Office of Communications & Public Liaison | Resources

                     Michael L. Policastro

                          Vice President

              The Travelers, Hartford, Connecticut



                 Management and Planning Series




           Introduction to Strategic Planning replaces

               Developing A Strategic Business Plan


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photocopying, recording or other -- without the prior written

permission of the U.S. Small Business Administration.


While we consider the contents of this publication to be of general

merit, its sponsorship by the U.S. Small Business Administration

does not necessarily constitute an endorsement of the views and

opinions of the authors or the products and services of the

companies with which they are affiliated.


All of SBA's programs and services are extended to the public on 

a nondiscriminatory basis.



                       TABLE OF CONTENTS












     Analysis of Strengths, Weaknesses, Opportunities

       and Threats (SWOTs)             2

     Mission Statement     4

     Key Results Areas     4

     Strategic Objectives  5

     Tactical Objectives   5

     Budgeting and the Strategic Plan  6

     Target Dates         6

     Coordinating and Monitoring the Strategic Plan  6







     A. Strategic Planning Session Agenda  9

     B. Strategic Plan Format   11

     C. Objectives, Responsibilities and Targets

     C-1. Objectives, Responsibilities and Targets

          (Completed Sample)          15

     D. Individual Objectives, Summary/Status Report  17

     E. Information Resources     19






This publication introduces you to strategic planning. Such a

plan will help you to


   *  Take advantage of your company's strengths.


   *  Eliminate or reduce your company's weaknesses.


   *  Capitalize on opportunities and emerging trends.


   *  Take defensive steps to reduce threats facing your business.


   *  Bring together all your company's resources, and direct

      them toward specific goals in areas such as sales growth,

      profit, productivity and service.


   *  Prioritize and document all the goals your company wants to

      accomplish over the next three to five years.


   *  Allocate resources and assign responsibilities.





Ask ten people for a definition of strategic planning and you

will probably receive ten different answers. Most agree that it

is a way to identify long-term goals and to direct your company

toward fulfilling those goals.


Strategic planning involves


   *  Assessing the current business environment.


   *  Defining your company's purpose mission.


   *  Deciding what you want the business to look like in three 

      to five years.


   *   Recognizing your company's 

       -- Strengths

       -- Weaknesses

       -- Opportunities

       -- Threats


   *   Mapping out a course to take the company from its current 

       to its desired position.





"My business is very small. Do I really need to develop a plan

like this?"


The best response to this question is, "Only if you want to stay

in business and prosper." Consider the following reasons for

strategic planning.


   *  Technology and the fast pace of change are making business

      management more complex. Strategic planning will help you

      foresee and react quickly to market changes and 

      opportunities and identify areas in which your business is

      lagging behind.


   *  Competition is becoming tougher. In most cases, small

      businesses find themselves competing with much larger

      companies -- ones that know the benefits of strategic

      planning and practice it.


   *  From a defensive standpoint, it is important that you apply

      the same concepts to your operation.


   *  Good financial control alone is not enough to ensure your

      business's success. In addition to a budget, you need 

      long-term goals to determine the future direction of your



   *  You can use strategic planning to involve employees in all

      areas of your business, so they share your goals.


   *  You can use your plan to communicate with bankers, who 

      often do not understand the nature of your business. 

      Bankers must be convinced that your company is in control 

      of its future before they will lay their money on the line.

      A comprehensive plan aimed at sustained growth in sales and

      earnings can be very convincing.


   *  A plan is also very helpful in dealing with your 

      suppliers, advertisers, attorney, accountant, auditor,

      investors and business consultants.


 Let's take a closer look at the process.





The strategic planning process begins with an assessment of the

current economic situation. First, examine factors outside of the

company that can affect your company's performance. In most

cases, it makes sense to focus on the national, local or

regional, and industry economic forecasts. This part of the

analysis should begin early, at least a quarter or so before you

begin the formal planning process. Use the following common

sources for information:


   *  The Wall Street Journal.


   *  The New York Times.


   *  Business Week.


   *  Industry periodicals.


   *  U.S. Department of Commerce (especially for the 12 leading

      economic indicators).


   *  Federal Reserve banks.


   *  Local industry associates.


   *  Local chambers of commerce.


