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0:10

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

And welcome to Module 3 of the Essentials of Management and Strategic Planning. My name is Marla Knoll and in this module we're going to focus on strategic planning. What is it and how can you use that to improve your business? So in this module we're going to talk about strategic planning. Some people really struggle with this concept. What is strategic planning? So we're going to talk about what it is and how it can help to improve your business.

0:42

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

There is an old saying that is, if you're not growing, you're dying. And so we have to remember that when we're looking at our businesses. I've had some of my clients say, can I just stay here where I am? I really like the size of my company, which is fine. But you have to really be careful about this because.

1:04

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

it's true that if you're not growing you could be dying and believe me your competition is working to help you with that so we need to be if we're not growing our business we need to look at at least improving our business so we can stay in business

1:23

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

So most businesses have the same cycle or similar cycles where initially when you first start the business you may lose money the first year or two. Then you start as the revenues go up making money and as the revenues continue to go up you continue to improve your profitability. And then you hit a wall. And so some businesses when they hit this wall they fail.

1:53

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

However some get over the wall and then again go through the same thing. The revenue goes up and up and profitability goes up along with the revenue hopefully and then you would hit another wall. And with every wall businesses struggle and sometimes with every wall there is the danger of not making it over that wall. So how do we make sure that when we get hit that wall we get over the wall?

2:23

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

Many times businesses grow organically. Maybe you have a great idea and you start out of your garage or you have a partner and you have a plan and you get going and you may even have a business plan, but that is not the same as having a strategy. So why don't we talk about what that means.

2:43

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

We need to think about what we can do differently to improve and grow our business than what we are doing. So the article in the Harvard Business Review talks about a strategy not being the same thing that we were doing before, but really stretching to try to do something different, bigger, harder.

3:09

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

And that is going to help us to get over the wall and grow the business. So you may think, oh gosh, it's going to be easy to come up with a strategy. However, that is not the same as a strategic planning meeting and getting all of your key executives involved in your strategic plan.

3:31

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

So we're gonna look at what a strategic plan really looks like, what's involved, and how that can really help your business.

3:41

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

This is such an important step in strategic planning. If you don't have a vision that's already defined and visual, then let's talk about what that looks like. What do you want your business to look like three years from now? And who's going to be there to help you? Does your executive team know what your vision is or are they guessing? Have you communicated that to them?

4:08

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

Or do they think it's all about just money? What is your vision and how clear is it to your staff? I think you'd be surprised at how many businesses get started and are going without really identifying and defining the purpose. So they...

4:27

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

They may have something in their head. The business owner may have something that they're thinking this is what the purpose of the business is. And assume that all of the employees understand and know the purpose of the business. You'd be surprised at how many employees do not know what the purpose of the business is. So we want to make that very clear. What is your purpose? What do you want your business to be for and about?

4:56

S… Speaker 2 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

And we're going to use Apple as an example because I think

5:00

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

I think that's such a clear vision. Originally, Apple had to have a computer on every desk, and it was really very visual. You could just see computers on every desk in a classroom. You could see it, and it was pretty clear and evident for the employees of Apple to see. They have changed, though, they have changed their vision to bringing the best user experience to its customers through innovation hardware, software, and services.

5:28

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

I don't think that's as clear as an apple on every desk, but they have had some success, of course, in the original vision. So now how would we make this new vision a little more clear, a little more visual to all of the employees? What do you think? I think this vision is a little clearer, and this is a perfect example of a vision that could be

5:58

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

potential for a hospital or an assisted living facility or some personal service business. We serve from our heart to be the first choice for Orange County families. And you have a picture of a heart and that's something that the employees could remember. We serve from our heart to be the first choice for Orange County families. So this is something where a picture and a

6:23

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

Vision goes together, easy to remember, and is very clear. So this is Nike's vision, their purpose statement. Her purpose is to unite the world through a sport to create a healthy planet, active communities, and an equal playing field for all. Great, this is wonderful. And it definitely shares a story. But is it something that the employees can remember? Well, for one thing, it's kind of long.

6:54

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

Is there a way that we could make this shorter so that all the employees could remember it? Because you don't want to have a vision that you're, if you ask all of your employees, so what's the vision of my business, they have to stop and think and say, well, something about a healthy planet, active community, I don't know what it is. You want your employees to be able to remember your vision.

7:21

S… Speaker 2 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

We want to make sure that our vision is clear, something that our employees can remember. So if Nike's purpose statement was

7:31

S… Speaker 2 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

Active community, equal playing field for all. That's something that the employees could remember. And that's a big goal, right? Equal playing field for everybody, right? That's really tough. And it's not about money. Our employees are not going to necessarily be driven by my profit, right? What do they care? They care maybe about their own pocket, but to have a bigger purpose is something that is...

7:59

S… Speaker 2 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

definitely more motivating for all of our employees and if we get the right vision or purpose statement then we're going to have success because we're going to have employees that are driven by our vision.

8:15

S… Speaker 2 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

So here's an example of a couple of vision statements that are definitely easy to remember and simple but big, big, big goals. Alzheimer's Association, a world without Alzheimer's disease. Seems like it would be almost impossible, but a great vision to have. Facebook, connect with friends and the world around you on Facebook.

