Whether you are starting a new business or building an existing one, building an effective strategy is a must. A strategy will help you to focus more on the long-term business outlook and not just the short-term goals. By definition “business strategy” refers to a roadmap that helps you to achieve your business goals. It puts in place the principles that will define the actions, decisions, and priorities in your business. As such, a business strategy is not necessarily the tactics you need to improve the performance of the business.
Here is how to build an effective business strategy using simple, executable steps
#1 Analyze the Current State
The business strategy mainly focusses on the future. However, before planning for the future, it is important to have a clear understanding of the past and current business performance. Items to consider include customer lists, annual revenues, the average revenue for every transaction, and a review of the most popular products or services. In addition to looking at how the business operates, you should pay attention to customer satisfaction, profit margins, sales processes, employees, and market position. If you have no one to audit and advise on your businesses’ financial health, you can consider fractional cfo services. A competent person/team will help you identify all loopholes in your cashflow and advise what need to be done.
This may require carrying out SWOT analysis. Collect information about what has worked, what needs to be improved, weaknesses of the business, and market opportunities. Also consider external factors like political policies, legal compliance, government regulations, and industry trends. These may either represent business strengths or weaknesses.
#2 Identify Business Aspirations and Goals to Achieve Them
Traditionally, goal setting is meant to help you measure achievements in your business. However, it is never concerned with why and how you do it. If anything, focusing only on the results could make you prioritize business needs over customer needs. What you need is to focus more on the process and purpose instead of results.
But that’s only possible if you set goals and anchor them to an inspiration or business vision. This is an important step in the process of building a business strategy. A business strategy should inspire you to work at serving your customers better. Start by coming up with a vision or aspiration. This should be in line with improving the current business situation. Add to that goals to improve the customer experience and you will have a complete equation.
#3 Mark out Your Target Market Segments
Without proper targeting, you are unlikely to experience any growth in business. If anything your company is likely to suffer from the effects of working with unclear messaging. This will misalign the sales and marketing functions. That is why you need to define the specialty or niche you will be targeting. Mark out the market segments that work well for your product.
In short, you should target the customers that really want and need your products or services. Such customers are likely to stay with you for a long time without thinking of buying from some other business. So, why don’t you work on providing them with value for a lifetime? Another thing to work on is to lower your customer’s buying costs.
#4 Work on Ways to Beat the Competition
Who are your competitors? Unless you surpass and beat them, there is no way you will have a big market share. Your customers need to have a clear distinction between your products and those of your competitors. The first thing you should do is ensure you have a product that really stands out. Customers should be able to think about your product before they consider those from the competitors. Your brand needs to be refreshing, your products differentiated, and the prices affordable for most of the customers.
#5 Come Up with Tactical Plans
Now that you know what you want to achieve, come up with tactical plans. This involves translating your strategy into detailed plans for the short-term. In the plans, you will include actions for the organizational functions and departments. For example, you need to define the production, marketing, and sales departments need to do to make the business better. You may even include the suppliers in your tactical plans. Should they be supplying more or less?
#6 Review Performance
The tactical plans need to be translated into action. But the action can only be measured with constant review of the current status of the work. That way, you will be sure that you are on track to achieving your overall goals. In order to manage and monitor your overall strategy, you need to put in place a whole team. You need people to help you gather information, plan, and prioritize. Find out what’s working and what is not. If something is working, enhance it. For what’s not working, find another way to do it.
As you can see, building a business strategy is a continuous process. There is no stage in the business cycle where you will say you have strategized enough. So, keep going. In the end, you will have a more successful business than you thought was possible.