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Strategic Planning Has Bottom-Line Impact

Business owners care about strategic planning is because it does make a financial difference. To verify this, in 2004, a research study of strategic planning and strategy execution of 280 firms was conducted in the U.S.

The following list provides the results of that study and explains what you can expect to achieve as well. (Note: To the reader who needs talking points to convince his or her management that strategic planning is profitable, this section is for you.)

  • Impact on sales volume:

    • Of those firms whose top management had a high commitment to execute strategic planning, 80 percent reported that their sales volume increased during that year.

    • Of the firms whose top management had a lower commitment (average or below) to execute strategic planning, only 59 percent reported that their sales volume had increased during the year.

    • From another perspective, firms whose top management had a high commitment reported 12 percent greater increase in sales volume than did those with a lower commitment.

  • Impact on net income:

    • Of the firms whose top management had a high commitment to execute strategic planning, 33 percent reported that their net income had increased during the year.

    • Of those whose top management had a lower commitment (average or below) to execute strategic planning, only 19 percent reported that their net income had increased during the year.

    • From another perspective, firms whose top management had a high commitment reported 11 percent better net income than did those with a lower commitment.

  • The role of being proactive:

    • Of the organizations whose top management was proactive, 78 percent reported that their sales volume had increased during the year.

    • By contrast of those who were more reactive, only 60 percent reported that their sales volume had increased during the year.

If you compare these stats to the Inc. 500 growth organizations (covered in the “What successful CEOs are spending their time on” section earlier in this chapter), you notice that these figures aren’t actually that high. Many of the Inc. 500 companies realized 100 to 200 percent growth over five years. However, the percentage increases are in addition to the growth you’re already projecting.

Therefore, strategic planning helps you either make up part of your growth expectations or is an addition to your projections.

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