What makes a good business strategy: 4 secrets every seasoned entrepreneur knows
As London’s premier business members club we have spoken to our some of our members about the importance of a business strategy when setting up and running your own business.
A business strategy is the foundation of any company. It’s what determines the direction and priority for all future decisions. A clear, concise and well thought out strategy can be a real game-changer in an organisation. Especially in the early days, it’s vital to keep all employees aligned on how to achieve growth. So what makes a good business strategy? Having spoken to some of our members, we have put together 4 tips that will make your life easier.
First though, we will look at why you should create a strategy for you business.
Why create a business strategy?
It may seem like a silly question, but why is a defined business strategy important in the first place? Business strategies are what make up the building blocks for an entire business. You need to follow a certain path and stick to those set goals and guidelines if you want to achieve success in any business.
“Without a strategy, companies don’t know what they’re supposed to do or how what they’re doing is making an impact,” wrote Jeanne Liedtka in her book, The Leader’s Guide to Radical Management.
Why is your business strategy important?
Your business strategy has a huge impact on what you do and what decisions you make every single day. It’s what allows you to quickly see what’s working or what isn’t. Without it, you’re in a constant state of chaos. You can’t keep all employees aligned on what you need to accomplish and what’s really important. That’s why it’s so important to have a clearly defined business strategy from day one.
Another reason is that your company needs a vision, mission and values if you want the company to be successful in the long-term. That’s what drives you and what your employees get behind. The support of the entire company is vital for success, so make sure everyone knows what they’re working towards.
4 tips for creating an effective business strategy:
1) Define your KPIs and measure your results
It’s important to know your business’ most important KPIs and indicators of success. That way you can easily identify what’s working and what isn’t, what works well together and what doesn’t.
For example, if one of the KPIs is to improve your conversion rates by 20%, then you should also have a strong idea about what results in an improved conversion rate. You can use A/B tests to help with this.
2) Develop a mission statement and vision with your team
Use your business strategy to define what you’re aiming for as a company. This can be done by creating what’s called an Organisational Statement of Mission, Vision and Values. Use it to communicate what your company is trying to achieve, both now and in the future.
Having this will help management stay on the same page with the rest of the company, what each department needs to prioritise and what you’re all working towards.
3) Define your competitive advantage
It’s important to define what helps your business stand out from the crowd and ensure all team members are clear on this. You can use what’s called a SWOT (strengths, weaknesses, opportunities and threats) analysis of you and your closest competitors to do this.
4) Iterate quickly
Arguably the most important element is to make sure your plan isn’t too rigid. In order to grow, you must be adaptable. You should constantly be looking for what opportunities you can seize and what potential pitfalls there might be. Your plan needs to allow room for this.
By creating a business strategy that allows you to adapt quickly, while still having a clear direction in mind, it will make growth much easier.