   *  The public library


After you have collected sufficient data, assess its present and

future impact on your business. For example, slow housing starts,

weak automobile sales, reduction in real disposable personal

income and increasing levels of unemployment signal reduced

future demand for goods and services.





After preparing a concise written assessment of the economic

environment, you are ready to meet with key people in your

organization for a marathon planning session. Make sure that all

key departments (e.g., sales, service, finance, processing,

manufacturing, etc.) are represented to ensure that a realistic

plan with a common goal is developed.


The meeting will be most effective in a comfortable place that is

free of interruptions and distractions. Often it is best to get

away from the business premises. For many businesses the process

takes two full days, so you may want to accomplish it over a



The sessions will function best if they are structured. The

following is a proven technique:

   *  Appoint someone to be the facilitator of the group. It 

      should be someone impartial and not so locked into his or 

      her own ideas that he or she cannot see the potential merit

      in others' ideas.


   *  Agree in advance that creativity is desirable, so no idea

      brought up at the session will be immediately discarded as

      impractical or undesirable. (Sometimes impractical or

      impossible suggestions can spark other extremely positive



   *  Appoint someone to write down the essence of what the group

      discusses and decides.


   *  Equip the room with a flip chart, felt tip markers, and

      masking tape or thumb tacks.


   *  Follow an agenda. The one shown in Appendix A has proven 

      very effective.


 After the opening comments, a review of the session's procedures

and a report on the economic environment, you are ready to begin

the most important part of the process.


Analysis of Strengths, Weaknesses, Opportunities 

and Threats (SWOTs)


Here the facilitator divides a flip chart page into two sections

and labels one half Strengths and Weaknesses and the other half

Opportunities and Threats (together known as SWOTs).


Each SWOT is to be written concisely on the flip chart. Everyone

is asked to identify SWOTs, starting with one person and

proceeding around the room in a clockwise fashion. This technique

elicits a response from each participant and rapidly creates a

charged atmosphere. 




         Example of Flip Chart Format for SWOT Analysis


               Strengths                   Weaknesses

     1.                           1.

     2.                           2.

     3.                           3.

     4.                           4.

     5.                           5. 


            Opportunities                    Threats

     1.                           1.

     2.                           2.

     3.                           3.

     4.                           4.

     5.                           5. 

     Examples of Strengths, Weaknesses, Opportunities and

     Threats that might be suggested by participants during the

     SWOT analysis:




       *  Over half of the residents in our marketing territory

          are affluent.


       *  Our company is well known.


       *  We were first in the area to institute telemarketing.


       *  Suppliers give us excellent service.


       *  Our financial position and credit rating are good.


       *  We have strong salespeople at the top of our





       *  The adjacent town is over 50 percent affluent

          residents. Penetrating that market would stimulate

          significant sales growth.


       *  One of our suppliers has offered co-op advertising,

          including a billboard.


       *  Most of our customers use us for only part of what

          can do with our products and services; the potential

          for more sales within our existing customer base is



       *  Our competitor is aging and may be receptive to a

          buy-out if we offer an employment agreement until

          age 65.


       *  Implementing a program to include stuffers (showing

          our full range of products and services) in every

          mailing to our existing customers could generate





       *  Recession, business slowdown.


       *  Telemarketing operation is generating an abundance

          of price-conscious customers who may leave us at

          the next price adjustment.


       *  The independent contractors we use are difficult 

          to control from a reliability and quality



       *  Salespeople often do not follow procedures.


       *  Lack of a formal budget process results in expenses

          that could be avoided or delayed.




       *  A new competitor started up its operation nearby 

          18 months ago and is cutting prices to attract

          market share.


       *  New competitor has lured away two of our employees

          with offers of better pay.



No one wants to feel foolish in front of the group, so people

listen carefully to what is said and think hard about possible



The facilitator should be certain that all SWOTs are recorded on

the chart. As pages of the flip chart become full, tack them up

around the room where everyone can see them. They will be used



When the facilitator has gone around the room several times and

every conceivable SWOT has been identified, the group is ready

for the next phase of the planning session.


Mission Statement


An organization's mission statement (usually no more than one or

two sentences) describes the purpose of the organization. It

enables all members of the organization to share the same view of

the company's goals, philosophy and future direction. It should

include the


   *  Reason the organization exists (management's mission) .


