Business strategy development in 5 steps
Business strategy development or strategic planning is when an organization decides how to use its resources and people best to achieve its goals. The team works together to create a specific and measurable action plan, which helps the business operate, innovate, and grow. When developing a strategy, it’s essential to consider your business model and how to involve everyone from the bottom up. This involves ensuring that everyone believes in your mission and vision, which will help them tap into their collective abilities and gain a competitive advantage.
What’s more likely to deliver results, mindlessly charging into a new situation, hoping for the best, gathering as much information as possible, and creating a detailed plan that guides your path?
Option one is undoubtedly more exciting but far more likely to fail miserably. For businesses looking to forge a brave new future, leaving the path up to chance is a terrible idea.
Instead, it would be best to have a business strategy — an action plan that describes where you want to be and details exactly how to get there. Here are five steps you can take to design your own.
What is a business strategy development?
A business strategy outlines a business’s purpose, target customers, and unique value proposition. A business strategy is the foundation of a company and outlines its purpose and approach. It identifies the target customers and the value proposition differentiating the business from its competitors.
For instance, a deli store may serve only locally sourced ingredients to appeal to sustainable-conscious customers who typically avoid heavily processed food. Similarly, a mechanic may use only local suppliers and manufacturing to offer superior service and position themselves against cheap parts made overseas.
Tactics are the specific actions taken to achieve those goals, such as setting up a supply chain (storage, logistics) or establishing contracts with suppliers (procurement, inventory needs).
Why do you need a business strategy?
Starting a business without a clear strategy can be detrimental. While some companies may stumble upon a successful strategy immediately, most require multiple attempts to find the right one. This can result in wasted time and money and even business failure.
Having a solid strategy in place is crucial to the growth and success of your business. It defines your business, informs daily decision-making, and keeps you and your team centered on your goals and mission. Without a strategy, it’s easy to become distracted by every new opportunity rather than focusing on opportunities that align with your goals.
Additionally, having a documented business strategy is essential for fundraising. Investors will want to know your strategy and how your approach to solving customer problems sets you apart from competitors in the market.
How to develop your business strategy
Discovering and documenting your business strategy can be easy with these five simple steps.
Examine the current state of your business.
It’s challenging to plan, and it would be best to have a path forward if you don’t know where you are. Before you do anything else, you should thoroughly assess the current state of your business.
Examine what’s working and what isn’t, the challenges you’re facing, who your customers are, where you sit in the competitive environment, and what opportunities and threats are for you.
- Look at missed opportunities and identify the missing link – was it due to a lack of resources?
- A lack of skills?
- Are you not professionally articulated in your position and business proposal?
Develop a vision statement and plan.
Once you know where you are, you must develop a rigorous statement of where you want to be and why you want to get there. A vision statement helps you plot the future direction of your organization by authoritatively stating your goals and what you want to achieve in the medium to long term. Significantly, it isn’t the time when you should concern yourself with how you’ll realize your vision. It’s more important that you inspire stakeholders and explain, in an ideal world, where you see your organization going.
Example vision statements are here: on the project manager’s Website blog.
Develop a mission statement.
Your mission statement should fit cohesively and align with your vision statement. The former is more practical than the latter, as it focuses on the present and describes a current picture of the company, the challenges it’s looking to help, and why it exists.
You can view a mission statement as the “how” behind your vision statement. It elucidates what the company is doing in the present and why those actions are essential to the company’s future to support your business strategy development.
Identify strategic objectives
You can think of strategic objectives as intermediate steps on the way toward a full realization of your vision statement. You want to set realistic, achievable goals for each department in your organization that drive everyone in the proper direction. These need to be measurable so that you have an accurate gauge of each department’s progress over time.
Typically, you would identify short-term and longer-term strategic goals. It could be a combination of hiring more team members to help you grow your business, moving to a new location, or perhaps increasing your business service offering to allow you to branch out into a different category segment.
You would want to ensure you capture your timescale and a tangible reference (i.e., several new hires or % of sales increase) and have identified the resource accountability for delivering those goals.
Draft tactical plans and performance management.
With your overarching goal and specific, high-level intermediate objectives, you’re ready to flesh out your business strategy development with tactical plans designed to deliver all the ideas you’ve foreseen for yourself.
It would help if you also had management processes to monitor your company’s performance as it executes these plans to ensure you’re meeting the deadlines necessary to hit your objectives. These should be firm but flexible to adapt if conditions require.
Ask yourself, what does good look like to your company:
- Is it customer referrals?
- Return customers?
- What is the size of the order? What is the number of customer complaints?
- The speed to process your accounts receivables
- How you treat your suppliers
- The number of followers on social media
Once you have clarity on these essential metrics, you can link them with your internal operations management procedures and set your management performance reports.
Plan a little, grow a lot.
“Plan a little, grow a lot” is a great philosophy. You can achieve significant growth and success by putting in some effort to plan your actions.
These five steps simplify the business strategy development process and should help you wrap your head around what’s needed when designing a business strategy, but there’s certainly a lot more. Creating an effective strategy requires much soul-searching and can often benefit from outside, impartial help.
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