Strategic planning: key steps to effective direction setting

We explain the best tips and tricks for setting up an effective, long-term plan for your business strategy and vision.

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Written and reviewed by:
Helena Young

Strategic planning is the process by which an organisation establishes its future goals, and implements a pathway towards achieving them. It involves effective collaboration and organised project management to oversee delivery.

You wouldn’t climb Everest without a route, so why would you set a business ambition without a strategic plan? Yet time-poor small businesses often neglect to plan a strategy for their company, leading to chaotic leadership and poor granular decision-making.

This guide explains how to implement and monitor a strategic plan for future success – even in today’s rapidly changing business landscape. We’ll also explain the vital role that people management plays in strategic planning by getting employee buy-in and engagement.

What is strategic planning?

A strategic plan is an actionable path towards an identified business goal, creating a blueprint for the months and years ahead. It is particularly important given the many challenges that small businesses have faced – and continue to struggle with – in the past few years.

With a global pandemic, an economic downturn, and the rise of remote work to contend with, SMEs have had a lot to contend with. Using a strategic plan, these kinds of obstacles can be navigated, giving the business actions and objectives to move into the best market position.

That’s not to say strategic planning is like looking into a crystal ball. It’s important to note that this kind of foresight must be agile. Businesses still need to remain reactive, to an extent.

However, a strategic plan can help to strengthen your organisation’s competitive advantage by giving you time and space to plan for a number of scenarios. This will ultimately lead to a strengthened and resilient business model and marketing plan.

Employee benefits

Alongside future-planning, one of the main benefits of strategic planning is that it’s an important people tool.

As well as reacting to external business factors, your plan should also be used as an internal compass to provide direction and purpose to your team.

Setting motivational goals for employees will ensure they stay productive and engaged, while simultaneously building trust between leadership and the workforce.

Strategic planning needs an underlying people focus to encourage ownership and job satisfaction.

Top 3 types of strategic planning

There are several frameworks that business owners can use to lay out their strategic plan. Some have a lot of associated terminology which can make them confusing for the average newcomer to understand. Some can even be used in conjunction with each other.

Here are the three most common methods of strategic planning, including why and when they should be applied:

1. SWOT Analysis

SWOT screenshot template analysis

SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats. Usually viewed as a matrix, it provides a comprehensive model to mark both internal and external factors that might influence your company vision.

Because it’s subjective, SWOT analysis is a collaborative process. You also don’t need a lot of time, resources, or expertise to carry one out. However, this is also the biggest flaw as the framework may lead to inaccurate information. We’ve built the above example of a SWOT project plan template using the popular project management software,

Who should use it? This model can be effective for businesses that aren’t carrying out complex, multifaceted planning. It’s great for consumer-facing businesses with clear rivals to analyse, too.

2. OKRs

OKRs screenshot template analysis

OKRs (standing for Objectives and Key Results) are a goal-setting methodology used by firms to establish ambitious, long haul goals. They should consist of two parts: an ambitious goal (the objective) and details on how you will measure its achievement (the key results).

OKRs are an excellent tool for companies that need to set challenging goals. However, they require a carefully balanced approach to make sure you don’t stretch too far and miss the mark. The template above is a good example of how you can track progress on OKRs to ensure they aren’t too lofty to achieve.

Who should use it? Startups or scale-ups with big growth ambitions that you want to achieve in one year or longer.

3. PEST analysis

PEST screenshot template analysis

It’s another acronym! PEST stands for Political, Economic, Social, and Technological. It is exclusively for examining external factors that might impact growth, which is why many teams choose to use it in conjunction with internal objective setting, like OKRs.

Because it gives you a comprehensive look at the market, the PEST Model is particularly useful for expansion into new territories. We’ve shown what a PEST analysis might look like in the screenshot above. As we’ve done, you could use task comments to make detailed notes on the impact political or social change could have on the business.

Who should use it? Startups or scale-ups with big growth ambitions that you want to achieve in one year or longer.

The 5 steps of a strategic planning process

Strategic planning can be difficult to get your head around. However, like any business task, the process looks a lot less overwhelming when broken down into simple, actionable steps.

Building a strategic plan is like designing any action plan. It involves five key stages: planning, preparation, communication, action, and review.