   *  Products and services offered.


   *  Clientele served.


   *  Nature and location of the business's marketing territory.


   *  Areas of specialization.


   *  Future direction of the company.


Every organization needs a mission statement and many require

one for each area of the company. By building your business plans

around a well-conceived mission statement, your company can more

effectively use its limited resources. Stated differently, the

mission statement helps your company move beyond trying to do

everything right toward doing the right thing.

The facilitator should lead the group in establishing (or

redefining) the company's mission statement in view of the

external economic environment and the SWOTs discussed earlier.


Let's take a look at some sample mission statements:


   *  The Johnson Corporation of Ohio is dedicated to maintaining

      its position as a leader in providing quality insurance and

      financial service products to businesses and individuals

      through a staff of highly trained people sharing a 

      tradition of integrity and service to its clients.


   *  Budget Travel provides economical vacation travel and 

      related services to customers in the greater Chicago area,

      who expect efficient, problem-free travel arrangements at a

      low cost.


   *  Our goal is simply stated. We want to be the best service

      organization in the world. -- IBM


   *  Whitefield Markets' goal is to be the lowest cost provider 

      of quality foods and groceries in the West Orange area, and

      eventually in the entire state.


   *  Velvet Green Nurseries' goal is to provide a full range of

      high quality wholesale and retail nursery products to

      professional landscapers and discriminating homeowners.


   *  Performance Plus manufactures and sells high performance 

      auto parts to the U.S. market. While our primary thrust 

      will be to increase our present product line to better

      serve existing markets, we will also actively expand into 

      the Canadian market.


   *  Smith Packaging Company's mission is to be the lowest cost

      producer of pork products in Delaware.


Key Results Areas (KRAs)


Most companies have from 8 to 15 key results areas (KRAs), areas

in which the organization must achieve success to grow and

prosper. The company's objectives and tactics can be grouped into

these key areas, making it easier to process and prioritize

objectives, allocate resources and coordinate with other areas.


The facilitator should lead the group in identifying KRAs for the

business. Many of the KRAs (increase revenues, improve financial

condition, etc.) are developed from the SWOTs. Some examples of

KRAs are


   *  Increase revenues.


   *  Improve financial condition (profitability, liquidity,

      solvency, credit and collections policies, etc.).


   *  Keep pace with or outdistance the competition.


   *  Improve efficiency and productivity.


   *  Achieve and maintain superior customer service.


   *  Capitalize on emerging trends.


   *  Increase utilization of technology to improve operations.


   *  Improve labor relations, human resource development and

      training (personnel issues: salary administration, job

      descriptions, benefits, personnel manuals, etc.).


   *  Improve internal communications.


   *  Improve distributor and/or supplier relationships.


   *  Improve public relations, advertising, promotions, etc.


   *  Improve or enhance products and services.


   *  Capitalize on the physical facilities (location, capacity,

      layout, parking, etc.).


   *  Improve or enhance insurance coverage.


   *  Capitalize on or improve organizational structure.


   *  Arrange for the orderly retirement and transfer of 

      ownership and control of senior owners to junior owners or

      potential owners.


Strategic Objectives


Usually there will be one or two strategic objectives for each

KRA, but occasionally there are more. Strategic objectives

describe conditions the organization wishes to achieve. As with

all objectives, it is important to make them as quantifiable as

possible. Two examples of strategic objectives follow:


Example #1


Key results area: Increase revenues  Strategic objectives:

Increase revenues from new customers, expand sales to existing

customers, acquire other related businesses, open new branches,

market new products or services and achieve levels of investment


income and inflation to achieve


$_______________ in revenues by Dec. 31, 19___


$_______________ in revenues by Dec. 31, 19___


$_______________ in revenues by Dec. 31, 19___


$_______________ in revenues by Dec. 31, 19___


$_______________ in revenues by Dec. 31, 19___


Example #2


Key results area: Improve financial condition.


Strategic objectives: Establish and maintain a financial 

condition sufficient to support planned growth through liquidity,

solvency and profitability for the four years listed, as follows:


                                        19___ 19___ 19___ 19___


Achieve a working capital position of   $     $     $     $



Achieve net worth of                    $     $     $     $


Achieve pretax profit margin of         $     $     $     $


Tactical Objectives


Establish tactical objectives to support each strategic

objective. Tactical objectives are specific, usually short-term,

objectives, aimed at supporting the strategic objective.

