Strategic Planning for the Self-employed
If you ask someone about their strategy, the answers are all over the map.
Some will start talking about marketing and branding. Some will start listing their values. Some will focus on their product offerings. Some will talk about their culture. Others might repeat their mission statement. Still others will list off their current goals and KPIs, or even just their daily tasks and decisions.
Many will simply pause, unsure of how to answer.
Like many words in the world of organization development, the definition seems fuzzy. Every author and consultant gets to use the term however they want and come up with some proprietary, trademarked system to make sure you finally get it “right”.
Perhaps the most basic definition of strategy is:
A plan of action to accomplish a goal.
The word itself was almost exclusively used in a military concept until the 1960s. The idea of a corporate or organizational strategy is still very fresh, historically speaking. Regardless, it has become prolific today.
To not have a detailed strategic plan, nicely printed and bound, and completed yearly would be a serious leadership faux pas. Corporations, non-profits, and government sectors have all jumped in with both feet, with the academic world fueling the movement with a steady stream of new research, frameworks, and tools.
Yet, despite its ubiquity, we have little consensus on how leaders should actually create that strategic plan. For some, it’s as simple as running a SWOT analysis with their team occasionally, while the next team implements a thorough process spanning 4-6 months culminating in a beautifully designed document and an annual budget.
If you decide to really go for it, there are endless tools you can use to help you plan strategically. You could try a Pareto analysis, a PESTEL analysis, a VRIO analysis, a value chain analysis, a VMOST analysis, or a simple gap analysis. Or you could use the nine-box matrix, the BCG matrix, the Ansoff matrix, the impact/effort matrix, or the classic urgent/important matrix. If you want an overall framework, you may resonate with the Blue Ocean strategy or Roger Martin’s Where to Play/How to win approach. You might use a Strategy diamond or the Five Factors from Sun Tzu’s Art of War. For a more pre-built option, consider Scaling Up’s One Page Strategic Plan (OPSP) or Traction’s Entrepreneurial Operating System (EOS).
If this isn’t enough, feel free to contact any management consultant on the planet and they’ll be glad to share their custom system with you.
Pretty simple, right?
Regardless of how much time and energy you put into your strategic plan, one thing seems to be certain: Most of your people won’t get it.
A Harvard Business study found that
“95 percent of employees in most organizations do not understand their [organization’s] strategy.”
That is a condemning statistic for any organizational leader and reveals a pervasive lack of clarity in the ranks.
Simply put, strategy can be confusing.
Strategic planning for One
Now, imagine you’re not a large corporation with a fully staffed C-suite, HR department, or team of MBAs to wade through all of this.
How does a solo entrepreneur or a self-employed individual know where to start?
This is the context I find myself in, and while I have led numerous strategic planning processes for other businesses, I have found the process of doing it for myself to be difficult. As I connect with other independent contractors and self-employed individuals in my network, it turns out I’m not the only one.
Finding strategic clarity can be difficult for any leader, but it seems there are a unique set of challenges that exist for the self-employed.
Let’s dive into a few of them:
#1 You’re Alone
This is the big one.
There is no partner, second-in-command, management team, or board that is also thinking strategically alongside you. No one to hear and validate your ideas and help you move to action quicker. No one to hold you accountable or notice if you don’t stay the course. No one to dream with you, explore new opportunities or wrestle through challenges.
This has a significant effect on the way we think about strategy.
While a team will discuss strategy through open dialogue through meetings or retreats, a self-employed person will process strategy through thoughts and writing. Our brains function differently in these two instances. There are aspects of our brain that light up when we’re in a conversation, namely the prefrontal cortex, which is responsible for higher-level cognitive control functions such as attention, prioritization, problem-solving, and strategizing.
Dialoguing in a safe environment with people we trust releases a neurochemical cocktail filled with endorphins, dopamine, oxytocin, and other chemicals that significantly alter our mood and mode of thinking. This puts us in an ideal state for the divergent thinking that’s needed when planning for the future.
In other words, the strategy we come up with in a collective setting will be different than the one we arrive at on our own.
Not only this, but the social setting includes a built-in validation component, where you can gain instant feedback on potential directions, causing you to toss out bad ideas faster and pursue good ideas with more confidence. To be fair, you may also pursue bad ideas with more confidence (hello, groupthink), but overall, healthy teams are found to have a greater ability to process complex information and come to better decisions.
An additional hurdle to being alone is that we often rely solely on our own perception when evaluating what’s going on in the marketplace or in our business. In a larger setting, every employee acts as a sensor and is a valuable source of information. The entire organization is monitoring at all times and can sense and respond to so-called changes in the wind. Picture a flock of starlings where each individual bird can sense both danger and opportunity and turn the entire flock in an instant. As a self-employed person, it’s more difficult to gather the data necessary for responding strategically to the environment.