1. Planning

Every strategic plan should begin with a business goal. This should be a direct, ambitious statement that outlines what you want the business to achieve and become.

Competitor analysis can be a great way to decide what your overall aim should be, by illuminating what area needs to be prioritised or is ripe for growth to remain competitive in the market.

Let’s say a wedding jewellery store called Tilly’s Trinkets needs to settle on a new business aim. Using the SWOT format, it reviews rivals to uncover:

  • Strength – it has a solid brand reputation for selling premium goods
  • Weakness – its closest wedding accessory competitor sells at a lower price point
  • Opportunity – it’s just moved into a new premise with a bigger audience
  • Threat – it’s nearest competitor is now located even closer by

As a result of these findings, Tilly’s may decide to diversify its product line to refresh its customer journey map and entice new shoppers to the store.

Once determined, work your goal into a clear one-liner that explains what you are striving to achieve.

For example, a good vision statement for Tilly’s might read: “To be the number one jewellery retailer in the region with a range of high-quality products for every occasion.”

2. Preparation

With your core business objective, you have built the framework of your strategy. The next step is to develop concrete business goals geared towards execution.

This is crucial for defining what success looks like in tangible terms, particularly for a broad vision like becoming the number one jewellery business in the UK.

Whatever objectives you decide on, it’s important to keep them SMART. Ensure every idea you put forward is:

  • Specific – explicitly state what is expected so employees know what they are working towards
  • Measurable – include a quantifiable metric that must be met for the goal to be considered achieved
  • Achievable – any SMART target can only be possible to complete using the resources you have available
  • Relevant or Realistic – consider if the target will align with your overall strategic vision
  • Time-bound – ensure that every aspiration has a deadline that it must be achieved by to encourage accountability

These objectives can then be inputted into your strategic plan. Here are some example SMART objectives for Tilly’s Trinkets:

  1. Growth objectives: Increase the number of customers by 25% in 2025
  2. Customer objectives: Achieve average customer review rating of 4.5 in 2025
  3. Marketing objectives: Increase new website visitors by 35% by the end of 2025
  4. Financial objectives: Reach a company revenue of £350,000 by August 2025
  5. Sales objectives: Increase up-sell from 15% to 35% between Q1 and Q2 2025

3. Communication

While the senior leaders will likely have dreamt up the company’s SMART objectives, it will be down to your team members to implement the actions involved.

Naturally, the next step in the strategic planning process is to update your employees on their new destination.

Communicate the plan to the organisation on a company-wide communication channel. This is typically best done in person, such as in a town hall meeting. Make sure the update is accessible at any time in written format, such as in a shared drive or email format, with a meeting recording available where possible, too.

Keeping your employees informed is good for teamwork. But it’s also fundamental to get them on board with the idea.

After all, your strategy informs what staff will be working on day-to-day. We’ll explain more on how to gain employee buy-in for your strategic plan, below.

4. Monitor progress

Your strategic vision is now well and truly underway. Now it’s time to stay on top of workload, track progress, and share regular feedback to ensure that everything is running on course.

Design project management dashboards to set key performance indicators (KPIs) and ensure every team member has metrics they can use to measure their work. Host quarterly meetings where everyone involved sits down to ensure that milestones will be met – and take appropriate action if not.

Remember; all of these resources are live documents. All plans will veer off course at some point, so it’s important to step in and make some updates to your plan if required.

Avoid adapting your strategy for the sake of it, however. For any change you do make, you’ll need to begin again at step two by introducing new SMART objectives with refreshed targets, which could mean longer delays down the road.

5. Review

The good news about a strategic plan? Once you’ve done one, you’ll have an excellent framework to build from in future, after your initial goal has been met and you’re on your way to setting a new, more ambitious target.

Still, perfection is a dangerous thing to strive for in business. Leadership must leave room for continuous improvement. At the end of a set cycle (usually quarterly or annually), make sure to review your strategic vision and confirm it still makes sense against your short-term goals.

If the company decides to change direction as new market opportunities and threats come up, this is also the time to tweak your strategic plan to ensure you’re driving the organisation in the best direction possible.

Who should set a business strategy?

Everyone has a role to play in designing and implementing a business strategy. However, responsibilities differ depending on the company’s organisational structure and leadership style.