Eventually you will prioritize these tactical objectives, assign

responsibilities and agree to target dates for completion.


One easy way to develop tactical objectives is to return to the

ideas from the SWOT analysis. Group each idea into one of the key

results areas. For example, say 12 SWOTs were identified that

could either positively or negatively affect KRA #1, Increase

Revenues. Use those SWOTs to develop tactics for the increase

revenues strategy. Capitalize on areas identified as strengths

and opportunities and try to reduce or eliminate weaknesses and



If your strategic objective is to expand sales to existing

customers, some tactical objectives might be to


   *  Produce and market a new product (take advantage of an



   *  Develop and market a new service (take advantage of an



   *  Identify a specific product or service you have been

      successful with and develop a plan to promote that product

      or service to every customer who doesn't yet have it

      (capitalize on a strength).


   *  Retain strong sales staff or replace weak sales staff

      (correct a weakness).


   *  Revise traffic flow of store or change displays, signs, 

      etc. (correct a weakness or capitalize on a strength).


   *  Change marketing or advertising theme (take advantage of 

      an opportunity).

   *  Establish a sales campaign with meaningful incentives (take

      advantage of an opportunity).


   *  Change salary program for salespeople from fixed to  

      variable salary based on sales (correct a weakness).


After you have categorized and established tactics to address

each SWOT, proceed with the next phase of the process.


Budgeting and the Strategic Plan


The strategies and tactics that you choose will affect revenues

and expenses to differing degrees. You need to consider the

potential impact of each objective on both revenues and expenses

so that you can prioritize them and reflect them in future



Target Dates


Be realistic in setting target dates. It is important that you

resist the temptation to set extremely ambitious target dates for

your objectives. In most cases, the tactics you have agreed on

will be accomplished by people who already have a full day's

work. Each employee must be given sufficient time to achieve the

specific objectives assigned to him or her, or the plan will

quickly be viewed as impossible to accomplish and useless.


When assigning a tactical objective, let the recipient tell the

group how long it will take to achieve, and accept that target

date, if at all possible. Appendix B displays a suggested format

for the strategic plan.


Coordinating and Monitoring the Strategic Plan


For maximum sustained results, an overall coordinator for the

strategic plan should be appointed. That person is responsible

for bringing together the various pieces of the business plan

into one comprehensive plan and for monitoring the plan.


The form in Appendix C can be used to display the strategic

objectives and all the supporting tactical objectives for each

key strategy area. It also lists the person responsible and the

agreed-upon target date for each objective, with a section for

comments. An example of how the completed form might look is

shown in Appendix C-1.


Appendix D is an Individual Objective Summary/Status Report,

which enables an individual to track the status of each objective

for which he or she is responsible and report monthly to the

strategic plan coordinator.


The monitoring process should be made as simple as possible. Each

month, the strategic plan coordinator collects the updated

individual objective summary/status reports from employees and

makes certain that all objectives in the plan have been accounted

for. He or she makes note of shortfalls, needs for reforecasts or

meetings to be called, and documents progress in a brief

memorandum to all strategic plan participants. For example


   *  At the end of April, we are on target or ahead of plan in 

      all but two tactical objectives. The attached individual

      objective summary/status reports describe the status of 

      every objective.


   *  Where a shortfall exists, I have highlighted the shortfall

      and noted the actions being taken.


   *  Overall we are well on our way to achieving our major






When the above procedures have been discussed with the group,

agreement should be reached on when the written strategic plan

should be completed and ready for use. The method of

communicating the content of the plan to all employees should

also be discussed.





No treatment of this subject would be complete without mention of

the fact that some strategic plans fail. The major reasons are


   *  Strategy was defined incorrectly.


   *  The plans lacked detailed implementation steps with tasks,

      schedules and responsibilities.


   *  Goals were not stated in clear and quantifiable terms.


   *  Planning did not involve input of key managers.


The process described in this booklet avoids these pitfalls and

has proven effective with small businesses.














