Six Steps to Creating a Strategic Business Plan
Kevin Ryan, Chief Executive Officer
Kevin Ryan, Chief Executive Officer
Five years ago, we began on a journey to improve how we plan and execute our strategic initiatives. This required us to totally overhaul our entire process. Prior, we found that by the time our plans were fully operational, half of the year had already past. We found it difficult to accomplish our annual objectives as a result.
We created a set of disciplines that has enabled us to achieve our yearly objectives on-time and in most cases on-budget. Additionally, we are able to begin the execution of our projects at the beginning of each year.
These disciplines are essential and have proven to be very effective in how we take care of our members.
Kevin Ryan, CEO
Resist in taking the easy way out when it comes to developing the business plan.
Kevin Ryan, CEO
| 1 | Create A Priority Matrix Establishes key decision factors when deciding which business plans to execute. |
| 2 | Create A Balanced Scorecard Determines how the business plan strategies will be measured |
| 3 | Create A Business Case High level overview of the business strategy |
| 4 | Create A Business Plan Detailed execution plan to achieve business strategy defined in Business Case |
| 5 | Create A Budget Determines the financial expectations and boundaries the plan must operate within |
| 6 | Create A Marketing Plan Marketing Plan needed to support business strategies. |
Ideally, you want to have your plan locked and loaded by the end of year. This will enable your organization to be able to begin execution at the beginning of the year
Below, is a recommended timeline:
| When | What | Who |
|---|---|---|
| August | Develop Balanced Scorecard Meassures | Management |
| September | Approve Balanced Scorecared Meassures | Board |
| October | Complete Business Plan (alignment with BSC) | Management |
| November | Approve Budget (alignment with BSC and Business Plan) | Board |
| December | Finalize Corporate Projects and Marketing Plan | Management |
This is one of the most important steps of the process. There are no shortages of good ideas that come from teams. However, the reality is that you can't do them all. Running the business plans through a priority matrix enables the best ones to rise to the top.
Kevin Ryan, CEO
| Priority Matrix | Importance Rating |
| Income Potential | |
| Expense Savings | |
| Resource Commitment | |
| Time To Market | |
| Risk | |
| Member Impact |
Thanks to having a Balanced Score Card, there has never been a goal we didn't achieve.
Kevin Ryan, CEO
Doing this well will set the goals for everyone to achieve. It creates a universal roadmap and report card that ensures all areas of the credit union are in alignment with the strategic plan.
| Weight | # | Measure | How It's Measured | Actual | Target | Status |
| 50% | Growth | |||||
| 25% | 1 | Dollar Increase in Total Assets Under Management | Monthly Report of Average Shares for End of Month | $10,000,000 | $8,000,000 | |
| 15% | 2 | Dollar Loan Production | Monthly Report Loan of Loan Production | $5,000,000 | $4,500,000 | |
| 10% | 3 | Growth of Checking Accounts | Number of checking accounts | 250 | 125 | |
| 35% | Financial Management | |||||
| 20% | 1 | ROA (Return on Investments) | Net Income (Annualized/Avg Assets) | .85% | .50% | |
| 15% | 2 | Gross Operating Expense Ratio (Gross OPEX) | Gross Operating Expenses/Average Assets | 4.00% | 3.50% | |
| 15% | Member Experience | |||||
| 10% | 1 | Member Quality Survey | Monthly Survey Results | 90% | 110% | |
| 5% | 2 | Direct Deposit | New Checking Accounts with Direct Deposit | 59% | 50% | |
We are caretakers of our member's money and that is something we should never forget.
Kevin Ryan, CEO
The strategic business plan is the vision, strategy, and actions to be taken in the course of the year to achieve the credit union's goals both short and long term. It breaks down the "why", "what", "how", and "when" the plan will be achieved.
Kevin Ryan, CEO
It's important that roles be established which enables that the strategy and subsequent plans are executed in a timely fashion.
