Importance of Strategic Planning
A business strategic plan details the methods by which a business sets out to achieve its objectives. Typically a business strategy will cover a period of three to five years. Developing the strategic plan is the most critical thing an accounting practice principal can do to improve their practice. A 2016 Accountants Research Report by Bstar Pty Ltd found that only 41% percent of practice principals have a strategic plan. The 59% without a strategic plan are paying the price for their inertia. In addition, most strategic plans are unnecessarily long, unclear, and fail to achieve their purpose. They are often prepared and forgotten.
Components of the strategic plan
An effective strategic plan will be made up of three basic components:
- Practice objective – This clearly explains the five year practice objective. This is the one main objective the practice wants to have achieved in five years’ time. It could be $2m turnover, $1m profit, or three offices.
- Five year timeline – This details what needs to be achieved at the three month, six month, one year, two year, three year, and four year periods to achieve the five year objective. So for example, if the five year objective was $1m annual fees, what annual fee value is needed at the end of year one, year two, etc.?
- Five key strategies – This is the five key strategies to achieve the practice objective. So for example, strategy one could be a new office, strategy two could be a new product or service and so on.
The key with this strategic plan is to keep it simple. Limit it to only one page and only one five year objective. A practice may have many objectives but it needs to clearly articulate the one main objective. The accounting practice principal should always be thinking about the strategic plan and ensuring all their daily activities are aligned to this.