In any conversation about business, you’re never too far away from ‘strategy’ being discussed. In TV shows like the BBC’s ‘The Apprentice’, you’d be forgiven for thinking contestants were contractually obliged to refer to it in every other sentence. The ubiquity with which it features in such glib conversation, how to build a strategy and then carry it out, is often neglected as a topic for discussion. Usually for fear of stating the obvious.
Defining and executing a business strategy however, is not as straightforward as Alan Sugar’s minions would have you believe. As the contemporary business must evolve with an ever-changing and increasingly digitalised landscape, it’s a concept that becomes more complex and in greater need of review.
In this paper, we will talk about how to define and build a strategy that suits your business model and aspirations, and how to implement it to its full potential.
What do we mean by strategy?
In the American hit comedy Parks and Recreation, loveable buffoon Andy Dwyer uttered the famous line, which went on to become much-used internet meme, “I don’t know who Al Gore is, and at this point I’m too afraid to ask.”
Business strategy is talked about so much, it’s rare you’ll find anyone with the confidence to admit they’d like some clarification as to what it specifically refers to. No-one wants to be Andy Dwyer. Yet, as the world changes, so too must our approach to our strategies.
In rudimentary terms, business strategy defines what needs to be done to meet business goals. It helps you make sound decisions related to such areas as recruitment and resource allocation. While all individuals and departments need to work independently, a business strategy ensures that conflict is minimised between what each individual and department is doing, and how their work impacts the overall direction of the organisation.
Simply put, your business strategy is a summary of how your business plans to achieve its goals, and sustain and improve its position in the industry. This can be a brief, single page of bullet points. It can be a complete booklet that explicitly outlines each step you feel your business needs to take, to realise both its short, and long-term ambitions.
Defining your business strategy
Defining the specifics of your business strategy depends on various factors; the sector you’re in, the scale of your ambition, your initial capital, whether you’re an established business, or just starting out. However, the broader essentials of any good strategy apply to all businesses. Let’s look at some of these essentials, and explain why we think your strategy must include them.
Know your industry before you build a strategy
Your business is part of a much larger, and constantly evolving eco-system. Technologies, innovations, politics, and demographics all contribute to the shape-shifting nature of industry.
It is imperative that you have a deep, intimate understanding of where your industry is at, where it’s come from, and where it appears to be going. This involves doing research. We recommend exploring the following areas within your industry to develop this understanding:
- What have been successful products and companies?
- What have these products and companies done differently?
- Do the banks consider the industry high/medium/low risk?
- What is the demographic profile of your target audience?
- What legislation governs and regulates your industry?
- What insurances do companies require? What are the cost of these?
- According to available research, is the industry growing, maintaining, or in decline? Are there suggested reasons for this?
- How will your product be distributed? What is the most efficient means of distribution?
- Will future staff require particular skillsets? How easy will it be to recruit such personnel?
- Is there expert analysis on the future of the industry? What future innovations could alter demand?
Producing a report based on the findings of this research will give you a much clearer appreciation of the scale of challenge before you. From this position, you can then start building your strategy.
Define your USP
Standing out requires being different. It is vital to both your short and long-term success to define what it is that sets you apart from your competitors. This doesn’t mean your product itself has to be different, but some stage of the customer journey and/or experience needs to be. It could be the level of customer service you provide, the pricing plan you devise, your CSR/environmental commitments, the packaging you use, the type of people you employ, to suggest just a few examples.
The ‘elevator pitch’ is a good way of determining the clarity and power of your approach. If you can’t explain what is you want to do, and how it’ll be different in around 30 seconds, you may be over-complicating things. Test an elevator pitch on a variety of people, from trusted confidantes to mere acquaintances. If they look thoughtfully straight at you, nodding their head, you might be on to something. If they scrunch their face up, and ask you to explain, your idea may need refining.
Once you’ve articulated what your USP is going to be, you need to plan how it will become a focal point of your energies. The more time you invest into perfecting what it is that makes your company different, the more attractive a proposition your company will start to look to customers.
Build a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats)
If you conducted a thorough research of your industry before building a strategy, you’ll have the makings of a SWOT analysis already.
The reason to include a SWOT analysis in your strategy is to help you determine the best opportunities to pursue to achieve your goals, as well as those to avoid. It sharpens your thinking as how best deploy available resources, and perhaps where to outsource others.
It’s worth pointing out that identifying weaknesses shouldn’t be a depressing task. If anything, it should be the most motivating. Discovering where your business might fall short compared with your competitors can give that extra drive to catch up.