#2 You are the business
As a solo practitioner, the line between business development and personal development is blurry. Strategic changes to the business will mean changes in your habits, mindset, skills, and knowledge. If the business is going to grow, you will need to grow. If you’re not learning, no one else is.
You don’t get the benefit of a diverse staff with different interests and strengths. Any strategic goals immediately become personal goals. This can quickly try the limits of our capacity. Our central nervous system can only learn and change so much before getting fatigued.
The first year of going out on my own was one of the most tiring years of my life (and I have twin boys, so that’s saying something). I was learning and taking in huge volumes of information every day. I wanted to offer the best service possible to my clients, which meant I had to be my best self. Every project required me to absorb and process new knowledge, sharpen skills, and test out new approaches. It can be exhausting if you’re not you’re careful with your boundaries.
When you think about business strategy as a solopreneur, you’re also talking about your personal strategy, which means you need to be mindful of capacity issues. It may seem exciting to test out some new venture, but unless you’re willing to stop doing something else, or find some more efficient way of doing it, you’ll end up burning yourself out.
Think of it this way: If you have a team of 20 people and they all have 1% of extra capacity to give to some new venture, that’s an extra 8 hours/week. If you’re on your own, that’s only 24 minutes. There is an economy of scale here that works against you.
When you’re evaluating the business to determine its strengths, weaknesses, and opportunities, you’re really evaluating yourself. You have to dig deep, get introspective, and be honest about what you find there.
#3 Heightened feeling of uncertainty
Strategy is always a risk, regardless of size. There are no airtight ways to accomplish your goals. There’s too much complexity. Strategic planning is like placing a series of strategic bets and hoping that one of them pays off. As a solo, that risk just feels more personal.
If it doesn’t pay off, that’s on you. You take the hit. Your money, your time, your ego. Your personal risk tolerance and relationship to fear will have a big impact on how you strategize.
The opportunity side of the coin also shows up differently as a solo. Here, one of your greatest strengths – flexibility – can also be a liability. It’s too easy to change course and lose focus when you’re on your own. You don’t have to convince 100 other staff members to pivot and move in a new direction. You just do it. You’re not an oil tanker, you’re a jet ski.
This is great for responding to client needs and market conditions. It’s not great for staying focused. Some strategies require sustained attention over the span of years to see the fruit.
Without a stable team around you, it’s too easy to go down rabbit trails and pursue pet projects that don’t really move the needle forward. One conversation can open a whole new door – a client asks you to do something that’s not really within your core business model, another organization offers you a job, you see a gap in the market and want to start a side business, you create another product or service more out of boredom than purpose, etc. After a while, your strategy becomes a watered-down mess and you don’t have a hot clue how to explain to other people what you really do.
All of this – the heightened risk and opportunity – make planning for the future more difficult, but also more important. Without a consistent rhythm of placing those strategic bets, reviewing progress, and making adjustments, you can veer off course and not even know it. With a plan in place, you might still choose to go off into the bushes once in a while, but at least you’ll know what you’re giving up.
This isn’t an exhaustive list, but it gives us an idea of why solopreneurs struggle with a disciplined approach to strategy and planning. If you have something to add to the list, let me know! Leave a comment, send me a message, or start a conversation with me on social media. I really would love to hear your perspective on this.
The way forward
Clarifying the challenges is the first step towards finding a solution. I can’t say that I’ve got the answer yet, but here are some potential approaches and “thought-starters” that may move us forward.
Develop yourself and stay healthy
Embrace the need for personal development in order to fuel your business. If you’re burning out, so is the business. Don’t be afraid to name personal growth goals as part of your strategy. Cultivating self-awareness, staying emotionally healthy, getting physically active, caring about nutrition, maintaining close friendships – these can all strategically position you for success. Get a coach or mentor, or start seeing a counselor. The business isn’t healthy unless you are.
Find other solopreneurs and strategize together
Being self-employed doesn’t mean having to do everything by yourself. Find a group of solos like yourself and go through a strategic planning process together. Help each other evaluate your core business models and the success of the prior year. Give feedback and input into each other’s plans and ideas. They don’t have to be experts in your industry, they only need to know how to listen well and ask good questions that help you see different perspectives. Turn this into an ongoing peer advisory group that meets monthly in order to give yourself the accountability you need to stay on track and keep making progress.
