

It is vital for new enterprise to be flexible and responsive to rapidly changing markets but to ensure that you are making sensible and informed decisions about the shape and nature of your enterprise it is also important to reflect on your plan as it is starting to take shape.

The key for a profitable and successful enterprise is to ensure that you can cost-effectively produce a product that a target number of customers want and are willing to buy off you for the price you are charging.

Reflect on your calculations and estimates, make adjustments and when you have come to a decision (i.e. this is the average price I know people will spend, these are the minimum costs I could incur to start-up, this is an achievable sales target for the market and resources that I have available) then put these final high-level figures in the table below. You should make a note of any concerns as these could be really important in terms of how you run your enterprise during start-up. For example, it may just not be realistic in year 1 to generate enough sales to cover all your costs. So how are you going to supplement your income whilst you set-up your enterprise?

Year 1 Totals ConcernsAnnual Sales Target

Average Price (Product/ Service)Income

Expenditure

Profit / Loss

What action can you take to negate these concerns so that don’t continue to stress you out? Use the SMART principles and be practical and pro-active.

Concern SMART Solution

Reaching your customers - Marketing & Distribution

Now you have clarity about what it is you are offering, how much it is going to cost to produce and how much you are going to charge your customers you need to start thinking about selling.

There is a lot of psychology behind sales. Why do some people go to the Sainsbury’s which is further away from the Tesco down the road? Most consumers make purchasing decisions based on convenience, price, habit and loyalty. As you are moving into a market you will need to tempt customers to purchase off you and not your competitors.

The way your enterprise communicates and behaves will influence your customers and will help you to communicate your offer. Reflect on your USPs, your mission and your own principles (what is important in the way you behave and are perceived by others?) to help inform this exercise.

Value / Ethic / Principe What does it mean?(e.g. Affordable) We always ensure that our customers are paying the best price

when compared to our competitors.

You can have any number of values but for your ease don’t have less than three or more than eight.

Now that you have a clear idea of who your target customers (tribes) and HOW you want your potential customers to perceive you it is time to start planning how to communicate with them, market your products / services and transform them into paying customers.

Done properly, your marketing plan will be the roadmap you follow to get unlimited customers and dramatically improve the success of your enterprise and help you to think of your customers as assets rather than just consumers. One of the most powerful mechanisms for increased sales is referral from your current customers to their family, friends, colleagues and potentially their online audience (if they blog, tweet, facebook etc).

Marketing PlanTribe (Target Customer Group)

Communication method

What will you say? How will you distribute?

Offers? How will you retain them?

Why will they refer?

Risk ManagementBefore moving into the implementation stage of your business plan it is important that you consider some of the potential risks and pitfalls that might occur and have a considered plan of action ready if that risk occurs.

Take some time to brainstorm in the box below all the possible risks that your new enterprise might face.

Now that you have brainstormed the possible risks, I want you to rate each of them with how likely it is to happen (H = highly likely, M = quite likely and L = possible) and then the potential impact it would have on your enterprise (H = disaster, M = troublesome and L = inconvenient). Now put top 5 risks in the table below (starting with any ranked HH then work down).

Identify the TOP 5 risks affecting the success of your enterprise idea.Risk Likelihood (L,

M or H)Impact (L, M or H)

Mitigating Action

Major Milestone – Action PlanWell done. You have completed the exercise on Strategic Thinking to plan the set-up of your enterprise idea. But to bring it to life you now need to start implementing your plan. Using all the information you have captured to complete this manual, refer back to your major milestones table (pg. 7) and complete the table below about the immediate actions you need to take to complete this milestone. Be SMART!

No: Task (who needs to do what?) When? Why? How? Completed?1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

Final thoughtWell done on getting to the end of this ‘Practical guide on Strategic Thinking’. I hope that the guidance and structure we have provided, helps you on the journey of setting-up and running a successful enterprise that you’ll find personally and professionally motivating and rewarding.

The purpose of this manual is to help you to think strategically and to capture your thoughts, ideas and evidence along the way. It is not a business plan but everything that you have captured in here can be easily copied and pasted into a standard Business Plan or loan / grant application.

Remember that it is very likely that your path will alter either through your own choosing or as you discover more about your market, products / services and customers. Like any good planned approach you should be flexible and responsive but always come back to this manual to test your thinking to ensure that although there might have been changes, you are still going in the right direction.

Good luck, be great and remember we all have to start at beginning.

www.strongroots-cic.org.uk