Updated: Apr 30, 2021
As a business owner, do you usually cringe and shy away from anyone who says the word “strategy” because you think that is for big companies and is not essential to you? The term ‘business strategy’ seems to conjure up a picture of a sizeable overwhelming task that many business owners think is not needed. Many believe that a strategy is something that consultants do for large businesses that generate a lot of paper and sits in the drawer. This belief is not the case at all. Every business must have a strategy that they work against to take their business forward.
A good portion of our business is working with business owners looking for investment or financing for their business and requiring a business plan. In many cases, these are new businesses. Most do not understand that a business plan is the implementation plan of your business strategy, and that must come first. Suppose you have not defined your target market, your business direction, your competitors, what sales you need to make, what marketing you need to generate sales, or how many employees you need. In that case, it is impossible to write a business plan for the business.
Many companies make a lot of money generating a lot of paper that can be confusing to a business owner, but that is not what a business strategy is. A business strategy is how you will achieve your business and personal goals related to your business. In two words, it is your ‘game plan’. Your business strategy is the map the draws on the board to let the team know the ‘what,’ ‘how,’ ‘when’ and by ‘who’ that needs to be done to be successful. When we hear a business owner tell us, “we are just all over the map,” it usually means that they do not have a business strategy in place. To build your business strategy, you need to understand at a minimum these points about your business:
The mission of your business
The vision of your business
Company values and culture
Value Proposition of your business
SWOT of your business
Clear definition of product and services including features and benefits
A defined target market and size (how much is possible to capture)
Pricing model developed that is competitive but allows you to make revenue/margin
Competition and how to sell against them
Best channels to market for your products
Marketing that will provide you with a return on your investment
Resources you need to implement the strategy
Expenses (fixed and variable)
Revenue Sales Forecasts
Financial goals for the next 3-5 years
Metrics to measure success
A business strategy should not remain stagnate, as it is forever changing as your business does. When you make changes to your business, you have to adjust your strategy. A business strategy is usually focused on a 3-5 year outlook and guides you to help you achieve your business goals. Even with a 3-5 year one, things will need to be tweaked here and there.
Businesses with a business strategy from the beginning tend to have a better chance of success down the road. If there has never been a business strategy, developing one becomes more difficult the longer one waits. Change will have to occur if the majority of the items above have not been defined and addressed. Any transition is more comfortable implementing in business before you have employees on board and generate significant revenue.
If you have a business strategy in place and are looking to grow your business, you will want to take the strategy you have now and look at the areas that need to change to meet your business goals. For example, you might add additional channels to market or new products. You need to modify or add items in other areas of your strategy that will be affected and help you achieve your growth.
Business strategy does not have to be four-letter word or be an arduous task. If you are looking for financing and need a business plan without a strategy in place, a business plan will cost you a lot more money. The strategy has to exist before a business plan can be developed. These are two separate engagements. If you do not have a strategy, your business plan will be full of holes, and you will risk not obtaining the financing or investment you need.
We offer facilitation sessions that are 2-3 days in length with pre-work depending on the size/complexity of the business where you walk away with your business strategy defined. We also provide a balanced scorecard with the strategy map as it provides the action plan for what is needed in the business to implement the strategy. We also offer business coaching to help you develop your business strategy for those business owners who want to learn how to do it themselves while being guided by a business coach.