When it comes to small business planning, a number of companies are immediately confused by goals, objectives and resources. As a result, they end up establishing conflicting objectives for departments & employees. This ultimately means the company isn’t properly allocating its resources. Instead, the focus must be on defining the company’s goals, determining the objectives to attain those goals and ensuring the small business is properly allocating its resources to attain its objectives. Granted, it seems pretty involved, but there is a way to simplify small business planning.
Without defining the company’s goals and objectives, small businesses can never properly allocate their resources. As such, they may view themselves as lacking in certain vital business functions and competencies, when, in fact, they have both the means and ability to handle the task at hand. This might lead them to pursue outsourcing options, when they have the cost structure and expertise to retain those services in house.
In orther instances, small businesses may decide to pursue outside financing without first considering the liquidity built up in their own receivables. These two are merely examples of some of the costly mistakes companies can make when they don’t allocate their resources to the successful completion of their objectives. So, within the realm of strategic planning what is the difference between goals, objectives and resources?
- Goals: A company’s goals are meant to define the company’s purpose and are therefore broad in scope. In this sense, they aim to provide an end result where the company can then determine those objectives essential to attaining its goals. They are less rigid, more long-term and less structured that objectives.
- Objectives: Objectives are more structured and their successful completion is measured in time constraints. Successfully completing objectives means to properly allocate the company’s resources. Objectives are points of measurement where the company assesses its progress towards its goals.
- Resources: These are the company’s internal resources, which include all its assets. Proper allocation of these resources will allow the company to ensure that it successfully attains its objectives.
Two of the most important planning tools for small businesses include the TOWS and SWOT analysis. You can read about using the SWOT analysis to improve your supply chain here. You can see the SWOT tool used on customer service here and see how it helps when performing a market feasibility study here. Finally, this post explains how to move a SWOT to a TOWS analysis.
Importance of Proper Allocation of Company Resources
Are you aware of your company’s resources? Are you aware that they include far more than just your employees & machinery? Proper allocation of company resources starts first with understanding those resources and what they entail. In this case, we’re discussing the company’s assets and these assets are far more than merely a company's employees and machinery. So, what else should companies include in the definition of resources? The answer: all the company’s assets! This includes employees, equipment, machinery, receivables, inventory, warehousing space, etc. All of these are assets small businesses can use to ensure there are properly allocating their resources to successfully attain the company’s objectives and its overall goals.
Proper resource allocation is an essential aspect of small business planning. It encourages small businesses to broaden their perspective as to what their assets are and how they can properly use those assets. Start first with the goal itself. Divide this goal into measurable objectives were progress can be assessed and changes can be made (if needed).
Finally, understand the resources at your company’s disposal and how they can best be used to attain your objectives. In addition, be sure to measure results and have periods of reflection where you and your team can assess your progress, or lack thereof. To read more about strategic planning, please read: How Can Strategic Planning Help Your Business Grow?
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