8:40

S… Speaker 2 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

So these are, they're short enough for people to remember but big enough to drive motivation. I want you to be clear about your vision. What is it and is it something your employees can remember?

8:55

S… Speaker 3 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

So we looked at, we have a couple of examples here, an apple on every desk, a world without hunger. I have a friend that has a roofing business and he wants a roof for every family, a family for every dog. These are really visions or purpose statements that employees can remember.

9:14

S… Speaker 3 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

And this will help you motivate your employees. If you have a vision that is easy to remember, visual, something that they can care about, then they will remember your vision and be motivated by it.

9:34

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

Once you have your vision, then let's look at your current strategies. Are they a stretch or are you just focusing on doing the same thing you always have done? And how did you create your strategies? Did you have good information when you generated strategies? Did you have some background and did you do this with the executive team? That's pretty critical. And then are they measurable? Do you know when you're going to hit that?

10:00

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

target? So and does your executive team know what that target is? So all of these really important questions and what we're going to do is dig into this a little bit further.

10:12

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

So we've developed a vision we talked about that how how you're going to get the vision and so once we get the vision we need to make sure that we communicate that to our key executive staff so that they have focus and they know what's going to be the most important thing for the business and after we do that with them we develop a plan around the vision with three to five strategies and I say three to five

10:40

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

Because we want to make sure we maintain the focus. So a lot of business owners look at they want to do 10 great amazing things or even 20. And what will happen is you'll probably get nothing done because you're going to be too scattered. It's really important to maintain focus on three to five key things that we're going to do to drive the business.

11:20

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

talked about the vision not being financial. However, we can, as a strategic option, have financial as one of our strategies along with some of these others, market share, operating efficiencies. These are some of the basic strategies that companies can focus on and components of these strategies to improve their business. So for most companies, if they go after one of these strategies,

11:50

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

they will be able to grow their business. There are other strategies as well but these are really some of the primary strategic options we can look at. When I talk about financial, there are three primary focuses for financial. I'm going to increase revenue.

12:10

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

or I could increase gross profit. What does that mean? It means I'm going to reduce the direct expenses that I incur to drive my revenue, or I could reduce my expenses, which is going to do what? Improve my net income.

12:28

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

So I can look at each of these components to see if there is something I can do that is beyond what I'm doing right now to improve my revenue, increase my revenue, increase my gross profit, which could be a combination of increasing revenue and or reducing my cost of goods, or lowering my expenses, which would increase my net income. So hopefully all of these would increase my net income.

12:57

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

But this is where we look at financial and I could have a strategy around any one of these three to have some improved financial success.

13:09

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

So market share can be a strategic focus. Are you looking at the right customers or is there a different customer base that you might try to reach out to? So one of the things that we wanted to do was to expand our market share and so we created an office in a new geographic location. That helped us to expand our market share and that was fairly successful.

13:37

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

I might look at the pricing and am I using the right pricing plan to reach the right customers? What is the most profitable? So the new office that we created was in an area where we could get a higher end or a customer that could pay more. And so that was more profitable for us. Now, not every strategy that you go after is going to be successful. And that is one of the points.

14:07

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

the Harvard Business Review article, you've got to be willing to take some chances to do something different and not try to accomplish more success from doing the same old thing. So what product am I generating or selling is another strategy. I might look at my product line and decide that I want to generate. I want to do something similar but not exactly the same.

14:38

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

related to my product, which would be horizontal in the same type of product. Or maybe I want to create something that supports my current product, which is a vertical growth. So I want to do something that is similar to my product or supporting my product, so horizontal or vertical.

15:00

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

Maybe I'm looking at my product line and I want to reduce my overhead in some way. So that would be around my specific product profitability. So all of these things relating to my product might be strategies that I look at as far as growing my business.

15:19

S… Speaker 2 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

You can have a people strategy, and what does that mean exactly? There is a book called Top Grading that you can review, and that helps you understand what are some of the things that you can do with your people. Training is one of the things I recommend first, probably one of the easiest things to do as far as the strategy is concerned.

15:45

S… Speaker 2 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

You may want to improve your diversity, and certainly that's an important thing in business today. And I think business owners are really surprised at how improving diversity improves the overall business. Then how about if you're going after a different customer? So in running the business, we decided to have a Hispanic business. So every employee in that business had to speak Spanish.

16:14

S… Speaker 3 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

And so that was an approach because we had a different customer. We needed to make sure that we had the right people to serve that customer. So people definitely is a choice for strategic planning.

16:31

S… Speaker 3 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

We used to grade our people from A, B, and C, and we could look at the C players and decide, well, are they going to step up the plate or are we going to need to replace those C players and try and find A players? Jack Walsh used to say to get rid of the bottom 10% of your people. I did not and do not agree with that.

16:58

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

But I do think that we ought to always look at our people and see if we can improve the quality of the people within our business. Whether I'm in a service business or a manufacturing business, efficiencies is always a strategy that I can approach and figure out how I can run my business.

