Many small business owners become so preoccupied with the chaos of day-to-day operations essential to running a profitable business, they don’t take the time to invest in a strategic planning process. As a small business owner, it may be difficult to know what you’re doing next week, let alone 5 or 10 years from now. Medium-term: Less abstract than long-term goals, medium-term planning seeks to establish both qualitative and quantitative goals for the next three years. Strategic planning takes a lot of effort and small business owners don’t have the time to put a new strategy in place every year.
Strategy is really about identifying options and making choices.  If revenue growth is a critical objective, what are the most viable options for your business to do this?  You could expand into a new geography, or you could create new products. How do you choose between these options?  In traditional strategic planning processes choosing between options is often done on a cost benefit analysis.  How much will something cost and what do we expect the payoff to be? A common mistake small business owners make is jumping right into tactics without thinking through their strategic options. You'll receive lots of great information, articles, statistics, and case studies on how small and medium businesses use social media. In fact, one of the main roadblocks stopping small businesses from finding success is a lack of clear goals and objectives. Try to quantify objectives such as revenue and net income, number of clients, markets served, position relative to competitors.  These are aspirational goals in nature, but helpful in creating focus.
Schedule regular meetings to assess where you stand in terms of meeting your objectives; what’s working and what adjustments need to be made?
The core elements of strategic long term planning in the metals and minerals industry, and the relationship between them, are expanded. The solution lies in systematic application of a series of tools and techniques, within a conceptual framework or philosophy, that aligns decisions and actions across the company, using a common language, standards, systems and processes, and defines the concept of strategic long term planning.
Value generation from the mineral asset(s) is achieved through the application of a suitable business model.
The physical characteristics of a mineral resource such as type and nature of mineralization, and physical structure (depth below surface, shape, extent, dip, surface topography, etc.) are fixed and do not change over time.
However mineral assets exist at a place (a specific fixed location) so defining a context (e.g.
This is the spatial context that encompasses location and associated operating environment. The selection of a mineral asset portfolio is affected, in the business context, primarily by the perceived financial value (investment quantum, returns, and duration), arising from the mineral asset(s). This value construct is driven primarily by the physical nature of the mineral resource (size, content, and depth, which drive exploitation technology selection), the anticipated market demand for products arising from the mineral asset(s), and an accepted level of business risk in realizing the perceived value. All of these, except the physical characteristics, are influenced by near term and forecast long term, economic and market variables. The world view attempts to capture the interdependence and uncertainty associated with key elements of the spatial and business contexts across the long lead times associated with financial returns from mining activities.
Simply put, it creates the link between the market requirements, business strategy, and tactical planning activities. The nature of these components, and their interrelationship in the strategic long term planning process, is schematically represented in Figure 2.
These planning parameters inform the financial analysis and optimization of the business plan, and create the link between mineral asset portfolio utilization and the market ► The annual cyclical business planning process is conducted utilizing the planning parameters (global assumptions) associated with the preferred or most likely world view. Concurrently value is optimized through application of value-based management principles during the development of the strategic long term plan?at mineral asset level and company level for a multi-asset organization.
Real options arising from evolving alternate trajectories are evaluated and a contingency plan is developed, based on planning parameters associated with the alternate scenario. The objective is to facilitate understanding of the nature of the mineral resource(s) and the geological context in which the business would be operating.
Understanding of the market and the environment in which the business functions informs the building of world views or scenarios and the associated global assumptions that are used to develop and optimize the investment centres that comprise the business plan.
The nature of the value chain is integral to the understanding of the characteristics of the market. This includes the social, political, economic, regulatory, tax, cultural, legal, and technological environments. As businesses have no control over the external environment, their success depends upon how well they adapt to the external environment. The ability of a business to design and adjust its internal variables to take advantage of opportunities offered by the external environment, and its ability to control threats posed by the same environment, determine its success. The nature of the global business environment will have an effect on the nature of demand and resultant selection of orebodies for mining. Global economic activity is the driver of consumption of product from the minerals and metal industry.
Changes in economic activity have a direct and immediate impact on the industry as they impact demand and ultimately pricing. The critical aspects of the global business environment must be incorporated into the strategic planning framework in order to align long term investment with probable market demand scenarios. This is done through integration of world views that adequately encapsulate the key global dimensions into the planning process.
In South Africa, the national business environment is dominated by a legislative environment that has been created to move South Africa from a racially biased society to a true, majority-based democracy.
