Studies show that companies which have clearly defined and well-articulated business strategies consistently outperform those that do not. How much? How about a 415% advantage in sales, for just one example. So, if you’re really serious about your business’s growth and profitability then planning and developing a solid small business strategy must be at the top of your to-do list.
But what exactly is a small business strategy? And how exactly can it help your business succeed? Just Small Business has a strategy worksheet that can help, but before we look at that let’s sort out exactly what we’re talking about.
What Is a Business Strategy?
At a conceptual level, a business strategy is just a collection of principles that guide decision making within a company. Choose the right principles, pursue them in the right order and stick to them in the right way and you almost can’t fail.
The first point is that a good strategy is one that’s communicated, understood and adopted across all levels of an organization. Towards this, clarity is imperative: an effective strategy is one that sets out a clear roadmap defining the actions people, teams and departments within the organization should make. No one’s contribution, however small, shouldn’t be without its own place.
And implement all this well and a solid small business strategy will steer your business to financial, organizational and social success. But how? Let’s go into more detail. The rest of this article looks at the key things an effective business strategy does.
Strategy Defines Your Big Goal
Setting measurable and achievable goals should be practiced at every level of your enterprise every day. Often these goals are small and inward-looking, they don’t need to be anything more.
But it’s clearly defining your Big Goal that’s essential for big-picture strategy. Just as a journey is best planned with a destination in mind, your business’ success can be best mapped with your Big Goal giving you something to aim for and measure every increment of progress against.
A successful small business strategy helps you identify what your Big Goal is and what reaching it will mean for your business. After all, if you don’t know what success looks like, how will you know if you’ve achieved it?
Strategy Gives Your Business a Clear Purpose
The most successful small businesses fill, occupy and own a specific niche in the marketplace. You’d do well to do the same. Towards achieving this, ask yourself:
- Who are you?
- What do you do?
- Why do you do it?
The answers to these questions make up your business’s strategic purpose.
A solid strategic purpose will inform your operational decision-making and can even boost your workers’ performance. It has been found by researchers that teams which focus on their business’s overall purpose have annual growth rates almost three times that of the rest of their industry.
An effective small business strategy helps you define your strategic purpose by outlining the answers to the big picture questions: who you are, what you’re about and what problem this solves in the marketplace.
Strategy Identifies Problem Areas
You should know what your business does well, but you also need to know what areas need improvement. A solid business strategy will give you the tools to identify problem areas in your current system and the effective strategies you need to brainstorm solutions.
An effective strategy also guides the actions of those in charge of implementing the solutions chosen. If you ensure your organization as a whole is on the same page, then you can work together to effectively combat the weak points.
Strategy Develops Clear Sales and Financial Goals
The goal of almost any business should be profitability, but do you know exactly how many sales you should be making per month in order to first reach break-even and then reach your desired level of profit? So many small business people have no idea.
A small business strategy will put you in control of your business’s finances. It’ll help you set a net profit goal, calculate your average sale value, and work out your ideal sales figure. It’ll also help you use regular profit and loss statements to track your business’s profitability: no more big surprises at tax time!
A solid financial strategy will also help you weather the seasonal highs and lows of your business. Cashflow is rarely a consistent thing, so having a clear cashflow forecast is essential to your business’s smooth operation through the lean times.
Strategy Focuses on Business Growth
At the end of the day, a successful business is one that focuses on growth. Whether your goal is more clients or to specialize your services, a business strategy will help you set milestones, organize tasks, and monitor your progress.
Get Started On Your Strategy Today
The best strategy for your business is one tailored specifically to your circumstances. Our strategic self-assessment tool will help you determine where your business stands now so you can develop a business strategy that plays to your strengths. You’ll also be able to identify problem areas specific to your organization and use this insight to better target solutions.
At Just Small Business, our balanced scorecard approach to developing tailored business strategies will ensure you’re in the best possible position to help your business survive, grow and thrive.