17:21

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

better, more cost-effective, fewer wasted products, fewer wasted time, in every respect. So a black belt, there is something called a black belt that can come into your business and look at some of the things, some of the ways you can improve your business. Or maybe if I'm manufacturing, I can look at the machines that I'm using and improve the type of machines that I'm using, the way that the machines are using.

17:50

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

The quality of the machines, so that might be a way of improving my efficiencies. And attitude, that's a whole, I may look at my culture and realize that my culture needs to be improved, which would improve my attitude, which would improve my efficiencies. So efficiencies is also a strategy that your business can go after.

18:18

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

It's very important when we're looking at our strategies. So you've just seen some examples of some strategies that you may be able to implement in your business. I encourage you to keep that to only three to five strategies, three to five strategies of things that you can do to improve your business. And just remember, not every strategy is going to work for you, but just realize that a lot of your competition isn't doing this.

18:48

S… Speaker 4 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

So three to five strategies is a good approach to strategic planning.

18:53

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

And really when you're thinking of strategies, I get input from employees, from vendors, from association meetings. I get a lot of ideas of strategies during the year. But when I'm holding a strategy meeting, I definitely do not invite all of my employees. It's good to have input from your employees.

19:20

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

but I would not invite everybody to a strategic planning meeting. I would only invite my key people. Now I do know somebody who used a consultant to hold a strategic planning meeting and the consultant had that person, the business owner, invite all of the employees.

19:40

S… Speaker 5 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

The result was all strategies related around the employees of all the wonderful fun things that we could do for the employees. It costs a lot of money. It costs a lot of time. And oh, by the way, all of those employees left the next year.

20:00

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

Do not include all of your employees in the strategic planning meeting. It should just be the executives of the business. I actually invited a competitor from another state, so that wasn't really a competitor, but somebody in the same business that was growing their business the way I wanted to grow that business, and they were in another state. So I knew of that person from an association meeting.

20:25

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

I invited them to our strategic planning meeting. They did so graciously and gave up their time and were complimented that I even asked them for their input into our strategic planning meeting. So just focus on getting three to five strategies that you're going to work on for your year. How do I measure my success?

20:53

S… Speaker 2 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

I measure my success with key performance indicators, key performance indicators. And these are the indicators that tell me that I've accomplished something, whether it's my revenue per man hour or my number of people satisfied with my services, reduction in waste numbers.

21:14

S… Speaker 2 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

These are key performance indicators. So what I want to do is to develop a benchmark. Where am I right now in things like my revenue per man hour, my waste numbers? And then as I implement a strategy, I measure to see how I'm improving these numbers. So there are leading and lagging key performance indicators. Leading key performance indicators is what I'm doing right now to get a result.

21:43

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

So I might be changing how I might be looking at the number of calls that I make for revenue. I might be calling more people in a month. And so that's leading indicator. I might be developing more training hours and I could measure the amount of training hours that I'm providing my employees.

22:08

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

But the lagging indicators are the indicators that result from whatever I've done. So financial statements are definitely a lagging indicator. I've done something during the month, financial statements are prepared after the month is done, and then I can see how well I'm doing.

22:24

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

But if I wait for after the month is done there could be some bad results So it would be a good idea to have some leading indicators something that you can watch during the month to help you to improve your Strategic planning to help you improve your business so that the lagging indicators Deliver you the results that you would like

22:50

S… Speaker 2 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

Once I have my key performance indicators, once I have my KPIs, what do I do with them? I think it's a great idea to share them with your employees. So your employees should know what you're measuring, particularly if it's...

23:08

S… Speaker 2 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

measurements of waste, measurements of employee satisfaction, measurements of the number of jobs you're getting, the success with your business. It's great to share that with your employees and then have some levels. So if I reach 75% of my goal

23:27

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

maybe I want to celebrate and celebrate with your employees or celebrate with your stakeholders but which would be you know maybe you have shareholders or other owners but use your key performance indicators to the positive and you can use your key performance indicators to help people understand maybe when your business is not doing as well.

23:53

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

it's certainly a good reason for not giving raises if I share my reduction or increase my increased reduction in revenue if my revenue goes down I let the employees know hey

24:08

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

can't give out raises this year but if my revenue goes up and I'm sharing that with my employees then I should be able to give raises but I do caution on sharing financial information what I shared was number of customers and that was the key performance indicator that we identified as a goal and we shared

24:37

S… Speaker 2 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

So how do we get there? It's really important to have a strategic planning session. So a strategic planning session, even if you have an idea of what you think the business needs to do, it's really beneficial to get your key executives on the same page because you'd be amazed.

25:00

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

at how much they can drive the bus on this and what you need is a team to get you there and you get the team together and drive driving in the same

25:12

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

lane by having a strategic planning session. So we're going to be talking about that in our next module, how to put together a strategic planning session. But we get together with our team and that helps us to make the vision clear, make sure that they have the clear vision.

25:31

S… Speaker 1 (ScreenRecording_٠٤-٣٠-٢٠٢٦ ٢٣-١٩-٤٥_1)

Make sure that we develop some three to five strategies together and then what are the KPIs and who does what, when, where, how to make sure we accomplish those strategies. And that's the accountability piece. Our strategic planning session will help us get there.

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