Acquisition and effective exploitation of mineral assets is predicated on a well-defined and effective system of legal tenure that will allow investment in long life assets. The exploration for and subsequent exploitation of minerals in South Africa is subject to a wide range of legislation and regulation; however, mineral asset acquisition and exploitation is governed primarily by the Minerals and Petroleum Resources Development Act (MPRDA) and associated regulation.
Understanding and operating within the context of the legislation applicable to the minerals industry is thus a requisite for effective business functioning and strategic long term planning. Developing an understanding of the uncertainty inherent in the external and future environments, and testing the robustness of strategic plans against a set of possible futures, is a critical component of strategic long term planning. Analysing key global trends and seeking to influence the possible business future(s) requires a widening of perspective to a range of possibilities. These are constructed and used to develop long term planning parameters (global assumptions) that represent the relevant underlying assumptions for each scenario, e.g. These planning parameters inform the financial analysis and optimization of the strategic long term plan and the business plan. Critically, the world views or scenarios create the link between the market, the global and national business environments, and the utilization of the mineral asset portfolio.
Analysing key global trends and seeking to influence the future(s) requires opening our minds to a range of possibilities and discontinuities. The complexity of strategic problems and the need to find acceptable solutions requires using methodologies that are innovative, rigorous, and participatory.
The development, socialization, and adoption of common world views can be facilitated through a workshop process where scenarios are created as a way of presenting alternative future world views, and from which critical long term planning parameters can be developed. Dependent on the number of scenarios developed (typically three, maximum four), alternative business options can then be developed with identification of suitable trajectories between scenarios, dependent on changing circumstances or progression between scenarios over time.

The organization knows what trajectory to follow as the contingency positions have been previously defined. Extensive effort is directed at estimating costs (both operating and capital) to accuracy levels of less than 10 per cent error during the feasibility studies. Similarly production, grade, and metallurgical recoveries are estimated at comparable levels of accuracy to drive the revenue line.
However, an area that is often not subject to the same rigour is the impact on plan viability of assumptions regarding metal (commodity) prices, exchange rates, inflation rates (domestic and foreign), and escalation factors (capital expenditure and operating expenditure).
The risk of not undertaking viable projects because of a pessimistic long term view, or conversely undertaking marginal projects because of an optimistic long term view, is mitigated through the use of scenarios or world views plus real option valuations.
Estimation of these long term planning parameters in the context of anticipated business world views or scenarios is therefore critical. These so-called driving forces or causal factors are many and are often complex in their relationships.
The relationship of these key drivers can be mapped using causal loop diagrams from which a simplified view of the interrelationship of these driving forces or casual factors can be derived. The logic being that once a view of the outermost parameters has been established (from a scenario), the parameters of the inner shells can be progressively inferred, creating a consistency in the parameter logic that is driven by the possible future world view. In this context the development of alternative global assumptions to align with alternative future world views is not so much a forecasting exercise, but more a means of understanding the implications of uncertainty and facilitating the testing of investment decisions in the context of future uncertainties.
Consistency in the logic of generation of parameters associated with alternate future world views is therefore paramount. Various technical experts are identified (internal and external to the organization) from different disciplines (economics, marketing, finance, supply chain, capital projects, estimators, etc.) and presented with the scenarios with a request for relevant inputs.
For example, the view on GDP and inflation is used as input into the expert opinion regarding cost escalation. On collation, the global assumptions are circulated within the same expert group for final comment and alignment as necessary.
This approach creates better understanding of parameter interdependency and clarity on the scenario structure, while testing internal consistencies.
