Everybody wants to be strategic these days.
But let's take a moment to discuss the difference between strategy and tactics, from the traditional military perspective:
Strategy is the utilization, during both peace and war, of all of a nation's forces, through large-scale, long-range planning and development, to ensure security or victory. Tactics deals with the use and deployment of troops in actual combat. -- Random House Dictionary, © Random House, Inc. 2010
When we first have a discussion with a prospective client, we often come face-to-face to the ugly truth that these usually savvy business owners don't know the difference between strategy, tactics and the tools of battle.
Here is an example:
Business owner tells me that they have been exploring an ESOP Strategy.
My question—What is your large, overriding objective?
Answer—To exit the business on a tax favored basis.
My reply—So this, "To exit the business on a tax favored basis" is your strategy. ESOP has nothing to do with the strategy. We must recognize ESOP for what it is. It is a tool of battle. Before selecting the tools of battle, we must tactically assess the options available to you to achieve your strategic objective.
The moral of the story: Calling a tool a strategy does not make it one.
This same approach applies to any other tools that might be appropriate for a business owner, but might also be horrible outside a carefully thought out strategy; e.g. Owner is presented A new life insurance strategy…Simple fact, life insurance is never strategic. It can be a powerful tool when tactically deployed, but don't let the cart lead the horse.
In our exit planning consulting practice, we take our clients through a value enhancement process that helps them achieve their strategic objectives and makes senses of the tactics and tools they will deploy in the process.
Recent Comments