Time         Topic                                 Responsibility



Day 1 


 8:00- 8:05  Opening comments                       President

 8:05- 8:15  Review agenda                          Facilitator

             Review procedures for session          

             Review roles of facilitator and recorder  

 8:15- 8:30  Review completed analysis of external 

             environment                            Preparer of


 8:30-10:00  SWOT analysis - Part One               Facilitator

             Roundtable discussion to identify and  & Group

             document all of the company's 

             strengths opportunities, weaknesses and

             threats (SWOTs) 

10:00-10:15  Coffee break 

10:15-12:00  SWOT analysis Part Two                 Facilitator 

             Continue SWOT analysis                 & Group

12:00-12:45  Lunch 

12:45- 2:30  Develop or redefine mission statement  Facilitator

             for organization (statement of purpose)& Group

 2:30- 2:45  Coffee and soft drink break 

 2:45- 3:30, Analysis and identification of key     Facilitator

             results areas (areas in which the      & Group

             company must achieve significant 

             results in order to achieve the kind

             of revenues and profits desired)

 3:30- 5:00  Establish strategic objectives         Facilitator

             (objectives that are descriptive of a  & Group

             condition you want to achieve) within 

             each key result area

 5:00- 6:30  Dinner 


Day 2 


 8:00- 8:05  Opening comments                       President

 8:15-10:00  Establish tactical objectives to       Facilitator

             address SWOTs -- Part One              & Group

10:00-10:15  Coffee break 

10:15-12:00  Establish tactical objectives to       Facilitator

             address SWOTs -- Part Two              & Group

12:00-12:45  Lunch 

12:45- 1:45  Integration of budgeting process into  Facilitator

             the strategic plan                     & group

 1:45- 2:00  Coffee and soft drink break 

 2:00- 4:00  Prioritizing objectives, assigning     Facilitator

             responsibilities and establishing      & Group

             target dates

 4:00- 4:30  Discussion of strategic plan           Facilitator

             coordination and monitoring. Includes  & Group

             discussion of strategic plan format and

             appointment of coordinator to monitor 

             plan and keep everyone advised when 

             shortfalls or reforecast situations 


 4:30- 4:45  Arrange timing of written report and   Facilitator

             method of communicating the plan to    & Group

             all employees of the organization

 4:45- 5:00  Closing comments                       President








Table of contents


Mission statement


Summary of key results areas (strategies)



Objectives, responsibilities and targets


___ for (enter key results area #1)

___ for (enter key results area #2)

___ for (enter key results area #3)

___ for (enter key results area #4)

___ for (enter key results area #5)

___ for (enter key results area #6)

___ for (enter key results area #7)

___ for (enter key results area #8)

___ for (enter key results area #9)

___ for (enter key results area #10)

___ for (enter key results area #11)

___ for (enter key results area #12)


Individual objectives summaries/status reports


___ for (enter employee's name)

___ for (enter employee's name)

___ for (enter employee's name)

___ for (enter employee's name)

___ for (enter employee's name)

___ for (enter employee's name)

___ for (enter employee's name)

___ for (enter employee's name)






Key results area:


Strategy statement:



Tactical objectives           Responsibility  Target date  Status













Key results area: Achieve and maintain superior customer service.


Strategy objective: Enhance customer service to distinguish our

business from the competition and to generate repeat customers

and referrals.



Tactical objectives           Responsibility  Target date  Status


1. Survey key customers to    Dale Harris     1-15-91 

   assess current level of 

   service and determine 

   their expectations regard-

   ing ideal service.  


2. Establish and staff toll-  Dan Devlin      2-15-91 

   free (800) number for 

   customer orders and 



3. Establish well-understood  Dale Harris     3-15-91  

   customer service standards

   and guidelines. 


4. Change human resource 

   programs to build staff 

   that takes pride in customer 



   Proposals to management due 

   as follows: 


   * Recruiting/hiring/       Debra Goldstein 4-30-91  


   * Ongoing training         Joan Lupacchino 5-15-91  

   * Performance appraisals/  Fred Monti      5-15-91  






Summary/Status Report for (Employee Name)



Tactical objectives           Responsibility  Target date  Status















U.S. Small Business Administration (SBA)


The SBA offers an extensive selection of information on most

business management topics, from how to start a business to

exporting your products.


SBA has offices throughout the country. Consult the U.S. 

