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
Let’s assume you have an existing business. 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.
Don’t worry if there is some overlap between your why and your driver. All you are trying to do at this stage is to get a basic framework in place you can build on.
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
The deliverable is your core product or service. For example your company could clean commercial and residential properties. If so the core service is cleaning services, there is no need at this stage to break it down any further.
If your product/services are more distinct then you need to perform a separate exercise from this point forward for each. For example you could do house renovation work and mould remediation work. These services satisfy a different customer need.
The definition of your deliverable should be short and succinct. You need to get to the essence of what you do.
If answers to the four small business strategy 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. You may only have one or two bullet points under each heading. That is fine, you don’t need fluff, you need focus.
If you intend to start a new business then the above should be the starting point for your research. The answers to the above questions plus your value chain (see part2) should give you a strong indicator if you have a viable business concept (or not). Your deliverable (including pricing strategy) must be properly defined before you continue.
When finished keep your 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 To Your Plan
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 Small Business 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 probably 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 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.
With your goals in place it’s time to move on to your objectives Part2
Note: A small charge applies to read Parts 2 and 3.
- The standard strategy process and why it fails
- The market analysis process
- Value chain
- Analysis the key steps
- The deliverable
- The need
- The competition
- The core.
- Your position in the marketplace
- Your customer
- Your focus
- Developing a strategy
- Your tactics
- Evaluate success
A small business strategy template.
Read parts 2 and 3 now