Throw out the traditional timeframes
I know, you’re supposed to plan one year at a time and you’re supposed to know your 5-10 year vision of the future. Don’t worry about that. Use whatever timeframe makes sense for the work you do. For example, I certainly think about where I want to be 3 years out, but my planning cycle is only 3-6 months, driven by the length of my current project commitments. This gives me a North star while also allowing for a lot of flexibility along the way. Traditional annual processes tend to be too rigid and only allow for significant change to happen at a predetermined time, once a year. Life and business are rarely that predictable.
Use “Even Overs” to help you prioritize
As a solo, a constant challenge is learning to stay within your limits. “Even overs” are a simple exercise that can help you see the trade-offs that exist in your strategy. You start by naming an objective or priority followed by the words “even over”. You then complete the sentence with some other valuable objective or focus that may get sacrificed in the process or put on the back burner. The important part is that both the right and left sides of that statement are positive concepts or ideas. As one consultant from The Ready defines it:
It’s a good thing even over another good thing.
Stating that you’ll choose something good over something bad doesn’t help you focus. The point is to force you to name something positive that you’ll have to say “no” to in the short run in order to achieve some other goal. Examples:
- Focus on broad, local market needs even over going deeper into a specialist niche.
- Growing client base even over growing revenue.
- Collaboration even over focus.
- Start a podcast even over writing consistently for your website.
Consider the Barbell Strategy
Nicholas Nassim Taleb made famous the idea of “black swans” – those rare events that you didn’t think were possible until they happened. These black swans can either catapult you to new heights or devastate you. To minimize the risk while still opening yourself up to the potential upside, Taleb recommends the barbell strategy.
Simply put, on the spectrum of risk, don’t load up the bulk of your strategy in the middle of the bar, but rather place them out on the ends. When it comes to financial investing, he recommends 90% should be placed in safe, stable places, while 10% in moonshots. You only invest in “sure things and wild swings”.
In the context of business strategy, this could mean ensuring you’re prioritizing stable clients and product lines while also investing a portion of your time and energy on strategic bets and longshot innovations.
For a solo entrepreneur, stability can feel like a rare moment. Your whole career choice can seem like a wild swing. This high level of uncertainty isn’t sustainable for most people. As soon as you can, find the secure and steady work that will keep your cash-flow nightmares at bay, then use 10-20% of your time and energy to swing for the fences.
Build a dashboard
You don’t have employees and business partners that can help you evaluate how well you’re doing or what’s changing in the marketplace. This means you need to be even more intentional about gathering the information that is going to help you shine a light on reality, uncover blind spots, and help you make decisions.
Identify which metrics would be most helpful to you in steering your business and build a simple dashboard to help you track them. Don’t worry too much about vanity metrics that won’t actually help you make decisions (e.g. number of Twitter followers), but also don’t stress too much about getting the “right” metrics on your dashboard right away. Test a few of them out and see if they’re helpful. If not, stop tracking them and try something else.
Be sure to take a balanced approach here. You don’t need to track everything but you also don’t want to get caught with tunnel vision by tracking only a narrow range of metrics. Look at everything from financial and sales numbers to operations to client info to personal resources like time and energy. Don’t know where to start? Consider some basics like tracking your cash flow, maintaining an income statement, recording your time by project/task, creating a sales pipeline, and calculating your actual hourly rate by project. Want to go beyond the basics? Visit www.kpilibrary.com and go nuts.
Use an Adaptive planning process
There are technical challenges and then there are adaptive challenges. Technical challenges are easy to identify, have clear-cut causes, and can generally be solved with enough expertise and technical skill. These are great problems to have. You can learn and plan ahead of time and then simply execute the plan. Building a fence or fixing an engine is a technical challenge.
Adaptive challenges are different. They’re complex, harder to identify, and have less clear root causes. Solutions often require a change in paradigms and mindsets, cross disciplinary lines, and require us to learn, plan, and act all at the same time. They defy our traditional process of a singular planning phase followed by a singular execution phase. Fighting a pandemic is an adaptive challenge.
While not on the same scale, the work involved in strategic planning is also adaptive. The work of forecasting the future of our self-employed endeavour involves a complex array of factors that we can’t control. If we try to solve this like a technical problem, we’ll be endlessly frustrated. This is another reason why so many business leaders dislike strategic planning, I think. It feels like an attempt to place a metal stamp on a shifting, dynamic reality. It doesn’t work. Our efforts to constrain uncertainty either fall apart as soon as we start moving forward or they stifle us and we’re no longer able to move and flex as needed.
With an adaptive mindset, we begin to treat strategic planning less like we’re building a house and more like the journey involved in pursuing an ambitious fitness goal. You have a vision of where you want to be, but the process involves a lot of experimentation, learning, iterations, failures, reboots, and reflection. It’s messy. New habits are hard to form, and unexpected variables will throw you off course. For a robust approach to adaptive planning, I recommend checking out the canvas created by the NOBL Collective.
