DEVELOPING A STRATEGIC PLAN (Pt 2)

Objectives to Achieve Goals

Accomplishing a goal requires establishing and achieving several specific objectives, which must:

• Be clear, concise and attainable.
• Be measurable.
• Have a target date for completion.
• Include responsibility for taking action.
• Be arranged according to priority.

An objective to the above-stated goal could require that the dispatcher develop a route structure capable of providing three-hour service to any area within 20 miles of the city's center, with the service beginning within six months.

An objective has to fit within a hierarchical network of other objectives that together contribute to the firm's ultimate goals and mission. For example, a subsidiary objective to the one mentioned above may be to purchase three new or late-model used delivery vans within five months. Another objective could specify expanding staff to drive the additional vehicles and to handle the expected increase in dispatching chores. This system of setting priorities is called a hierarchy of objectives.

Anthony Raia provides a list of guidelines to help you avoid pitfalls in setting objectives (Rue and Byars, p. 107). Some of the most important include:

• Adapt your objectives directly to organizational goals and strategic plans. Do not assume that they support higher level management objectives.
• Quantify and target the results whenever possible. Do not formulate objectives where attainment cannot be measured or at least verified.
• Test your objectives for challenge and achievability. Do not build in cushions to hedge against accountability for results.
• Adjust the objectives to the available resources and the realities of organizational life. Do not keep your head either in the clouds or in the sand.
• Establish performance reports and milestones that measure progress toward the objective. Do not rely on instinct or crude benchmarks to appraise performance.
• Put your objectives in writing and express them in clear, concise and unambiguous statements. Do not allow them to remain in loose or vague terms.
• Limit the number of statements of objectives to the key result areas (for your business). Do not obscure priorities by stating too many objectives.
• Review your statements with others to assure consistency and mutual support. Do not fall into the trap of setting your objectives in a vacuum.
• Modify your statements to meet changing conditions and priorities.
• Do not continue to pursue objectives that have become obsolete.

The formulation of a mission, goals and objectives is a complex, repetitive and continual process. As a small business owner-manager, your first reaction may be that you don't have the time or the resources to accomplish this. This may be true; however, you must develop a process that you can implement and be comfortable with. You will need to be aware of this process, the relationship of goals to ultimate performance and the need to be specific and consistent. A carefully thought-out set of goals provides the base on which the rest of strategic planning will proceed. The time you put into carefully assessing what you hope to achieve and how you will measure it will reduce the time required to assess and control performance.

Environmental and Industry Analysis

In determining appropriate goals, you will need to consider the position of your business within its industry and the broader business environment. Several trends may affect your business prospects. Examples may include shifts in population (e.g., the purchasing status of baby boomers), trends in the economy, technological developments, legislation (e.g., safety or antipollution regulation) and the activities of special interest groups. As you clarify your mission and goals, you will find that some factors are important while others may not require your attention.

There are several approaches to dealing with fluctuation and change in your business environment. James Thompson presents a list of general strategies that provides a good first cut at the complicated process of making strategic choices related to the business environment (Miner 1982, p. 147). He argues that most organizations search for certainty in an uncertain, fluctuating environment. Depending on the business' resources and the specific situation, a business may adopt one of four approaches to the business environment.

Buffering can be used when you have an abundance of resources, sometimes referred to as organizational slack. However, this is a luxury few efficiently run businesses enjoy. If, for example, you possess a technological edge, you may be able to relax your vigilance in the confidence that you have the resources to adapt to changes that may occur. You are then able to concentrate on other environmental factors that may affect areas of your business in which you don't have such an advantage.

Smoothing is a useful approach when you enjoy surplus resources in one area but your ability to meet demand is overtaxed in others. A good example is a chimney cleaning service that was unable to meet demands for chimney repair and service during the winter months, but had to lay off employees during the spring and summer months. In an attempt to change the environment, the owner developed advertising and pricing strategies aimed at attracting more business during slow times. In addition the owner assessed the skills of his employees. He found that by doing general masonry jobs in slow times, he could retain workers while actually increasing the size of his business. This example also provides a clear illustration of how a small business can manage, and even change, its environment.

Forecasting is something that all businesses must do. When you don't have the resources to use a buffering strategy or when conditions make smoothing impossible, you must anticipate environmental changes. The immediate need of most businesses is to monitor the competition. Other events that you can anticipate with an effective forecasting system include

• Technological breakthroughs.
• New competitors (either a company purchases in to your industry or a new competitor enters from an overseas market).
• Changes in the cost and availability of raw materials.
• Changes in consumer taste.

Effective forecasting is possible only when probabilities can be predicted; for example, you have a pretty good idea of what the odds are that shortages will occur in a raw material, or what the chances are that a law will pass providing new sources of assistance to small businesses. Unfortunately, many trends and changes are very difficult, if not impossible, to anticipate, even with the best forecasting system.

As a result you may find that you must resort to Thompson's fourth approach -- rationing. An unanticipated technological breakthrough or a sudden change in the spending habits of your customers may force you to reallocate resources. In this situation, goals may need to be delayed or foregone altogether, and parts of your business may need to be reduced. All needs of the business will not be completely met, but you will move to a base from which you will have the best chance to recover. With time you will rebuild to compensate for any losses incurred.