A strategic business plan is critical to the success of every business transition journey. It requires a clear destination and a map outlining how to get there. This plan does not have to be complicated but it needs to be realistic and begin with an exploration of your current strategic position.
Conducting a strategic positioning exercise involves an examination of what we call the nuts and bolts of a healthy business. These are the four main categories that house the thirteen factors that keep the engine tuned and the wheels turning.
The nuts and bolts of a healthy business
- Why you do what you do
- What you do
- How you do it
- What influences what you do and how you do it
A. “Why you do what you do” stems from your philosophy and leads to a clear vision for the future
The foundation of a healthy family enterprise is its family business philosophy or purpose. It provides the answer to “why you do it”. This philosophy helps clarify your ultimate destination on the business highway – your goal for the inevitable change in ownership of your business.
Your destination is the common vision held by the outgoing and incoming owners of the business. Having created an alignment between family and business, the vision will meet the objectives of the business transition without compromising family unity. It will also drive all strategic, investment, participation, compensation, asset distribution, and/or operating decisions. In other words, it is the basis for “what you do” and “how you do it”.
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B. “What you do” refers to the products and services you sell and the sales and marketing strategies you use to sell successfully
Measuring “what you do” is as important as “how you do it”. Healthy, saleable businesses have the right product mix and are proactive in managing their supply chain. They have controls in place to monitor work-in-progress, inventory and distribution. They have a formal sales process and actively market the right products and services.
C. “How you do it” incorporates all the factors that need to be aligned to keep the wealth engine running smoothly beyond current management. These include:
- Your internal structure
- Your systems and processes
- Your social capital
- Your intellectual capital
- Your physical assets
In addition to the more obvious systems and processes, “how you do it” should include establishing a definitive business structure that operates effectively and efficiently and can thrive beyond your leadership. Proactively building the social capital to enhance business reputation/ethics/relationships, the intellectual assets that differentiate your business, and the physical capital that enables reinvestment and satisfies shareholders is also important.
D. “What influences what you do and how you do it” incorporates a number of external factors, such as:
- The industry or marketplace in which you operate
- The current business environment
- Your competition
- Your customers and markets
It is important to be aware of whether your industry is growing or declining. Are changing technologies, government regulations or climbing interest rates impacting your business? Will shifting demographics decrease the demand for your products? Are your competitors better positioned in the marketplace?
When they are optimized, the factors included in A, B and C constitute the internal strengths that give your business a competitive advantage and at the same time help achieve the identified vision. When they are not optimized, they can prevent your business from reaching its goals.
Every business has to contend with the external factors mentioned in section D. Sometimes these factors present opportunities that will enhance your ability to achieve your vision for the future, but they can also present roadblocks on the journey. While they are not completely under your direct control, they can and should be managed.
These nuts and bolts are the SWOT factors (Strengths, Weaknesses, Opportunities, Threats) that form the basis of a strategic business plan and detailed roadmap for the transition journey. Our Stop or Go survey is a simple yet effective tool for conducting this SWOT analysis and determining your overall strategic position.
Stop or Go survey
The Stop or Go survey is a confidential online questionnaire designed to assess each stakeholder’s view of “where we are today” in pursuit of the ultimate long-term strategic direction - the protection and transition of the intellectual capital that is essential for a sustainable, saleable operation.
The system will instantly analyze your responses to 40 key questions and produce a results chart similar to the diagram on the right to determine if, overall, the business is 
poised for growth or at some level of risk. An X will mark your current strategic position. An X in the green area suggests you are in a position to expand or diversify. An X in the red area suggests you have considerable threats and weaknesses to address in order to sustain your business. The results help answer such questions as “will we continue to run and invest in the business or proactively pursue a sale?”
The findings for each of the nuts and bolts categories are then reported separately in order to highlight key success factors along with areas that need most attention. A bar chart similar to the example below depicts perceived strengths or opportunities in green. The areas where a significant weakness or threat exists are marked in red. The yellow bars indicate those factors that show a more moderate level of concern or optimism.
Building blocks and areas of concern
By having all those who are directly involved in the ownership or management of the business complete the questionnaire (independently and in confidence), you can identify any differences of opinion or potential conflicts that need to be resolved.
From this analysis, you can then develop appropriate strategies to enhance your current strategic position. Strategies can range from improving your core business, through adopting new initiatives, to testing and implementing the innovation that is inherent in pursuing a new strategic direction.
Investing time to check your current strategic position can alert you to take either a very defensive or somewhat conservative position in order to mitigate risk, or indicate when conditions are right to be more competitive or aggressive.
Completing the questionnaire again at a later date will provide you with a clear indication of the progress made in addressing initial concerns.
To conduct a Stop or Go survey in preparation for a diversified business plan, or for assistance with any of the components of a roadworthy Communication VehicleTM, contact your BDO advisor or call The BDO SuccessCare ProgramTM at 1 800 598 6400. Remember, an equal focus on the business, ownership and family/personal areas of your business is necessary to navigate the potholes and ensure a smooth sale or transition.