Strategic Planning is Critical for Business Success

By James S. Cassel

Strategic planning is one of the most popular but least frequently implemented New Year’s resolutions for middle-market business owners. While most business owners agree that strategic planning can provide a roadmap to drive their business growth, long-term survival and profitability, many fail to devote the necessary time, energy and resources to do it right, if at all.

When they do get around to developing strategic plans, they often do it haphazardly and without proper process, strategy or buy-in from key stakeholders. Plans often sit on shelves garnering more attention from dust and mites than from company executives.

To be clear: Strategic plans, which provide practical roadmaps for implementing and managing an existing company’s strategic direction, differ from business plans, which are used for starting businesses, obtaining funding or directing operations.

The following is some practical guidance based on our experience counseling middle-market business owners in all stages of a company’s business cycle.

First, identify the right management team members to participate in developing your plan. Their support and execution will be critical, so engage them upfront. Broader participation enables you to draw from a wider pool of experience, views and opinions. Moreover, team members who have worked for other companies bring valuable insight regarding what might work and what might not.

Consider where you want your business to be in the next 12 months, 24 months and five years. Envision revenues, growth, employees, locations, products and services offered, etc. A good strategic plan should cover five years and be continuously reviewed and modified.

Key elements considered should include:

▪ Vision: a bold, inspirational, aspirational statement setting the direction for your company’s future, describing your identity and raison d’être

▪ Mission: While your vision statement is forward-looking, your mission statement describes what you do today, for whom, and how

▪ Values: a description of your beliefs that will enable you to achieve your vision and mission. As an example, look at the core values of private equity firm Roark Capital Group: roarkcapital.com/CoreValues

▪ SWOT: an evaluation of your company’s strengths, weaknesses, opportunities and threats, which helps you identify priority focus areas for your strategic plan. You must be honest with yourself

▪ Goals: approximately five statements explaining how you will make your vision reality

▪ Objectives: Each of your goals should be supported by approximately five “SMART” (specific, measurable, achievable, realistic and time-based) objectives to help advance them

▪ Action plans with key performance indicators: Each objective should have an action plan showing how it will be achieved, along with KPIs to enable evaluation and adjustment to ensure success

Based on these considerations, develop a strategic plan outline and focus on the top five to seven key areas that can help drive your business goals. Build into your plan a time line for routine evaluation to ensure you meet your goals. Remember, success is about execution. A good book to read is: “Execution: The Discipline of Getting Things Done” by Larry Bossidy and Ram Charan.

Failure to keep a close pulse on emerging industry developments and to remain nimble to adapt contributed to the demise of companies like Polaroid and Blockbuster Video. Stay apprised of how you are perceived, who you are, what you have done and what you need to do to succeed. Work with experts to evaluate and update everything from your branding to your product offerings. Determine what external forces might hurt your business. Consult your board of directors and/or strategic advisers to provide counsel and tactical support. Asking for help or advice is never dumb; not asking is.

Another important point: Be proactive. Evaluate your people, business lines and customers. Eliminate the wrong ones and invest in the right ones.

Creating a strategic plan is only the first part of the battle. The real challenge is implementing it and keeping it updated. However, my experience has confirmed that companies that do this right gain greater control of their destinies and position themselves for survival and success.

Click here to view original article.

U.S. Adds 227,000 Jobs in January While Trump Pushes for Even More

U.S. employers added 227,000 positions last month, the largest increase since June, the Labor Department reported Friday as recently inaugurated President Donald Trump met with top business executives to discuss his economic strategy.

The number, which included gains in retail, construction and finance, beat economists’ estimates of 195,000 and compared with a revised increase of 157,000 in December.

Even though January’s job report may be slightly inflated — the month offered better weather conditions for construction than December and there were fewer post-Christmas layoffs at retailers because of lower seasonal hiring — employment growth remains very strong, said Ryan Sweet, director of real time economics for Moody’s Analytics.

“It gets us on the path towards achieving full employment,” Sweet said in a phone interview. The Trump administration is “inheriting a very strong economy. The one concern is that their stance on trade may be more disruptive to growth this year, but other than that, the economy’s fundamentals are rock solid.”

The unemployment rate ticked up slightly, moving from 4.7% in December to 4.8% in January, as labor force participation increased 0.2% to 62.9%, according to the report.

“Ironically, it’s encouraging that the unemployment rate ticked up because it rose for the right reason,” Sweet said. “The increase in the labor force participation rate, which nudged the unemployment rate higher, is good news. An increase in the labor supply is important because business are already grumbling about their difficulty finding qualified workers.”

One area of concern, however, is that average hourly earnings increased only 3 cents to $26, despite the minimum wage rising in 19 states, Sweet added.

