Just because your business is small (at the moment), it doesn’t mean that you should think and act small. I’m not suggesting that you rush out to find a smart new office with an impressive boardroom or set up branches across the globe. Rather, that you think like a large corporate in terms of setting your strategic direction, developing your business plans and monitoring your progress.
This may seem like a luxury that you can’t afford, especially as you’re running round trying to keep customers happy, your business afloat and creditors at bay. But that’s even more of a reason to take a step back and assess where your business is heading.
Having a clear strategy makes life easier. By providing a framework, it allows you to make decisions more quickly and with a consistent view. And, with your team on board, you will all be pulling in the same direction.
So how do you draw up a strategy? Well, it doesn’t have to be a long, painful and expensive process. You and the key members of your team know your business better than anyone, so an open discussion between yourselves is a good way to start. You may wish to invite a facilitator to challenge views and make sure that all ideas are brought to the table.
You are looking to set out what you want to achieve, why you want to achieve it and how you plan to achieve it. That sounds pretty straight forward, but it is important to make the strategy as clear and precise as you can. A good way to assess whether your strategy is clear is to consider it in the context of different scenarios or decisions.
For example, a business may come up with a strategy statement “to double turnover so that we are larger than competitor X and to achieve this by increasing our customer base”. Let’s test this out with some questions:
Depending on the answers, the strategy statement may be tightened up or changed.
It may be that a loss making contract is acceptable if it helps them to become the largest player in their regional market, opening up greater opportunity. So the strategy could be rewritten as follows: “to become the dominant player in the regional market as this delivers significant benefits in terms of bidding for contracts; to gain this position we will increase our sales force to grow revenue and we will actively seek to heighten awareness of our brand.”
Alternatively, a loss making contract may be unacceptable and competitor X is being used solely as a benchmark for growth. The business owners are interested in boosting profit to sell the business in three years’ time. So here, the strategy may be rewritten as follows: “to grow profit from £x to £y in three years to increase the sale value of the business; this will be achieved by growing profitable revenue and tight cost control with minimum investment for the longer term.”
So, unpicking the reasons behind the initial strategy statement has led to two very different business approaches.
Having established what you want to achieve, why you want to achieve it and how you plan to achieve it, the next stage is to draw up a three year plan.