Treat the planning process like a change cycle
To plan for strategy is to plan for change.
It’s important to think through not just what we need to be doing, but how we will go about doing it. We need a process.
Students of Lean Manufacturing or Total Quality Management (TQM) will be familiar with the Deming cycle of Plan-Do-Study-Act (PDSA). It emphasizes short planning cycles, moving to action as quickly as possible, and an intentional approach to learning from those actions.
Personally, I appreciate the simplicity of the Lean Change Management cycle introduced by Jason Little.
The steps are as follows:
#1 Insights
Generate as many insights as possible about your current state.
This may come from the data you’re gathering and monitoring from the list above, from a regular discipline of retrospection, from client feedback, from reading and learning, or from more traditional approaches such as a SWOT analysis.
How you capture insights isn’t what’s important, it’s just that you do it.
#2 Options
The insights you captured in the first step will have shone a light on all sorts of tensions, system issues, opportunities, and blind spots. The goal of the second stage is to generate as many options as possible to either overcome the challenges or pursue the opportunities that were revealed. Look at elements like working practices, habits, processes, product/service offerings, relationships, partners, strategies, money, etc. (i.e. everything’s on the table here, both small and large). Once you have a list, prioritize them with the help of a mentor, peer group, or close colleagues.
#3 Experiments
This is the fun part. Choose one of your top options and turn it into an experiment that you can test out. First, craft a hypothesis. What is your educated guess about what will change by implementing this new action? How will you measure if it’s a success or failure? Then, test it out for 6-10 weeks and monitor the effects. At the end, decide if it needs to continue, be tweaked, or if it’s “fit for the pit” (a little obscure Canadian reference for all you elder Millennials out there). Regardless of whether it’s a success, you’ll have generated a ton of new insights to capture, effectively restarting the cycle.
A cycle like this doesn’t just help you change, it teaches you how to change. It creates the habit and rhythm of continuous self-transformation.
The goal isn’t to have a great plan, it’s to build your capacity for sensing and responding to the environment around you.
Where to start
When you read a list of ideas like the one above, it can be hard to know what your first step might be. I get that. Here’s my suggestion:
Start small and start where the energy is.
According to BJ Fogg’s work at Stanford, new habits have a much better chance of surviving if you make them small, easy, and enjoyable. If you have to grit your teeth and rely on willpower to start a new rhythm in your life, you’ve failed before you’ve even started.
In other words, if you’re going to start a rhythm of strategic planning in your work, don’t make it suck.
To give you an example, here’s how I’m going to take my own advice and approach strategic planning for the next year:
- I’m partnering up with another self-employed friend and we’re going to do the process together. We’re going to take a day off, go to a nice, retreat-like location, and spend the day charting a course for the future and speaking into each other’s lives. I know I’m going to follow through on this because it sounds like a lot of fun. There’s going to be good food involved, good coffee, good beer, and good conversation. Why wouldn’t I do this?
- As for the actual process, I’m going to follow a version of the Barbell strategy. 80% of my time will be spent on more stable sources of client work, while 20% will be filled with a series of experiments and change cycles. I believe this will both increase my rate of learning and decrease the time it takes me to move to action. To choose which experiment I’ll test out, I’ll rely on clear purpose and values as guardrails and use even-overs to help me stay focused on what’s most important.
- Every month, I’m going to hop on a call with the same friend that I did the strategy retreat with and we’ll check in with each other on how things are going and what we’re learning. Every 2nd or 3rd month will be an opportunity to reboot the change cycle with a new experiment. These calls will be scheduled in advance, so I won’t book anything else into that time slot.
- For my own health, I’m creating a new physical fitness routine that will fit in easily with my existing schedule. I’ve been a gym nerd my whole life, but Covid has definitely set me back in this regard. It’s time to get back on track. I’ve learned that my physical health and mental health are closely intertwined.
Where will I be a year from now as a result? I’m not sure. That’s the exciting part. I will have tried out some bad ideas, and hopefully some good ones, but either way I know I’ll have gained a ton of insight that I can apply to the following year.
What’s your next step?
What’s landing for you as you read through the ideas above? I’d love to know.
If you’re debating over potential changes to your strategic planning process, leave a comment or connect with me on social media. It would be great to learn from you and hear about the ways you’re gearing up for the next year.
Let’s keep learning together.
Dan
PS – If you love the idea of a strategic peer group for yourself, but don’t know how to pull it together, send me a message on LinkedIn. Let’s start something.
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