There is an awful lot of confusion about what is (and what is not) strategy. Unfortunately, much of the coverage of small business strategy is way over complicated. In reality, it is simply a guide to how to get from A to B. I suggest that is something every small business needs.
In this three-part guide, I provide a simple framework to follow to build your own small business strategy and plan.
What Is Strategy?
In essence, it’s simple. Let’s take an example. Let’s suppose in the next year you want to publish your first book on Amazon. That is your goal.
To achieve your goal you calculate you will need to write 2,000 words per day, 6 days a week. That is your objective. It is quantifiable and time-limited.
Your strategy is how you are going to achieve that objective. Where are you going to work? What proportion of your time will be spent on research?
Crucially, a small business strategy is also about dealing with obstacles. How will you lock out distractions? If you know you are prone to procrastination how will you deal with that?
Finally, there are tactics. Will you use paper or a computer. Will you use a sign on your door when you are working to prevent the kids from breaking in.
A Starting Point
Rather than sit there and stare at a blank bit of paper start with this – why do you do what you do? If you are a small business owner the alternative would be to work for someone else. It would be a lot more secure, less stressful and it may pay just as much so why don’t you do that – there must be a reason. Write it down. This is the why.
Next, what is it that drives you day to day. Is it family, is it a need to be recognised for what you do, is it self esteem, is it money or is it you have ended up in a position where you have no choice? Whatever it is, write it down. This is the driver.
The final step is to write down these four questions. Two on each side of a piece of A4 paper leaving plenty of space under each question.
- What fundamental product or service do you provide? – The Deliverable
- Who needs that product or service and why? – The Need
- Who else can deliver a product or service that meets that customer need? – Competition
- Given question 3 why should anyone buy from you? – The Core
If answers to those questions come to you immediately scribble them down. If not, it doesn’t matter. Now fold up that piece of paper and take it (and a pencil) everywhere you go for the next week. As you go about your daily business ideas will pop into your head. Pull out your piece of paper and scribble them down under the relevant question.
At the end of the week take out your notes and try to pull them into some sort of order. You should have six headings. The why, the driver and the four questions.
When finished keep that piece of key questions paper close. It is too easy for a small business strategy and planning exercise to wander off track. You have to maintain a focus on the key issues. Keep referring to your key questions paper. It will pull you back to what is important. We will return to deliverable, need, competition and core in Part2 – particularly the core.
Why Geography Is Important
It is important to define the areas you will cover. Do you only operate locally or nationwide? Specifically, what areas do you cover? If you are currently local but you aim to go national that is fine but that needs to be an input to your strategy. The way local firms operate is different from national firms.
Defining Your Strategic Goals
Remember your goal is your finish point. It is where you want to get to. Depending on your circumstances you may need to define long and short term goals. For example, your goal may be to ultimately sell your business and retire. But if you are in your early forties that goal is a long way off.
It is still the long term goal, but it is impossible to plan that far ahead. Therefore, you will also need some shorter-term goals. These should be staging points on the way to the long term goal.
Your ‘Why’ and your ‘Drivers’ feed into your goals. They limit their scale and scope. Check back to make sure your goals match your why and drivers. If they don’t everything else that follows WILL fail.
Goals are more than statements and need some fleshing out. Your goal might be to sell your business but sell it for £1 or £1m? I guess it is the latter. Write your goals with sufficient detail so you can go back to them in two or three years and immediately grasp what you are trying to achieve. You do not need lots of detail (that comes with the next stage – objectives) but you need enough to make it an identifiable target
It is fine to be ambitious but your goals also need to be reasonable. Otherwise, all your goals will do is knock your motivation. Your goal could be to reach £2m turnover in two years. If in the first year you do £10k then all the £2m target will do is knock your belief system and self-esteem.
There might be good and valid reasons why you only do £10K in the first year. It might be part of the plan. Amazon made huge losses early in its history but they had a plan (and investors signed up to that plan). The point is your plan should match with your (quantifiable and time-limited) objectives.
If your long term goals really are long term you will need to break them out into sub-goals. Standard practice ten years ago was to plan for the next five years. Now a realistic target is two to three years maximum. The world moves too fast to realistically plan any further out. Sub-goals should be steps on the way to a long term goal.
What Are Your Objectives
In broad terms what are you going to need to do to achieve your goals? These are your objectives. They must be quantifiable (1000 of) and time-limited (by August 2022). It is best to start with your goals and cascade downwards, defining objectives as you go.
It takes time to complete this process and it is unlikely you will be able to complete it in one sitting. Make a start, then keep coming back and editing over a week or so. Start with a big piece of paper (at least A2) and a pencil and draw out your objectives.
Keep editing until it all makes sense. Don’t worry about how you are going to achieve those objectives, that comes next. As you move through the strategy process you will continually come back and revise the previous step until everything matches up.
If you either get stuck or feel you are wandering off at a tangent refer back to your six questions sheet. This should give you the guidance you need on what is important.
Next comes the interesting bit. There will inevitably be roadblocks that could prevent you from achieving your objectives. How will you deal with them?
What Are The Roadblocks
Many of the standard texts on strategy gloss over this bit (or ignore it altogether). You have your objectives. All you need to do is diligently work towards achieving those objectives day by day and everything will be fine (not). If it was easy everyone would be doing it.
Before diving into the market analysis. You need to take a hard (and brutally honest) look at what could stop you from achieving your objectives. Take a top-level view only at this stage as more roadblocks will drop out as you dig more into the analysis. Many roadblocks will be obvious as you probably bang up against them regularly. Again it can be useful to chew this over for a week or so. Write down each objective and carry the list around with you adding notes on what key issues limit your progress as you go.
Of course, it is important to remain positive and not get despondent about apparently tough obstacles. Against that it is also vital to not gloss over obvious roadblocks to progress. Where you have limitations, accept them, note them and move on.
Knock your notes into a list with the most serious roadblocks at the top of that list. Don’t worry at this stage about how you will deal with these roadblocks, that comes later. Based on the analysis stages (see Part2) your roadblock list could change.
Note: A small charge applies to read Part2 and Part3.
The standard strategy process and why it fails
The market analysis process
Analysis the key steps
Note: A small additional charge applies to read Part3.
The base plan
Look at the scenarios
Medium term action plan
Small business plan template