How to Define Your Business Strategy
As you start and grow a business it is important to spend time thinking about your business strategy. Think of the business strategy as your map — with it, you’ll determine the direction of your business and what you want it to look like in the future.
By clearly defining the strategy, you’ll have the guidelines and structure to develop your business or growth plan and achieve your business goals.
Remember, you cannot be all things to all customers. You do not have to be the market leader to compete successfully, but you do need to focus on your company’s strengths to find a way to differentiate from other competitors.
DEFINING YOUR BUSINESS STRATEGY
Once defined, your business strategy sets priorities for the company and management team and helps you attract and retain the talented workers you need.
Although individuals in your company may focus on different priorities to accomplish specific tasks, these priorities should not conflict with the overall strategic direction of the company.
Your business strategy can be defined in either several paragraphs or be written as a set of strategic statements. It is a summary of how the company will achieve its goals, meet the expectations of its customers and sustain a competitive advantage in the marketplace.
Your business strategy should answer these questions:
- Why is the company in business?
- What is our core strength?
- Which customers should we continue to serve or start serving?
- Which products/services should we stop offering, continue to offer or start offering?
- Why have we decided on these strategic directions?
Answering these questions will help you establish your strategic priorities. After all, you can’t be all things to all customers — nor should you be!
You don’t have to be the market leader to successfully compete, but you do need to focus on your company’s strengths to differentiate your business from the competition and help customers understand the value you offer, including features and benefits.
Let’s dig into two examples that not only showcase a business strategy in action, but also highlight the difference between a business strategy and business goals. In continuing with the “business strategy as a map” analogy, goals are the journey — in other words, how you’ll follow the map to reach a destination. If you want to prioritize these two elements, it’s often easier to develop your strategy first, then outline the goals that will help you achieve that strategy.
EXAMPLE 1: PINNACLE PERFORMANCE GROUP
Pinnacle Performance Group is a consulting company that provides performance improvement strategies, assessments and training programs to mid-sized businesses.
Pinnacle has successfully worked with a variety of service businesses on an innovative client retention process. Some of the most positive feedback has come from accounting firms and financial planners who have used these services.
Like many consulting companies, Pinnacle’s current revenues are tied to the number of hours the consultants can work, and the majority of its clients are located in a four-state area.
The Pinnacle team wants to grow the business. After conducting a SWOT analysis and brainstorming their three-year vision, they developed the following strategy and goals to accomplish them.
Pinnacle Performance Group will offer performance improvement strategies, assessments, training programs and tools to help mid-sized businesses build sustainable futures, increase productivity, and develop staff and customer loyalty.
In addition to continuing its regional consulting services, Pinnacle will:
- Develop a software program based on Pinnacle’s successful client retention process.
- Create a turnkey training program that can be used to help potential customers achieve the greatest benefits from the client retention software.
- Broaden Pinnacle’s distribution activities to market the new client retention software and training program to mid-sized accounting firms and financial planners nationwide.
- Implement a marketing plan to position Pinnacle as the expert in client retention for accountants and financial planners.
- Enhance the value of the Pinnacle Performance Group brand.
- Develop a revenue stream independent of consulting time that will provide 50 percent of Pinnacle’s sales revenue within three years.
- Increase the assets of the business so that in the next five years, Pinnacle could be sold to another company or individual.
EXAMPLE 2: O-FOODS
O-Foods offers a line of organic foods that range from cereal and soups to cheese and chicken. These products are currently sold at three company stores, and those products that can be easily shipped are also sold through the O-Foods website. In addition to the O-Foods branded products, they also carry other organic products.
Each of the company stores is located in a town with a major university; both students and working adults interested in a healthy lifestyle are their target customers. O-Foods attracts and retains a talented staff that provides product information along with a high level of service to its customers — creating a strong competitive advantage.
The following strategy and goals were developed based on their SWOT analysis and three-year vision.
O-Foods will provide its customers with the freshest and finest organic food available. O-Foods’ team ensures each customer has an outstanding shopping experience by providing a high level of service and product information. O-Foods will:
- Implement an employee stock ownership program for those employees who have worked for the business for a minimum of one year.
- Develop an employee training program to further enhance all employees’ product knowledge and customer service skills.
- Create a unified look for the stores, the website and the product packaging.
- Design a marketing plan to increase purchases by current customers and attract new customers within the existing target markets.
- Increase operational efficiencies.
- Improve shipping capability so that perishable products can be ordered from the website and shipped anywhere in the United States.
- Develop incentives to maintain high employee retention with a turnover rate of less than 20 percent annually for those at or above the assistant manager level and less than 30 percent for all other employees.
- Build the O-Foods brand.
- Increase profits by 15 percent each year for the next three years.