“The last few months’ average hourly earnings have come in on the weak side,” he said. “The general takeaway from wages is that the economy is not at full employment yet. We are getting there, but we still have a little bit more slack to absorb before we start to see a noticeable acceleration in wages.”

Still, pay jumped 2.5% over the past year, which is a positive for workers though it may tighten profit margins for employers.

“The big challenge,” said James Cassel, an investment banker and co-founder of Cassel Salpeter, “is going to be whether the wage growth causes margin compression for businesses, or whether they can do one of two things: either get some pricing power, in terms of raising their prices to accommodate for that, or alternatively they can get increased productivity.”

That’s an issue on which President Trump may turn to his economic advisory council, which met Friday morning and includes CEOs from Tesla , Wal- Mart , Blackstone Group , Disney , JPMorgan Chase , and IBM .

Known as the president’s Strategic and Policy Forum, the group’s mission includes helping the president buoy job growth.

The overall strength of the U.S. labor market, which has shown marked improvement since unemployment peaked at 10% in 2009, was a factor in the Federal Reserve’s decision to raise short-term interest rates by 25 basis points in December.

The hike, only the second since rates were cut to nearly zero during the 2008 financial crisis, may be followed by as many as three this year, the central bank projected. During the Fed’s latest meeting, the committee members decided to leave interest rates unchanged.

“From the Fed’s perspective, this is as good as it gets,” Sweet said. “The unemployment rate is falling well below their estimate of full employment, and wage growth isn’t strong enough where it suggests that they need to create any sense of urgency in raising rates.”

Click here to view original article.

U.S. Adds 227,000 Jobs in January While Trump Pushes for Even More

By Valerie Young

The U.S. added 227,000 jobs during the month of January, while the unemployment rate ticked up slightly to 4.8%.

U.S. employers added 227,000 positions last month, the largest increase since June, the Labor Department reported Friday as recently inaugurated President Donald Trump met with top business executives to discuss his economic strategy.

The number, which included gains in retail, construction and finance, beat economists’ estimates of 195,000 and compared with a revised increase of 157,000 in December.

Even though January’s job report may be slightly inflated — the month offered better weather conditions for construction than December and there were fewer post-Christmas layoffs at retailers because of lower seasonal hiring — employment growth remains very strong, said Ryan Sweet, director of real time economics for Moody’s Analytics.

“It gets us on the path towards achieving full employment,” Sweet said in a phone interview. The Trump administration is “inheriting a very strong economy. The one concern is that their stance on trade may be more disruptive to growth this year, but other than that, the economy’s fundamentals are rock solid.”

The unemployment rate ticked up slightly, moving from 4.7% in December to 4.8% in January, as labor force participation increased 0.2% to 62.9%, according to the report.

“Ironically, it’s encouraging that the unemployment rate ticked up because it rose for the right reason,” Sweet said. “The increase in the labor force participation rate, which nudged the unemployment rate higher, is good news. An increase in the labor supply is important because business are already grumbling about their difficulty finding qualified workers.”

One area of concern, however, is that average hourly earnings increased only 3 cents to $26, despite the minimum wage rising in 19 states, Sweet added.

“The last few months’ average hourly earnings have come in on the weak side,” he said. “The general takeaway from wages is that the economy is not at full employment yet. We are getting there, but we still have a little bit more slack to absorb before we start to see a noticeable acceleration in wages.”

Still, pay jumped 2.5% over the past year, which is a positive for workers though it may tighten profit margins for employers.

“The big challenge,” said James Cassel, an investment banker and co-founder of Cassel Salpeter, “is going to be whether the wage growth causes margin compression for businesses, or whether they can do one of two things: either get some pricing power, in terms of raising their prices to accommodate for that, or alternatively they can get increased productivity.”

That’s an issue on which President Trump may turn to his economic advisory council, which met Friday morning and includes CEOs from Tesla (TSLA), Wal- Mart (WMT), Blackstone Group (BX), Disney (DIS), JPMorgan Chase (JPM), and IBM (IBM).

Known as the president’s Strategic and Policy Forum, the group’s mission includes helping the president buoy job growth.

The overall strength of the U.S. labor market, which has shown marked improvement since unemployment peaked at 10% in 2009, was a factor in the

Federal Reserve’s decision to raise short-term interest rates by 25 basis points in December.

The hike, only the second since rates were cut to nearly zero during the 2008 financial crisis, may be followed by as many as three this year, the central bank projected. During the Fed’s latest meeting, the committee members decided to leave interest rates unchanged.

“From the Fed’s perspective, this is as good as it gets,” Sweet said. “The unemployment rate is falling well below their estimate of full employment, and wage growth isn’t strong enough where it suggests that they need to create any sense of urgency in raising rates.”

Click here to view original article.