Government section in your telephone directory for the office

nearest you. SBA offers a number of programs and services,

including training and educational programs, counseling services,

financial programs and contract assistance. Ask about


     *     SCORE: Counselors to America’s Small Business, a 

           national organization sponsored by SBA of over 11,000

           volunteer business executives who provide free

           counseling, workshops and seminars to prospective and

           existing small business people.  Free online counseling

           and training at 


     *     Small Business Development Centers (SBDCs), sponsored

           by the SBA in partnership with state governments, the

           educational community and the private sector. They

           provide assistance, counseling and training to 

           prospective and existing business people.


     *     Women’s Business Centers (WBCs), sponsored by the SBA  

           in partnership with local non-government organizations

           across the nation. Centers are geared specifically to 

           provide training for women in finance, management,

           marketing, procurement and the Internet.


For more information about SBA business development programs and

services call the SBA Small Business Answer Desk at 1-800-U-ASK-

SBA (827-5722) or visit our website, 


Other U.S. Government Resources


Many publications on business management and other related topics

are available from the Government Printing Office (GPO). GPO

bookstores are located in 24 major cities and are listed in the

Yellow Pages under the bookstore heading. Find a “Catalog of

Government Publications at 


Many federal agencies offer Websites and publications of interest 

to small businesses. There is a nominal fee for some, but most 

are free. Below is a selected list of government agencies that 

provide publications and other services targeted to small 

businesses. To get their publications, contact the regional 

offices listed in the telephone directory or write to the 

addresses below:


Federal Citizen Information Center (FCIC)



The CIO offers a consumer information catalog of federal



Consumer Product Safety Commission (CPSC)

Publications Request

Washington, DC 20207 

The CPSC offers guidelines for product safety requirements.


U.S. Department of Agriculture (USDA)

12th Street and Independence Avenue, SW

Washington, DC 20250 

The USDA offers publications on selling to the USDA. Publications

and programs on entrepreneurship are also available through 

county extension offices nationwide.


U.S. Department of Commerce (DOC)

Office of Business Liaison

14th Street and Constitution Avenue, NW

Washington, DC 20230 

DOC's Business Liaison Center provides listings of business

opportunities available in the federal government. This service

also will refer businesses to different programs and services in

the DOC and other federal agencies.


U.S. Department of Health and Human Services (HHS)

Substance Abuse and Mental Health Services Administration

1 Choke Cherry Road

Rockville, MD 20857 

Helpline: 1-800-workplace. Provides information on Employee

Assistance Programs Drug, Alcohol and other Substance Abuse.


U.S. Department of Labor (DOL)

Employment Standards Administration

200 Constitution Avenue, NW

Washington, DC 20210

The DOL offers publications on compliance with labor laws.


U.S. Department of Treasury

Internal Revenue Service (IRS)

1500 Pennsylvania Avenue NW

Washington DC 20230 

The IRS offers information on tax requirements for small



U.S. Environmental Protection Agency (EPA)

Small Business Ombudsman

1200 Pennsylvania Avenue NW

Washington, DC 20480

Hotline: 1-800-368-5888

The EPA offers more than 100 publications designed to help small

businesses understand how they can comply with EPA regulations.


U.S. Food and Drug Administration (FDA)

5600 Fishers Lane

Rockville MD 20857-0001

Hotline: 1-888-463-6332

The FDA offers information on packaging and labeling requirements

for food and food-related products.


For More Information


A librarian can help you locate the specific information you need

in reference books. Most libraries have a variety of directories,

indexes and encyclopedias that cover many business topics. They

also have other resources, such as


     *     Trade association information

           Ask the librarian to show you a directory of trade

           associations. Associations provide a valuable network

           of resources to their members through publications 

           and services such as newsletters, conferences and



     *     Books

           Many guidebooks, textbooks and manuals on small

           business are published annually. To find the names of

           books not in your local library check Books In Print,

           a directory of books currently available from



     *     Magazine and newspaper articles

           Business and professional magazines provide 

           information that is more current than that found in

           books and textbooks. There are a number of indexes to

           help you find specific articles in periodicals.


      *    Internet Search Engines


In addition to books and magazines, many libraries offer free

workshops, free access to computers and the Internet, lend 

skill-building tapes and have catalogues and brochures 

describing continuing education opportunities.

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