Strategic Planning for Startups

An internet search for “strategic planning” often turns up elaborate processes tailored for large organizations to tackle the problem of laying out their vision, goals, and strategies. Yet, even though having a strategic plan is essential for every organization’s success, how do we adapt these often expensive, consultant-driven processes to fit the world of a small, early-stage startup? 

What is Strategic Planning?

Strategic planning is when organizations define their long-term vision, goals, and strategies for achieving them.  Essentially, a roadmap for achieving future success, a strategic plan informs setting priorities, allocating resources, and measuring progress. For startup leaders, a strategic plan is a way to describe to your team and your potential investors what your plans are, and then to be able to track progress and revisit your plan when needed.

The deliverable from a strategic planning process is a documented “Strategic Plan,” which helps communicate to key stakeholders what the plan is. Note that, for startups, the higher-level elements of the plan, such as mission/vision and high-level goals and strategies, are often captured in a fundraising document. Then, the more detailed elements like the goal breakdown and more thorough and confidential plans are captured in internal documents.

How Does A Startup Tackle Strategic Planning?

A startup’s mission and vision boils down to what the startup was formed to accomplish. Unlike large organizations who often have very broad mission/vision statements that encompass the wide range of things that organization is doing (example:  Google’s mission statement is “to organize the world’s information and make it universally accessible and useful” and its vision statement is “to provide access to the world’s information in one click.”) Startups typically have the advantage of having a narrower focus. In fact, if you have a small startup with a mission statement as lofty as Google’s, it will likely strike people as a bit silly!

Start By Articulating Your Startup’s Destination

Mission: Start by asking yourself why your organization exists. Why did you start down this path? Try to define the core purpose of your startup in a way that positively describes the change you hope to bring to your customers’ world.

Vision: Where do you want to be in the future? Will you be the technology leader? What will your technology enable that does not exist yet? Will you offer a dramatically lower cost option? Will you provide insights that no one has had access to before? Will you solve an intractable clinical problem?  Try to boil down what will make your solution unique and what position you will occupy in the marketplace.

While you might revisit your framing of these directional statements as you learn and grow your startup, usually, these north star elements do not swing wildly around.

Next, Figure Out a Big Picture Plan

Situational Analysis: Take stock of your present situation by updating your analysis of your market and competitors, focusing on trends and industry positioning. Check on the competitors you know about, search for emerging competitors, and capture your insights on what is happening in your target market.  Large organizations will hire consultants to do research. Startups need to do this in a less costly way. Ask yourselves questions and see what information you can glean. Do not be afraid to ask your favorite customers what is happening from their perspective. Consider macro trends like the overall health and growth of the economy nationally, locally, and by industry. Note any significant advancements by competitors who solve problems you are targeting. Basically, what is happening that could affect your startup’s opportunities? For example, right now, it would make sense to consider the impact of tariffs, reduced spending by U.S. federal organizations, and potential changes in reimbursements for healthcare organizations and those who supply them.

Gather your team and update your SWOT analysis that lays out your strengths, weaknesses, opportunities, and threats to reflect the current situation.  This is the foundational analysis that identifies the internal and external factors that could impact your success. Updating your analysis at least annually and comparing today’s analysis to last year’s helps force your team into stepping back and paying attention to what is going on around you and whether you are gaining ground. Sometimes, such an analysis may be a real wake-up call to do something different or even consider whether it is time to abandon the startup because what you thought were your advantages and strengths have been decimated by your competition.   

Strategic Goals: Next, consider where you go from here. Figure out what you need to accomplish and in what time frame to build toward success.  For startups that are still raising money, this often includes considering your next big fundable milestones. Be as clear and measurable as you can.

• If you are still building your product, what is the next big step along that path? Do you need to prove your technology can perform at a certain level? Build a prototype that can meet specific standards? Deploy five beta units into field tests? Conduct a successful clinical study?
  
  
• If you are seeking product/market fit, what are your first commercial proof points? Can you get your product prototype into a customer’s hands for testing? Can you secure your first sale or three? Can you secure your first hundred thousand in sales?
  
  
• If you are early commercial and starting to scale, what shows that you have been able to diversify your customer base and achieve repeatable sales? What will demonstrate that you have found a sustainable price point and early signals of future profitability? Can you demonstrate the beginnings of a rapid sales ramp, doubling or tripling your sales along your path to getting to your first $1M and beyond?

You want to make sure your goals are specific, clearly defined, and measurable so you know if you achieve them, realistically achievable with the resources you have, relevant to your organization’s mission, and time-bound.

Strategies: Once you know where you are trying to go, lay out how you plan to get there. What strategies do you plan to use – and what strategies are you not using? Lay out the specifics on how you plan to achieve your goals, and make sure you lay out who has responsibility for what, what resources you have or need to acquire, and what major steps and timelines are to get there. Remember that sometimes what you choose not to do is as important as what you choose to do because startup resources (time, money, people) are always limited. Reflect on the pros and cons of each potential course of action. Examples of the kinds of strategic questions startups may consider include:

• Which possible markets will we prioritize first?  How will we sequence going after the various applications of our technology to find the right balance between focusing enough to fit the resources we have, while still maximizing our speed and potential opportunities?
  
  
• Who will we sell to?  Businesses? Consumers? Specifically, who?
  
  
• What is our “secret sauce,” and how do we ensure we have the expertise and resources to control development of it?
  
  
• How will we make our product? Manufacture it or assemble it ourselves? Outsource some portions of the manufacturing? 
  
  
• What are our strongest value propositions and market differentiators?  How do we articulate this in ways that resonate with our prospects? How do we inspire customers to tell people like them about what we are offering? How do we quickly and cost-effectively test our theories to ensure we get this dialed in?
  
  
• How will we raise awareness about our product and educate potential customers about what we offer, first for early adopters and later as we scale?
  
  
• How will we sell our product(s)? What is the balance between focus and control versus reach and breadth? What incentives can we offer a partner’s sales force to get them to pay attention to and prioritize selling a new product (which is often harder than repeat sales of existing offerings)?
  
  
• How do we “market” to those who might want to buy our company someday?  What comes naturally yet allows them to see the value we are creating and to become intrigued about it?

Startup Strategic Planning Tips

• Think out a few years to define where you want to go and then break it down into what needs to happen this year to realize those longer-term goals.

• Ask yourselves what the big questions our startup is facing are about what path to take. Then try to answer those questions. Write down both what you will do and why you chose not to take certain paths.
  
  
• Remember that it takes time and effort to really step back and do strategic-level planning, so carve out some dedicated time to get you and your team into that headspace.  Trying to fit this type of work into little slivers of time is difficult, so consider devoting a day or two to just setting aside the urgent stuff and getting into the important. Failing to make the time can result in missing significant, startup-threatening changes. Plus, devoting the time can help everyone get aligned and will show when you are talking to potential investors and other stakeholders.
  
  
• Revisit your plan quarterly and annually to check nothing significant has changed and to evaluate progress.  Did you accomplish what you set out to do? Why or why not? Have any of your essential assumptions changed or proven wrong?  Do you need to adjust?

Strategic planning is an ongoing process, with periodic deep dives. While gyrating around will waste tons of time and energy, losing sight of the broader environment and what choices you are making can be lethal. Keep eyes on the big picture even as you are executing your plan.