It’s trendy these days to walk around saying that “hope is not a strategy” but I know many entrepreneurs and business owners who say they couldn’t have got very far without hope… me being one of them! Hope is what keeps us doing what we do even in the face of peril… and poverty!
But of course, we need more than hope to successfully build and run a business.
So if hope is not a strategy, what is the ideal business strategy? What is business strategy anyway?
What is business strategy?
If you ask a brand or marketing specialist, they will tell you business strategy is your vision and mission and how you convey your “brand” to the market. If you ask a product delivery specialist, they will say strategy is how you bring your product to market. If you ask someone in a legal or financial field, they will say it’s how you manage and deliver your product/service in a risk-averse and cost-effective way. Pick a specialist in any field and they will have a different view of what business strategy is.
So which is it? Is it some of these things or all of them?
Well, here’s my definition…
Business strategy is simply the means by which a business sets out to achieve its objectives. The method by which you work out your business strategy is your Business Planning Process and the output of your business planning process is your Business Plan document.
This might sound obvious if you’re an experienced business owner or have worked with/in large corporations, but it isn’t so obvious to those startups and small business owners who haven’t and who are not used to thinking in this way.
So actually, everyone is right. The truth is that strategy should touch every aspect of your business: from the outset of you determining your vision and mission; to defining your product/service, your customer and your competitors; to how you will deliver that product/service; and most importantly to how will continue to operate, grow and evolve as a business.
OK. So it’s the means by which you set out to achieve your objectives. Sounds easy… not! Let’s break it down a bit. There are a few elements:
- Define your objectives,
- Define how you plan to achieve them, and
- Define when you’ll know you achieved them.
Define your objectives
Fundamentally, you need to know why you’re in business. What are you trying to achieve? Freedom, happiness, get rich quick, cure cancer, invent something, become famous, etc? People go into business for a million different reasons. If you don’t know why you’re in business, stop everything and work that out.
That’s the first question or your “end objective”, however defining your objectives should include the following considerations as well:
- What is your vision and mission?
- What is your product or service?
- Who is your target market and ideal customer?
- What problem for your customer does your product or service solve? What value does it give your customer?
- Who are your competitors?
So these considerations should bring together your top-level objectives, centred around what you are bringing to the market and who for. In addition to these, you can have specific goals and objectives in relation to other aspects of your business. These are discussed later.
Define how you plan to achieve your objectives
The “sexy” stuff
When defining how to achieve your high level objectives, consider these things:
- How will you communicate your vision and mission?
- How will you advertise and market your product or service?
- How will you reach your target market and ideal customers?
- How will you compete with your competitors?
This is where your branding, marketing, advertising and product delivery strategies come into play. Each one of these needs a considered and planned approach so that you are not only bringing a product/service that will actually add the value you claim but also that you effectively market and communicate that value to your prospective customers.
The not-so-sexy stuff
But it doesn’t end there. Here also is where you make sure that the foundations that underpin the “sexy” or “front-facing” aspects of the business are stable. You should include:
- How your business is structured to enable best delivery, e.g. company vs sole trader, online vs shopfront, home-based business vs office-space, etc?
- What are your processes to produce and deliver your product/service and how do you ensure quality?
- Who is involved in the production and delivery process? You, employees, contractors, external suppliers, etc?
- How you’ll manage your clients and keep them happy, so not only will they come back but they’ll tell their friends about you too.
- Legal and tax obligations, insurance requirements, risk management processes, etc. – the really boring stuff!
The unsexy stuff is… well, not sexy and therefore not fun. It’s the boring side of running a business. But it’s also the nuts and bolts of your business. And it’s where many businesses come undone, because oversights in these areas can be costly, and can really harm your income stream and your reputation.
I’ll be writing more about business operations planning in later blog posts (follow my blog or sign up to my e-list to get notified of new blog posts).
Define when you’ll know you achieved your objectives
This is another area that many small businesses forget about. They define their goals and strategies and then file away their business plan forever. It is essential if you want to grow and evolve as a business to check your strategy periodically. A great way of forcing this behaviour is to clearly set out measures or markers (also known as Key Performance Indicators, KPIs) that will help you decide if you’ve met your objectives.
Set a sales revenue goal per month – that’s the most obvious. Define a percentage growth rate of profit or a reduction in costs per year, if these are areas that are important to you. Set customer satisfaction KPIs. Create a culture of innovation by setting a goal to bring at least 1 new product to market every quarter or year. Set measures that promote your own training and development or those of your staff.
Each business is different and your focus will be different, but KPIs are a great way to keep you honest and force you to check back to your strategy, which will in turn help you stay on track and keep your “eyes on the prize”.
So, as a small business or startup, you might say that all the above is just too hard and not necessary for you. OK, let’s explore that…
So do you really need a business strategy?
We all probably have anecdotal evidence of business owners who came up with a great idea and within a month were operating a business with no real strategy or plan except to keep going and make it through one day at a time. Many of those would have failed within their first year (and we have the stats to prove that – in Australia, that’s 3 out of 5 startups).
But I would argue that those which did make it past 2-3 years may not have seemed like they had a business strategy but in fact they did. It may not have been formalised in a Business Plan document but they would have at the very least planned the bare essentials, i.e. the “sexy” stuff plus the high risk “non-sexy” stuff.
Without these essentials, I don’t know how they would have survived. But hey, if you know of any successful business that got to where they are without a plan, by all means let me know in the comments!
* Images sourced from Death to the Stock Photo and Unsplash.
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About the Author: Angeline Zaghloul is an expert in business strategy, client management and business processes, and is the Principal of Peer Business Consulting, a Sydney-based consultancy providing strategy and operations support to startups and small businesses.
* Portrait by Markus Jaaskelainen.