For many of today's small businesses, their idea of a strategic plan can be summarized in one word -- "Survive!" While there is no question that this is a most challenging time, it is also a very good and inexpensive time for planning to survive longer. Some might refer to this as updating a strategic plan.

The first question in this process that always needs to be answered is "Where are we?" Many companies will have difficulty answering this. They only know that where they are today is not where they thought they'd be two years ago. A very simple and meaningful exercise can be utilized by pulling off the shelf the old two-year plan and seeing just where the divergences occurred. Assuming you used a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis then, simply apply a little Monday morning quarterbacking and look at your previous prognostications and conclusions.

For many, a common mistake was to way overvalue our strengths while minimizing our weaknesses. This compounds when we realize that we probably also overstated the opportunities and understated the threats. The purpose of this exercise is not one of penance, but rather to help build a significantly more realistic model as you go forth. Do the SWOT analysis again and I assure you a more sober viewpoint of your current status will be the result.

The second step is to answer the question "Where do we want to go?" As the realities of the marketplace have continued to unleash unseen forces, many companies have reacted and their reaction has them in places and markets they might never have envisioned. This is neither good nor bad, but given the higher probability of success through building upon previous successes, this can provide a much clearer insight. Suddenly peripheral opportunities become available as a starting point of awareness and new found focus.

Equally important in this directional discussion is the need to keep in mind the underlying requirement for competitive advantage. As many companies unfortunately found out, when the overall market is growing, then there's the appearance of enough business for everybody. When it contracts, however, the marginal "me-toos" are the first to go. So any productive discussion of where to go should include the requirement for having the ability to compete and sustain whatever market is pursued.

This leads to the final question of "How are we going to get there?" The answer to this simple question always boils down to either low cost or value added. While many think that their particular success is a combination of both, it is an illusion. Over time, competitors who focus on driving down costs earn a sustainable and defensible position; those who invest in value added also earn a sustainable and defensible position. Those who try to do both ultimately succumb to one or both of these two strategies. Whatever competitive strategy is decided upon, it is critical that this be driven into every functional component of the organization. This is not just sales and marketing hype, but also operational imperatives for manufacturing, logistics, HR, accounting and even research and development.

If you've made it this far, congratulations; a whole lot of companies haven't. And if you want to increase your chances to be around next year and the year after that, take a little time and go through this exercise. Good luck is when preparation meets opportunity. Amazingly, good strategic planning is often synonymous with good luck.

John F. Riddell Jr., director of the Center for Entrepreneurial Growth-Hamilton County, writes every other Tuesday about entrepreneurs and their impact on companies and the marketplace. Submit comments to his attention by writing to Business Editor John Vass Jr., Chattanooga Times Free Press, P.O. Box 1447, Chattanooga, TN 37401-1447, or by e-mailing him at business@timesfreepress.com.