The Roles:
| Role | Responsibility |
| Project Sponsor | The project sponsor is usually the individual who developed the business case. Overall, they are responsible for executing the business case and business plan. They are responsible for making key business decisions that may be encountered during the execution of the busines plan(s) |
| Business Leader | The business leader is usually the individual who wrote the business plan and/or is the subject matter expert. This individual oversees the day-to-day tasks in the business plan and works closely with the project manager and key stakeholders |
| Project Manager | Is repsonsible for:
|
Besides the Business Cases, Business Plans, Budget, and Marketing Plan, below are some other items that be included. They are:
The Introduction - Sets the background and context for the strategic plan. It's always a good idea to include the following in the introduction
A typical Table of Contents for a strategic plan could be:
| Introduction | Page x |
| Planning Session Updates | Page x |
| Business Cases & Business Plans | Page x |
| Measuring Success (i.e. Balanced Score Card) | Page x |
| Credit Union Market Update | Page x |
The Business Case sets the vision and roadmap.
Kevin Ryan, CEO
A business case helps communicate the highest level elements of a strategy, and allows for feedback and collaboration from teams before too much time is spent. Often, business cases are born from planning sessions. Once the business case is vetted, it should then be given to business area leaders to begin the process of writing the business plan which centers on how the solution contained in the business case will be achieved.
A Business Case is made up of the following sections:
| Brief Description | Provide a brief description of the business case |
| Executive Summary | Provide an executive summary of the business case. It should be no more than 2-3 Paragraphs |
| Current Situation | Describe the current situation. This should be somewhat detailed. A current situation can either be a problem you're trying to solve or an opportunity. It's always helpful to provide data and/or insight. |
| Solutions Options | Provide a high level overview of what the solution will be. It should be either bullet points and/or a couple of paragraphs. |
| Cost Benefit | Provide a summary of what cost benefit would be. Comparing costs and benefits is essential when determining priorities. |
| Target Dates | What are the targeted dates for achieving the solution. |
You can download a sample business case by clicking here
A Business Plan should be clear and concise.
Kevin Ryan, CEO
A Business Plan is made up of the following sections:
| Goals | Outlines specific goals needed in order to achieve the solution outlined in the Business Case |
| Objectives | Outlines how the goals will be achieved. |
| Expected Measurable Results | What results will be obtained when the goals and objectives are achieved. |
| Resources | What types of resources are going to be needed in order to achieve the plan. This should include specific costs. |
| Key Stakeholders | Identifies who the key subject matter experts and key stakeholders are who will be involved in performing the necessary action steps in order to achieve the plan's expected results. |
| Milestones & Target Dates | Outlines key milestones and target dates. |
Throughout the business planning process, there could be several business cases and business plans that will be reviewed. The reality is that all the plans may not make the final cut. Therefore, how do you determine what goes in the final business plan strategy?
Earlier in this online guide under The Steps section, I outlined the importance of establishing a priority matrix that helps determines what goes into the business strategy plan. Once all the business cases and plans have been developed, this is the time to run them through the priority matrix (see sample below).
| Priority Matrix | Importance Rating |
| Income Potential | |
| Expense Savings | |
| Resource Commitment | |
| Time To Market | |
| Risk | |
| Member Impact |
Below, is a sample of what a priority matrix might look like:
| Business Case & Plan | Income Potential | Expense Savings | Resource Commitment | Time to Market | Risk | Member Impact | Overall Rating |
| Increasing Loan Production | 3.0 | ||||||
| Interest Bearing Checkign Account | 2.8 | ||||||
| Increase e-Statement Penetration | 2.5 |
| Low Priority | Medium Priority | High Priority |
The overall rating is determined by the overall importance the metric has in achieving the business strategy. The importance rating is basically factors being considered when making the decisions on whether or not to execute the business case and business plan.
By running the business strategies through a priority matrix enables the ability to establish which plans are going to have the highest impact on achieving the overall business strategy plan's objectives.