The aggregated parameters provide a descriptor of a current and future world view and transition between the two. Crucially, the global assumptions provide the link between the agreed world views or scenarios and the associated economic parameters for business planning purposes. The global assumptions create discipline and uniformity of assumptions, as they are the only economic planning parameters permitted to be applied across the organization for planning and valuation purposes. The physical characteristics of the individual mineral assets within the portfolio determine the development of a mine extraction strategy, the mining right plan, the budget and long term plan per asset and collectively for a multi-asset business. Concurrently, value is optimized through application of value-based management principles during the development of the strategic long term plan?at mineral asset level and company level for a multi-asset organization. Real options arising from evolving alternative trajectories are evaluated and a contingency plan is developed, based on planning parameters associated with the alternative scenario. The business plan then forms the basis upon which the organization is structured and resourced. Supporting, aligned execution plans are developed for the necessary supporting activities in finance, human resources, projects, engineering and infrastructure, and sustainable development. This is the starting point for strategic long term planning for metals and minerals entities. The core outputs of the strategic long term planning process are thus also critical inputs into the overall company strategy. The key question that VBM answers in this process is: What is profitable growth, now and in a possible future world view, and which of the options should be prioritized? The business planning activity creates a central process around which the business organizes planning activities to meet the needs of the Executive and the Board. It creates an annual rhythm to activities, so that all parties are aware, through the 'five Ps' of the planning process (philosophy, programme, process, product, and people) of what must be done, by whom, by when, and to what standard to meet the company's planning needs. Alignment with support activities is ensured through use of the long term plan as the base plan for resourcing, capability, and infrastructure establishment. The long term planning process ensures optimisation at mining right area level, with strategically aligned constraints, before consolidation and optimization at a mineral asset portfolio (company) level. Each step in the process is a path along a decision tree with choices being identified, rationalized, motivated, and implemented. The long term plan then informs all other disciplines within the business as to supporting requirements to create the business plan.
Similarly, in the human resource area it would provide the basis for staffing, skills development, and housing requirements. The business plan covers the life of the operation or the first 60 years (two periods of 30 years to align with the MPRDA,) whichever comes first. It comprises a combination of investment centres at different levels of confidence of estimate, viz. The mine extraction strategy thus informs the nature of the mining right plan specifically: optimal scale, relative production from different ore sources, basic infrastructure options, and critical constraints. As such it is not time-limited and has a life, which is a result of the optimal scale of operations as identified in the mine extraction strategy. The MRP is driven by the mine extraction strategy (scale of operations, layouts, existing asset base, production sources, constraints).
A comprehensively scheduled mining right plan (MRP) will result in a view of the mineral resource potential and the mining and concentrating capacity and cash flow required to achieve it. Cash flow estimates from the LTP are used to forecast estimates of value for a project, a mine, and the company.
The LTP is constructed from investment centre models representing logical mining units (by reef type) and project area. It comprises a combination of investment centres at different levels of confidence of estimate, viz. Logically, as study work is completed, investment centres progress from the lowest levels of confidence estimate through to execution. The level 3 plans are at best scoping studies, may be based on inferred mineral resources, and generally not subjected to a rigorous stage-gate review process. Typically downside shifts are rapid and brought about by crisis, while upside shifts tend to be more gradual as markets tend to expand at a sustainable growth rate driven by capital cost and availability. Contingency planning is the preparation for an unexpected, rapid shift in industry dynamic. Despite development of world views or scenarios, the rate of change between anticipated world views is difficult to anticipate.
Generation of contingency plans allows a rational, controlled shift between one operating state and the next based on earlier analysis. It is a means of reducing the scale of crisis through anticipation and prior sensitization. These are evaluated by investment centre and downscaling options may include closure, delay, or mothballing.

Discounted cash flow (DCF) methodology is applied, with emphasis on net present value (NPV) and internal rate of return (IRR). Determination of project value (NPV) is based on the philosophy of a differential value obtained from the difference between the base plan at level 1e (the agreed and financed production, cost, and capital profile associated with all investment centres at level 1e and 1 with economic tail management applied) and the base plan plus the project (with its associated combined production, cost, and capital profile plus economic tail management), i.e. Excluding tax shield benefits (stand-alone assessment) allows ranking of projects, while inclusion of tax shield benefits indicates the likely return from the project once included into the overall business plan portfolio.
The primary measure of value, in the overall strategic long term planning process, is that of net present value (NPV) coupled with internal rate of return (IRR) relative to an agreed minimum rate of return (an investment hurdle rate, either weighted average cost of capital or a risk-adjusted discount rate).
However, given that the business plan is a combination of a short term budget period plus a long term plan, it is necessary to bring into consideration the effect of short term cash flow.
The long term objective of the organization is to maximize value, but this has to be tempered with the need for balance sheet management and near term cash flows.
The use of common investment centre models, as developed and applied in the overall short- and long-term planning process, allows integration into existing reporting and governance cycles, and ensures alignment with the overall business planning process.
Strategic objectives relating to market capacity (the ability to absorb output, ultimately leading to market share), operating cost curve positioning, and targeted return on investment (leading to capital availability), coupled with the nature of the mineral assets in the portfolio, shape the potential overall exploitation trajectory.
