No matter what the size of your business is, you simply cannot achieve your growth and productivity milestones without a sound and well thought out business strategy.
When it comes to small-sized businesses, having a sound business strategy is even more crucial. These businesses simply do not have spare capital or cash to burn; they cannot afford to learn through trial and error. One bad investment or decision can threaten their survival; that is why small business owners need to make smart decisions that focus on intelligent investment and growth opportunities, which do not dry the funds, are sustainable, and help the enterprise prosper and grow. This can only be achieved with the help of a business plan that lays out the most efficient path leading to your goals and objectives.
So what exactly is a powerful business strategy?
A powerful strategy…does it mean a strategy that was written by a highly paid technical writer? Is it something that a person with 30 years of experience can only make? Or does it mean a strategy that has all the right business terms and lots of financial numbers?
My answer is a simple one, absolutely not!
So, what is it? I am not going to give you a technical definition; a powerful business strategy is simply the one that understands your vision, helps you achieve your goals and hit all your growth targets.
Why do you need a business strategy?
A business strategy gives your business a direction; it helps you see where you stand and where you need to go and shows you the way to get there. You can invest in the latest technology and hire the best professionals, but to benefit from these resources, get results and grow, you need a strategy.
For any small business owner it is important to have goals and milestones and a business strategy to achieve those goals. One of the biggest mistakes small business owners make is to “wait and see where the startup goes and then plan accordingly”.
Imagine if Jeff Bezos, the owner and founder of Amazon, had decided to go with the flow. Why am I talking about the biggest online retailer in the world in an article about small businesses? Because Amazon too was once just a small business that kicked off in a garage.
With no vision, direction, future growth goals and financial targets Bezos may never have made it out of that garage. Amazon’s growth and its journey is one of the best examples of how a vision coupled with clear goals and powered by a sound business strategy can take you from a garage to across the globe.
Remember, your strategy will have an impact on every aspect of your business; from customer relationship and employee loyalty to your profits and future growth, everything needs to be strategised.
Let’s have a look at what you need to do to build a powerful strategy;
Define a clear mission and vision statement
A mission statement is the core of your business; it tells us what your business is and why it exists. It tells us what products or services you offer; who your target audience is and what value you bring to them. Whereas, a vision statement is an insight into your future plans, where you want your business to go and where you want to see yourself in the market.
Any small business needs to be very clear about what it is and where it aims to go. Why? Because a business has limited capital and it simply does not have the room to invest in any of the ‘maybe we could try this, maybe this latest trend will take us somewhere’ ideas. It needs to know where the money should go and where the growth needs to lead it.
Look at Facebook; it started as a campus-based social network and today that same idea has expanded and transformed a college social network into one of the most powerful companies in the world. The company very successfully defined its vision and mission from the start that defined its goals; Facebook started as a social network, which needed to grow. If you looked at its latest corporate vision and mission statement today, it is an evolution of the same core values.
Your mission and vision lead to a clear and effective strategy that will help you set the right goals.
Define your goals and objectives
Defining clear goals and objectives is an extremely important step because it will help you identify your strengths, weaknesses, assess threats and explore the right opportunities while formulating your strategy. You should clearly define both your short-term goals and long-term goals.
Imagine, you want to design and sell dresses; this would be your small business idea. Now all you need is a plan to execute this idea and to make that plan you need to have goals.
It’s my first exhibition so I would start with 20 casual dresses and I want to make this much profit on each dress. Eventually I would want to open a boutique.
Now you have given yourself a set of goals (short-term and long-term) that will drive all your planning and strategy. Once you set a profit target, you will come up with a pricing strategy, which will determine the type of fabric you will buy, the quality of fabric you will choose and other such factors. All of these decisions will help you create a budget, which would allow you to determine how many people you can hire, which venue you can afford and so on.
What is happening here? Your goals are laying the foundation of your entire business including your finances, operations and human resource & logistics.
A small business without any goals cannot determine where the money needs to be invested, where to look for growth opportunities, where to allocate its resources and what it needs to survive. The success or failure of each goal will help you see where your strengths and weaknesses lie, which would allow you to make better growth and investment decisions in the future.
Assess your current operations, know where you stand
As a small business, this is the point where you analyse your current state of operations. In order to make the right assessment, you will have to evaluate your business’s strengths and weaknesses; identify your current investments and the profits they are generating; determine the gaps and loopholes causing wastage of monetary and manpower resources; weigh your competitors and your current market position and share.
Remember, as a small business owner your resources are limited; in order to survive and grow, you need to make sure these resources are being deployed effectively. Your operations have to be monitored constantly and decisions have to be made promptly. Knowing your strengths, weaknesses, opportunities and threats will help you create a business strategy that targets all these areas and caters specifically to what your business needs.
Remember, a powerful business strategy is the one that shows a great understanding of your business. It should be in sync with your business’ vision and mission; it should be able to address all your strengths, weaknesses, threats, growth prospects based on both internal and external factors; it should understand your market, your market share and position.
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