You wouldn't let a contractor renovate your kitchen without a blueprint. You'd waste an immense amount of resources, like time, money and manpower. A business works the same way. A lack of a business strategy can cause you to focus your efforts on the wrong services and products — the ones that don't give you a return. On the other hand, having a solid business strategy in place offers the control and direction you need to make the best company-wide decisions.

Creating a good business strategy is something many of us overlook, for the same reasons we sometimes ignore the instructions before building that piece of Ikea furniture - it takes too much time. You're busy building your business, you don't have time to stop and think about how you're building it. For many fledgling businesses, the hustle takes up most of your time and energy. 

How to Set Your Business Strategy

 

Step #1 - Put Together a Vision Statement

You need to know where you want to go before you can get there and a vision statement can help. A vision statement includes aspirations, business goals and outlines what true success would look like to you. Use data and statistics to come up with concrete goals. Be sure to include a clear mission statement that highlights your company's overall purpose and check back against it to ensure all your other goals align with the core mission.

 

Step #2 - Analyze the Competition

You can start checking out the competition by doing an external forces analysis using Porter's Five Forces. This analysis method helps you look at things like which competitors are out there and how easy it is for new players to enter the industry. It can help you find your competitive advantage. Your value needs to be unique and stand out from the crowd, so you need to know what other companies are doing. Study your competitors to differentiate your company in the services, products and prices it offers.

 

Step #3 - Pinpoint Your Target Markets

One of the key parts of creating a business strategy is being explicit in who you want to sell to. Figure out which markets you want to serve and which ones you may be overlooking, and create a plan to pursue them. Knowing your ideal customer creates cohesion between different departments, like sales and marketing. Clarity helps save valuable resources, like company hours, that otherwise might be wasted.

 

Step #4 - Find New Opportunities

Company growth happens when you identify new segments to pursue. This can be new product lines, services you offer and more. You want to figure out how these opportunities might evolve over time and use data on potential risks to determine which opportunities are worth pursuing. Then plan for any challenges you might face.

 

Step #7 - Test First

Rather than jumping in with both feet, plan to take a small sample and test out an idea first. That way, if the new product line or service is a failure, your losses will be minimal. Although failures are inevitable, this strategy helps guard against large losses on risky undertakings. 

 

Step #8 - Track the Results

No business strategy can be successful without follow-up. Keep track of your goals to see if your procedures are having the desired effects. Set and continue to monitor key performance indicators (KPIs) like revenue per client, profit margin and customer retention rate. Plan to track all of these data points monthly.

 

Step #9 - Share the Strategy

Include managers in the strategic planning meetings. Once it's finalized, send the final plan to everyone in the company. Explain how the moving parts will be implemented and why you chose to do it the way you did so everyone is on board. Also, update any shareholders and stakeholders. Make sure they know the why behind the what inside the business strategy and how you foresee it affecting revenue and company value.  

If you're a solo operation, feel free to share your business strategy with other stakeholders or advisors. That can include your accountant, your financial advisor, your bank and even your customers. Many customers would love to hear your upcoming plans and can help keep you accountable. 

 

Step #10 - Remain Flexible

A business strategy should be malleable. If something isn't working, it's not working — and it's best to admit it. For any ineffective action plan, be willing to switch gears. If your new outreach campaign hasn't given you the expected increase in customer retention, re-examine your strategy and administer change. Don't stick with something if it's failing just because it was in the initial plan. Consider adding an "if - then" strategy to your plan. For example, "if Plan A doesn't proceed to point X by this date, reassess Plan B".