You can download a sample business plan by clicking here
You can download a sample priority matrix by clicking here
Our Marketing Plan supports our business plan initiatives.
Kevin Ryan, CEO
A Marketing plan should consist of the following:
Marketing efforts should align resources to drive communication that supports the business plan. Marketing reviews the business cases and business plans and then builds a marketing calendar that is aligned with out business plan objectives.
We always know how we are progressing on our strategic plan.
Kevin Ryan, CEO
In most cases, each business plan is supported by a detailed project plan. If you don't have a project manager on staff, the management of the project will usually fall to the Business Leader and/or subject matter expert.
Ideally, it's a good practice to establish phases that each project goes through. The credit union's project phases are as follows:
A Note about Phases:
It's not essential that project phases be established. Project phases like the ones listed above just helps organize the project. It also ensures that before the tasks assigned; they are well thought out and planned.
You don't need a sophisicated project management software tool. A project plan can be created in tools like Excel or Microsoft Word. There are several templates that can be downloaded directly from Microsoft Office. Below, is an example of a template.
A project plan should consist of the following attributes:
You can download a sample project plan by clicking here
Never forget to celebrate the wins.
Kevin Ryan, CEO
Contained in the six steps, there are two important components that keeps the board, management, and staff always "in the know" when it comes progress being made on the business strategy plan. They are:
The Balanced Score Card
Since the entire business strategy is built around achieving the results contained in the balanced scorecard, it's recommended that the results be shared on a monthly basis. Depending on the measure, the balanced scorecard may require that expected results be laid out for each month. This is determined during the Balanced Score Card step.
During the phase, it's important gain feedback on what went right and what went wrong. Additionally, it's important that you celebrate when a project is completed. This gives all the stakeholders a sense of accomplishment.
Sample Balanced Score Card
| Weight | # | Measure | How It's Measured | Actual | Target | Status |
| 50% | Growth | |||||
| 25% | 1 | Dollar Increase in Total Assets Under Management | Monthly Report of Average Shares for End of Month | $10,000,000 | $8,000,000 | |
| 15% | 2 | Dollar Loan Production | Monthly Report Loan of Loan Production | $5,000,000 | $4,500,000 | |
| 10% | 3 | Growth of Checking Accounts | Number of checking accounts | 250 | 125 | |
| 35% | Financial Management | |||||
| 20% | 1 | ROA (Return on Investments) | Net Income (Annualized/Avg Assets) | .85% | .50% | |
| 15% | 2 | Gross Operating Expense Ratio (Gross OPEX) | Gross Operating Expenses/Average Assets | 4.00% | 3.50% | |
| 15% | Member Experience | |||||
| 10% | 1 | Member Quality Survey | Monthly Survey Results | 90% | 110% | |
| 5% | 1 | Direct Deposit | New Checking Accounts with Direct Deposit | 59% | 50% | |
The Project Plan Status Report
Chances are, the board is not going to want to a detailed project plan each month for each strategy. It's good practice to provide a high level summary that communicates how the business strategy is progressing.
Sample Project Plan Status Report
Strategy Update: Increasing Loan Production
| Project Completion: 25% | Project Status: On-time |
| Milestone/Task | % Complete | Risk | Projected Due Date |
| Milestone 1 | 25 |
3/31/2018 | |
| Milestone 2 | 75 |
4/30/2018 | |
| Milestone 3 | 50 |
5/31/2018 | |
| Milestone 4 | 50 |
6/30/2018 | |
| Milestone 5 | 35 |
7/31/2018 |
| Project Risks: None at this time | Project Leadership:
Project Sponsor: xxxxxxxxx,xxxx Project Leader : xxxxxxxxx,xxxx Project Manager: xxxxxxxxx,xxxx |
You can download a sample balanced score card by clicking here
You can download a sample project plan by clicking here
You can download a sample project status report by clicking here