One of the most important functions of management within a business is strategic planning. Product decoration businesses do not become successful because they stagnate, or forget about their future once they have found success. No, management must have one eye on the present, and the other on their future. The old adage “time is money” is trite, but true. If future projects, developments, and expansions are not planned and projected properly, then time (and money) will be wasted. The biggest hidden costs in a business are its opportunity costs. When time is wasted on one small order, or replacing a botched one, there is no value added to the business. Instead, value is lost. This is because the business could have spent both the time and the money on another order or project that could have provided value. Since the value of opportunity costs are typically unknown they can easily be overlooked, or ignored. This is, however, a big mistake.
Every action taken in the course of a project is done at the expense of another possible action. If, for instance, excessive time is taken to set up a screen printing job, then that time is wasted. Instead, it could have been better spent printing the order or setting up another order. Effective time management and project management go hand in hand. All the research and analysis performed to evaluate a business strategy would be for naught without effective and efficient implementation. Even the planning process itself can become a weakness if it is not governed, as it can be difficult to take the next step from planning to implementation without established parameters. Priorities must be determined, non-priorities must be set aside or discarded, and deadlines must be established. Structure is a critical element of time and project management.
One of the most important aspects of strategic planning is determining what is and is not worth the time and money necessary to reach a goal. First, it is important for management to assess the capabilities of the business. To know what goals are attainable, one must first know what the business is capable of. What type of equipment does the business own? Will the business need to acquire more equipment for its goals? Can an entire decoration process be outsourced in order to save time and/or money? What level of skill does the workforce have? Does the business have enough skilled and unskilled labor to execute different decoration processes? What limitations or constraints might hinder efforts to reach the goal? For example, is there enough space for screen printing equipment? If not, then screen print transfers can be applied using only a heat press, which comparatively takes up little space. These are all important questions that must be answered about the business itself in the planning stage of a project.
However, the internal factors of a business cannot be the only consideration when planning. External factors, like the business’s competition, must be accounted for as well. Competitors have a tremendous influence on a business. Whether a competitor has a price point that needs to be matched or a more efficient process that demands investigation their efforts are a threat to your business, but also a possible model for success to replicate. There are also two different types of competitors: direct competitors and indirect competitors. A direct competitor offers the exact some products and/or services (like a local embroidery shop), while an indirect competitor may offer different products and/or services that fulfill the same needs for consumers (Discount Mugs and Zazzle). When considering the competition, it is valuable to measure the business against the industry leader. Of course, an industry leader like Old Navy makes intelligent decisions and offers quality products at low prices. Much can be learned from studying those who are most successful in your respective industry. This process is called benchmarking.
Competition is far from the only external factor a business must consider. Environmental factors, like weather, the political and legal climate (local laws and statutes) in which the business operates, and even war can have a dramatic effect on any business or industry. In order to plan efficient operations effectively, all factors and influences, both internal and external, must be considered and addressed. The world we live in is a turbulent place where things outside of our control can greatly affect our business and personal lives. So, when planning for the business you cannot plan for a perfect world.
Utilizing a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis is an excellent method for evaluating the internal and external factors that affect the ability of the business to reach a goal. Those four categories are organized into a grid, which helps to visualize all aspects of an objective. A SWOT analysis helps to weigh positive (Strengths and Opportunities) and negative (Weaknesses and Threats) influences against one another to determine the viability of the objective. No method of analysis is perfect, however. SWOT analyses, for example, do not account for the relative value of strengths and weaknesses. Not all strengths and weaknesses are equivalent, and a SWOT analysis does not have the capability to differentiate their individual values. This does not mean that SWOT analyses are unhelpful, but it is important to understand that it does not provide a perfect or complete representation of all aspects of the objective that need to be considered.
Once you understand how to interpret SWOT analyses, that information must be put to use to help the business stand out, or create a competitive advantage. Anything from a low price to a higher quality garment can become a competitive advantage. Through analyzing your business and the competition, you can see where opportunities exist to develop a competitive advantage. In order to thrive in a competitive market like product decoration, your business must have something not only to differentiate itself from the competition, but something that clearly makes your business better. Price is not the end-all, be-all of business. Many businesses offer cheap apparel or custom products. If you offer a premium product that is superior to what is available, then the market will respond to it, even at a higher price point. This means that the product has a higher perceived value.
The easiest way for a product decoration business to create a high perceived value for its products is to establish its brand and market that brand effectively. Branding goes far beyond logos and slogans. A company’s brand is its public image, its own perceived value to consumers. Establishing a brand is not an easy process, and it requires diligence to maintain a level of excellence. Apple Inc. is a perfect example of this concept. Years of dedication, planning, and a commitment to excellence allowed Apple to establish itself as the personal computing and mobile device retailer. The Apple brand is now synonymous with high quality products and even a certain lifestyle. None of that would be possible without extensive knowledge of its market through thorough analysis and planning.
Benchmarking is another useful method of analysis. Continuing with the previous example, Apple is the industry leader in cell phone production. They are the benchmark that other cell phone manufacturers aspire to. So, in order to reach Apple’s level, or even surpass them, their competitors will compare and contrast themselves with Apple. That is benchmarking- the process of evaluating the standard-bearer in an industry in order to improve your business. By looking at the similarities and differences with Apple one can determine what Apple’s competitive advantages are, and how to compete with them. This does not, however, mean copying Apple’s every move. Not only do you want to avoid infringing on any trademarks or copyrights, but exactly copying the benchmark’s strategy is unlikely to be successful because they are likely entrenched as the standard. It is a must to still find a way to set your business apart.
There is an inherent risk in any business undertaking. Opportunity costs, and the risks associated with them, have already been addressed. However, there are other types of risk to consider, especially the risk of a project or product being unsuccessful. The risk of failure can be a powerful motivator, or a powerful deterrent. In order to evaluate potential risk, the risk premium must be weighed against both the possible positive and negative results of a project or decision. The risk premium is the minimum amount of return on a product with greater risk that is necessary to be able to choose that risk over a product with less (or no) risk. In simpler terms, the risk premium is the required profit to make a risk worth taking.
There are three different approaches a business can take when addressing risk. Risk-averse, or risk avoiding, management will take every precaution to mitigate risk. While this strategy is safer, it is also likely to produce lower returns than strategies that include risk. Risk neutral management will neither avoid nor actively seek out risk. Risk neutral management likely has determined that some risk is necessary to optimize results, but will not have a predisposition to favor one over the other. Risk-seeking management is inclined to seek out high risk/high reward projects or strategies. The lure of greater potential yield or reward for a line of action is paramount for risk-seeking management. Since higher-risk strategies are typically those with the greatest reward they are pursued most aggressively by risk-seekers.
Strategic planning is essential to a successful business. Every new undertaking for a business requires thorough analysis and preparation prior to implementation. Such evaluation will allow management to determine the best course of action, and aid in the development of the process. Potential pitfalls can be identified and avoided, or corrected. Existing decoration processes can be enhanced or streamlined. Budgets can be set, and teams and decoration equipment can be prepared. Without effective strategic planning, time, money, and opportunity costs can be wasted trying to maximize efficiency and productivity “on the fly.” That type of waste is detrimental to any business, but for a small business it can compromise the project and the business as a whole. Margins for product decorators can be quite thin on a per-unit basis, meaning that it can be difficult to make up for mistakes or lost sales because one or two sales is unlikely to provide enough revenue unless a particularly large quantity is ordered. However, with quality analysis and effective project and time management any project is likely to succeed.