Business owner and board of directors

Senior leaders and managers – such as the CEO, executive team, and board of directors – should set the early stages in motion by determining their organisation’s overall vision. The number of people involved in the process will depend on the business owner.

Democratic leaders like having lots of heads in the room to hear ideas. These types might also invite the rest of the board of directors to give their opinion on what the goal should look like.

Autocratic leaders want to have full control over the vision. They will decide the direction based on the company’s mission, ethos, and operational goals.

Managers and department heads

Once the strategy is defined, the parties involved should allocate a project team leader to set relevant SMART objectives. At this stage, it makes sense to bring in managers or department heads as they will be overseeing delivery of these aims.

It’s recommended that team heads review their company’s vision and its associated objectives annually. They should also meet regularly to offer feedback and assessment, and shift smaller goals and KPIs yearly depending on strategic priorities and performance.


While they may not be involved in the planning process, it’s your workers who will turn any words on strategy into actions. When your vision and objectives are decided, communicate them to all staff so they can begin to absorb new responsibilities into day-to-day operations.

Working at ground level, individuals are best-placed to offer priceless feedback and data on which tactics are effective. Managers should work to help them feel valued and empowered to ensure they feel confident to speak up in case an issue with a deliverable arises.

Getting buy-in for your strategic plan

The last decade has wrought constant upheaval to UK small businesses. Companies have been forced to change direction on multiple occasions and, as a result, many have also had to pause growth objectives and prioritise cost-saving.

Simultaneously, the UK is currently in the midst of an employee engagement crisis as millions of workers have handed in their notice. This has caused chaos for small business owners, who need a drop in productivity as much as they need another COVID.

Amidst all this uncertainty, it is vital that the business gives the workforce a North Star to aim for. Doing so will drive success with a carrot, by promising a winning goal for the company, and ensuring employees feel motivated to stick around and achieve it.

As early in the process as possible, objectives set at the highest or executive level should be communicated throughout the rest of the firm to guide team and individual-level goals. They should also be accessible at all times, not obscured by hierarchical hoops.

Known as ‘cascading’ this is an effective way to promote collaboration and boost team spirit, as it ideally keeps every worker performing well and shooting towards the same goal posts.

Equally important is regular communication and updates of how you’re tracking against the strategic targets. Showing staff how they work contributes to an ambition will prove that they are not just valuable, but also valued; bolstering morale and reducing staff turnover.


The past decade has proven there are some business scenarios that SMEs simply can’t plan for. But even in a chaotic landscape, rigorous annual planning can serve to futureproof your business against external changes to drive future success, profitability, and value.

Think of it like the difference between placing a bet, and making a long-term investment. The former might give you a lucky break. But the latter will insure you are in a strong position in future – both in terms of business performance and employee satisfaction.

Project management software is a good place to start. It provides a comprehensive suite of tools to help teams organise plans, and share them with stakeholders, promising effective strategy-making that keeps everyone on the same page.

Strategic planning FAQs
  • What are the 5 steps of strategic planning?
    Strategic planning can be broken down into five actionable steps. 1. Determine your business goal; 2. Develop SMART objectives to reach the goal; 3. Communicate the objectives and goal to the team; 4. Monitor progress towards achieving both; 5. Review the strategic vision and confirm it still makes sense against your short-term goals.
  • What are some common mistakes to avoid when developing a strategic plan?
    One of the worst mistakes you can make during strategic planning is not gaining employee buy-in. If the rest of your team feels unenthused and uninvolved with the new objective, it will slow down progress towards achieving it. Other mistakes include not being agile to changing market conditions; and not setting clear SMART goals.
  • How do I get started in strategic planning?
    Every strategic plan should begin by determining a clear, one-line business goal. This can be determined using a strategic plan framework like OKRs or SWOT analysis.
Written by:
Helena Young
Helena is Lead Writer at Startups. As resident people and premises expert, she's an authority on topics such as business energy, office and coworking spaces, and project management software. With a background in PR and marketing, Helena also manages the Startups 100 Index and is passionate about giving early-stage startups a platform to boost their brands. From interviewing Wetherspoon's boss Tim Martin to spotting data-led working from home trends, her insight has been featured by major trade publications including the ICAEW, and news outlets like the BBC, ITV News, Daily Express, and HuffPost UK.

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