Define your goals
Growth and getting rich are pretty much everybody’s goals when they go into business. In order to achieve these holy grails, you’re going to need goals that are a bit more specific, and initially, short-term.
A good way to determine specific, ambitious, but realistic goals is to work out where you’d like to be in five years. Once you’ve done this, you can begin identifying what needs to be done to get there, and work backwards. So, for example, if you were to achieve your five-year goal, what will you need to have accomplished by the first year? Write your answer down. This is now your one-year goal. Again, from here work backwards until you have quarterly, even monthly goals.
This is a vital process to undertake. Not only are such short-term goals highly motivating, they provide a vantage point from which you can review progress. If targets haven’t been met, find out why, and make changes to keep your five-year goal firmly in your sights.
Track your KPIs (Key Performance Indicators)
Defining important KPIs may be something you build into your strategy after a few months, more so if you’re just starting up. During this time, you should start noticing patterns and trends in customer behaviour. Spikes and dips in purchasing activity will more than likely correspond to certain endeavours undertaken (or not undertaken) by the business. Make sure these endeavours are tracked, these are your KPIs.
As the business progresses, more fundamental KPIs like sales, and marketing will become obvious. However, keep an eye on more ancillary KPIs. These can be as seemingly minor as what time of day you make social media postings, or the number of visitors who complete contact forms.
If each KPI is tracked, reviewed, and acted upon, your goals become much more achievable.
Like the SWOT analysis, you should have a good idea about your competitors having done a comprehensive study of your industry.
Look at the established companies, and examine what they’re doing. What is their branding like? How do they use social media? What do they promise their customers they can do? What other companies are they affiliated to?
As so much of our purchasing is now done online, websites are ever more critical. You’ll find that most of your main competitors rank highly on search engine result forms. This is no accident. These companies have mastered the art of SEO (or so have a company they outsource to). Search Engine Optimisation is the process by which websites ensure their content matches the search terms customers are likely to use when looking for a company or product. If you trawl these sites, you should notice certain words and phrases featuring highly in their content. These ‘key words’ and ‘key phrases’ are recognised by search engines, and fire the websites to the top of results pages. Make a note of these ‘key words’ and ‘key phrases’ and use them in your web copy and additional content.
SEO is about more than just a judicious use of words though. Links are also important. Ensure each page on your website links to another, and in blogs link to other websites from where you have gathered information. In time, companies should start linking back to your site, and you’ll notice your website creeping higher and higher up the results pages.
Have a Marketing plan
When compiling your costings, it is imperative a certain amount is safeguarded for marketing. 10% of available capital is a good rule of thumb, but many companies spend much more.
Particularly in the early phases of a business, exposure is everything. More important still, is the right exposure. This is where you need to define who your customers are likely to be, and you want them to be. If your product targets a younger audience, a strong social media presence is an obvious starting point. If your target audience is more ‘hard to reach’, you’ll need to be a bit more creative.
For the best possible results, outsourcing is highly recommended. Marketing companies live and die by their ability to produce ROI with their activities. The initial cost of using a Marketing company might be higher than you’d like, but the exposure you’ll get, and the subsequent ROI makes it a worthy investment.
To minimise friction, it needs to be decided exactly what people’s roles will be, and exactly what they are responsible for. Failing to define roles and responsibilities can easily lead to a free-for-all, and the chaos that can ensue could end your business dream before it’s begun.
Different people have different strengths and weaknesses. Always look to play to strengths. It’s no good having the biggest, most energetic personalities doing the accounts. Have them customer-facing.
Once roles and responsibilities are defined, set targets, and review them regularly. If it becomes clear a certain role might be better being performed by someone else, change things around as soon as possible.
This may not appear to be an important part of a strategy plan, but don’t be fooled. There’s a reason most companies feature them prominently on their websites.
When it comes to internal decision-making and activity, your mission statement guides employees to make the right decisions; decisions that correspond with the goals your company has set out to achieve. They act as a constant reminder of what your company stands for, and its ambitions for the future.
For third parties, such as investors, affiliates, and customers, your mission can inspire them to take the actions you want, and reassure them that yours is a company with an objective and a conscience.
Don’t fall into the trap of thinking a business strategy is project to be completed, then shelved. A good business strategy should be organic, and open to change.
In time, you may find elements of your strategy are no longer fit for purpose. For example, your goals may change, your customer demographic may change, what you are able to offer your customers may change.
Update your strategy as per these changes and make sure you share the new strategy with your workforce.