Typically this constraint manifests as capital availability (based on sustainable growth and necessary return on capital) and the inability of the market to absorb increased production volumes without significant reductions in metal prices.
Within this context the business plan portfolio, thus comprises those investment centres which meet a value maximization objective within the strategic constraints. Optimization techniques can be used to enhance the value of the business by maximizing value associated with the flow of metal through the different elements of the value chain. The key challenge is to simultaneously optimize elements of the value chain rather than to optimize component parts in isolation from the remainder of the elements.
Enterprise optimization is therefore based on building an integrated geological, mining, processing and market model which allows optimization of variables along the value chain.
This allows development of strategic long term plans that are optimized on a value chain basis using mineral asset portfolios coupled with existing and planned infrastructure (mining, process and transportation). One of the key objectives of the strategic long term planning framework is to create alignment of activities across functional groupings and along the company value chain. This is facilitated by the integrated process and dependencies created between the business plan and resourcing of the various support functions. The operating activities are mining and process, underpinned by project and engineering execution. The related operating activities of process and projects are structured and optimized to match the anticipated strategic long term plan (SLTP) production profile. Process capacity is designed and implemented in anticipation of the aligned mining production profile developed in the SLTP. Projects necessary to the SLTP are then optimized, engineered, and executed according to the SLTP timing requirements. Similarly, the support functions of human resources, finance, engineering, marketing, and corporate affairs create capacity and capability to allow effective execution of the SLTP.
Consideration is given to installed capacity for each of the key process elements such as concentrators, smelters, and refineries. Capacity decisions defined during this process then influence parameters applied in the global assumptions where relevant.
Decisions on installed capacity associated with the final business plan then influence staffing structures, operating cost, and capital (project and SIB) requirements. Each mineral asset has, by virtue of its long term plan, a sequence of projects that require execution, on a timeline, to deliver on the plan. Opportunities may exist to smooth capacity requirements through outsourcing, depending on the overall business model applied. Staffing and operating cost is determined by the capacity required to execute the project portfolio, while overall project capital is defined by the project portfolio in the business plan. To allow execution of the SLTP, critical infrastructure in the areas of electricity supply and distribution, water supply and distribution, and transportation systems is necessary. This infrastructure has long lead times and requires engagement with governmental structures and communities for approval and execution. An interactive long term consumption estimation model should be constructed to forecast average power and peak power requirements based on production profiles.
An integrated power supply and distribution strategy can then be developed that integrates anticipated utility power supply profiles with anticipated energy savings, self-generation requirements, and any shortfalls to be supplied from independent power producers. A water strategy plan that considers existing supply, potential storage facilities, and inter-basin water movement should be developed.
Maintaining a close relationship with Government in the development of the medium- to long-term water strategies to avoid competition for water resources is crucial. The overall water strategy should be fully integrated with provincial and municipal development plans. Maintaining a close relationship with Government in the development and integration of the medium- to long-term transportation strategies is crucial, as substantial portions of transport infrastructure can be dual-use and are often in public space. The strategic long term plan provides the basis on which social and labour plans and environmental management programmes are structured to ensure alignment with overall business objectives.
These inputs are integral to the value-based management approach and definition of metal pricing in the world view or scenario development that defines the global assumptions.
The structure of these contracts (volume, price, delivery, form) is influenced by the forecast availability of metal arising from the business plan as developed through the SLTP. Mining projects are invariably long lead time, high capital requirement entities requiring cash flow management over extended periods. One of the key objectives of the strategic long term planning framework is to create alignment of activities across functional groupings and along the company value chain. Supporting capability plans are aligned with the business plan requirements and resourced to ensure timely delivery of capacity and capability as necessary. It is a logic construct that translates into a defined outcome?the business plan, through a series of repeated actions, using a standardized set of tools and techniques.
It creates discipline and structure to allow shared understanding of the opportunities and challenges facing a mining and metals company. The framework provides the basis for effective management of large, diverse, complex, mineral asset portfolios while creating shared understanding and a common language. The concept of project value tracking and its application in strategic mine planning at Anglo Platinum. Proceedings of the Second International Seminar on Strategic versus Tactical Approaches in Mining, Australia Centre for Geomechanics, Perth, Australia, 8-10 March 2006.

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