Strategic Planning and Startups: Getting Going

When developing a strategic plan, and a startup, it would logically follow that this is what you would do at the outset. After all, shouldn't your goal be to not only found a business, but also develop a business plan that will help your business to not only establish itself right away but also to quickly grow and expand?

A business plan is key, since it will likely have quite a few components that would be used in a strategic plan, but a business plan is not a strategic plan. You need to have a business plan first, then develop your strategic plan. When you boil things down, a strategic plan needs to be viewed as your practical outworking of your business plan. It is your way of sitting down, assessing the situation, and coming up with an approach to implement it.

One key thing should be said at this point: specifically what a strategic plan is not. A strategic plan is not sitting down and creating a wish list, or just talking about what things immediately come to mind. I remember trying to moderate a strategic planning session that quickly devolved into people making points about why the organization had not done anything on a topic, why their ideas needed to be followed, etc. Strategic planning needs to be the time where you sit down, have concrete goals in mind, and devise a plan of how to attain them.

The heart of your planning will need to involve financial projections. Obviously, if you have just started operations (or are in the process of raising seed funding), this could be a little difficult to do, since you do not have projections to work with. Additionally, you might be at the phase where your company will not immediately be profitable due to where things stand. Therefore, there are limits to what you can do as it pertains to strategic planning.

When it comes to goals for a business and strategic planning, we will now examine what the focus should be based on profitability. It should look along the following lines:

Attained Profitability: Not all startups require a lot of capital to get going, and organizations that are service based will likely be profitable almost immediately. However, there will be liabilities that need to be serviced. Paying them off needs to be a key focus, but simply paying down debt should not be all you are focused on. Your strategic planning needs to make sure that you adequately address any outstanding company needs as well. Therefore, plans involving cash flow projections need to focus on both servicing debt as well as improving the quality of your offerings. You are not planning to scale here. Instead, your focus needs to be on developing a sound foundation for long term growth. 

Working Towards Profitability: Quite a few startups are not profitable immediately. This is due to the costs required to get things going. In this situation, your focus needs to be in planning how to become profitable as quickly as possible. Additionally, depending on how you financed your startup, your financial stakeholders will likely factor in some way into these discussions. Recent articles on venture capital companies have indicated that the length of time invested has actually increased, with some discussions focusing on how the current model is not really sustainable, especially when it comes to being able to invest in new opportunities. All of that to say, exit strategies for some of your investors (possibly even all) should very much be under consideration in your strategic planning.

As you can see, developing a strategic plan is rather complicated. At least using the profitability metric you can quickly focus on what your goals need to be.

At the end of the day, one thing is certain with regards to start ups regardless of whether they are profitable or working towards it: your goal with developing a Strategic Plan is not to create an ambitious plan for world domination. Instead, you need to be focusing on building a solid foundation. While it might not be as much fun as you would like (especially considering some of your more ambitious plans that have been committed to paper), focusing on developing a solid foundation with a startup strategic plan is where your focus needs to be. The only real difference, then between profitable and working to become profitable companies is the pathway that they can take due to their constraints.