Beyond the semantics of planning

I admit that most of what I have done with my practice so far has been seat-of-the-pants decision-making, based on the challenges or opportunities as they presented themselves. I certainly can see now, however, that choices I make today will have an impact on the long-term value of my business. And, if I keep thinking about what a potential buyer would want whenever it is time for me to exit, I am likely to make decisions that will serve the business well today.

Here’s my confusion, though. I keep getting wrapped up in the difference between “vision” and “strategy.” At some level, I view them as the same, in that both should describe the direction in which I want to take my business. I also have talked to other advisors who tell me they have either a “strategic plan” or a “business plan” – and I get the impression they are talking about the same thing. Can you provide some order to this?

Coach says: Because strategy is so fundamental to the success of any enterprise, you would think there would be more clarity regarding the concept. However, having worked with thousands of financial advisors over the years, helping them define their plans for their businesses, I can tell you the issue is more than one of semantics. I also am willing to admit that my definitions may not be the last word. However, I am happy to describe how I differentiate between those terms.

My belief is that there is a natural order to the creation and development of a long-term plan for any business. As a big fan of Stephen Covey’s book, The Seven Habits of Highly Effective People, I subscribe fully to Habit No. 2: Begin with the end in mind.

To me, that means you should start your planning with a clear vision of what you want your business to be at some point down the road. With that vision in mind, you then develop a strategic plan for how you are going to realize your vision, followed by a business plan that describes the tactics you will use to implement the strategy.

In more simple terms: vision determines strategy, which defines tactics. Let’s look at each in turn:

– Vision

Advisors have many different pictures in their minds for the future of their businesses. Some see a large practice with many clients, lots of support staff, integrated systems and a full range of products and services. Other advisors opt for a smaller, more intimate business that serves fewer clients who have specialized needs. Of course, there is every variation in between and there is no right or wrong choice; it simply is a matter of personal preference.

Because everyone characterizes what “success” means to them in their own way, I define “vision” as: “What you want your business to look and feel like when it is as successful as you want it to be.”

Therefore, your vision statement should answer such questions as:

• How big do I want my practice to become?
• What role and responsibilities will I have?
• What will my value proposition be?
• What type of clients will I have?
• What will my team be like?
• What level of service will I provide?
• What brand image will I have in my community?
   

– Strategy

With your vision of “what I want to be when I grow up” now clearly articulated, you then can design the strategic framework that helps you to make choices about both what to do and what not to do on your way toward fulfilling that vision.

Strategy points out direction. Strategy tells everyone: “This is where we’re headed, and here are the boundaries within which we’re going to operate.”

Strategy doesn’t say: “Here’s what we must do next week” or “Next year, we’ll add X number of new clients.”

However, strategy might tell us: “To realize our vision, we need to add another revenue stream to our product mix” or “We need to change our target market” or “We’re a financial planning-driven practice, not an investment-management firm.”

Think of strategy as your high-level “big picture” of what you are trying to achieve with your business. In more familiar terms, strategy is the forest, not the trees. Typically, you would have only one core strategy at a time.

For example, a strategy might be “to become the go-to firm in our market area for self-employed professionals and small-business owners.” Or “to serve the needs of middle-income retirees.” But your strategy would not be both.

Because your strategy is deep-rooted and based on your vision, it should be very slow to change. Hopping too quickly from one strategy to another not only is inefficient, it also is confusing to everyone around you, including clients, staff and centres of influence.

– Tactics

The best way to describe tactics is to differentiate them from strategy. Whereas your strategy provides direction, your tactics are about implementation. Basically, strategy is what you want to achieve; tactics are how you are going to achieve it. Strategy is future-oriented; tactics focus on the present. Strategic designs can and should radically change the path of your business, while tactical plans are usually designed to achieve incremental improvement.

Setting strategy is a “top down” exercise that determines the nature and direction of your business. Consequently, it is something that you, as the CEO of your business, must do.

Implementing tactics, on the other hand, is more of a “bottom up” operational responsibility and, as such, can be delegated to someone else, although you’d certainly still want the right to approve the tactics to ensure they are appropriate for your chosen strategy.

Using one of the strategic examples above – “becoming the go-to firm for self-employed professionals and small-business owners” – your tactics would be wrapped up in a business plan that includes:

• Marketing plan: products and services, branding, communications, promotional activities, pricing.
• Sales plan: sales objectives, pipeline management, sales process.
• Service plan: service standards, segmentation, service delivery process.
• Resources plan: technology, systems, staffing, finances.
   

If strategy is your high-level “big picture” view, then tactics are what you see on the ground. Tactics are the “trees,” not the “forest.” Whereas you typically will have only one core strategy, you are likely to have multiple tactics for achieving that strategy.

Referring back to our previous example, in order to build your profile and reputation among self-employed professionals and small-business owners, you may decide that the most effective approach to achieve that goal is to establish strong relationships with your target market’s professional advisors, including lawyers and accountants.

In that case, one tactic you might employ would be to offer educational seminars that allow those professionals to earn continuing education credits. Alternatively, if you wish to appeal directly to your target market, you may choose to advertise in a local business journal, conduct seminars on succession planning for entrepreneurs, take steps toward becoming a guest on local radio and TV programs, volunteer in the community, and so on.

Ideally, of course, you would be using a number of tactics simultaneously, which means you must have a methodology for evaluating the effectiveness of each tactic. And, unlike your strategy, which should remain relatively consistent, you can change tactics easily if you determine that something isn’t working.

One final point: it is human nature among entrepreneurs to want to minimize time spent on strategy in order to jump right into tactics – because we want action right away. The problem with that approach, however, is that if you’re travelling in the wrong direction, no matter how fast you’re going, you won’t reach your destination.

In other words, if the strategy isn’t right, the tactics probably won’t be right, either.

George Hartman is managing partner with Elite Advisors Canada Inc. in Toronto. Send questions and comments to ghartman@eliteadvisors.ca. His practice-management videos can be seen on www.investmentexecutive.com.

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