I write a lot about business strategy and that it’s important, but I just realized that I really haven’t shared my definition of it.
To understand the term “strategy”, it helps to realize that the term is a shortened way to refer to your business’ “strategic plan,” so whenever I say “strategy” you can replace it with “plan” or “strategic plan” and it will make a little more sense.
Since it’s the way most people talk, though, I’m going to keep on calling it “strategy.”
“Strategy” is usually used in opposition to “tactic”. While a strategy is a longer term plan of what you want your company to achieve and how it will get there, a tactic is a single task, like a photo shoot or an afternoon researching keywords.
Strategy should always come before tactics, because strategy determine which tactics will benefit you most and how you will go about doing those tactics.
A lot of this might feel kind of fluffy or pointless but, I assure you, it’s not. I see companies go out of business all the time because they either had no strategy at all or because they had one but didn’t follow it.
You can tell companies without a strategy. If you belong to entrepreneur groups and see people who routinely ask “is anyone else’s sales down today?”, they are practically raising their hands and saying “I’m making this up as I go with no strategy.” Someone with a strategy would be following a plan already, looking at data patterns over weeks and months, probably not even noticing a single day’s traffic statistics
What is Strategy For?
The purpose of a strategy is to help you write out where you want your business to go. If you just have it in the back of your head somewhere, it’s really easy to forget what you’re trying to do and why.
Your strategy also serves as a reminder later on. When you’re dealing with small details every day, it’s surprisingly easy to forget why you started or what you’re trying to achieve.
Or, as the old saying goes, when you’re up to your ass in alligators, it’s easy to forget you were there to drain the swamp.
When you are trying to make a decision about your company, like adding a new product line or opening a store on a platform, you need to ask “how does this fit into my strategic plan?” If the answer is “it doesn’t”, then you might not want to it.
That’s not to say that your strategy won’t change over time. It definitely will. But it should change because you intentionally decided to, not because you weren’t paying attention or felt like it in the moment.
What Goes in your Strategy
Your strategy needs to have several ingredients in order to help you understand your company’s goals and how you will go about achieving them.
Why am I doing this?
This might seem really simple, but why are you running a business? I know, I know, you want to make an income. But there are other ways to do that.
Why did you pick this type of business to run? What fundamental purpose are you looking for this business to fulfill?
Are you trying to earn an income just for yourself? Do you want to employ people to help revive a town with a declining economy? Do you want a percentage of your company’s profits to go to a cause?
It needs to be something that’s really, really important to you. Otherwise the first time you have a bad month and don’t make any money, you’ll quit the business and go work for someone else.
What is my goal?
Didn’t I just ask that? No, “why am I doing this?” is about you and your motivations. Your goal is about a measurable result you are looking to achieve. This goal is something that, at some point in the future, you can say whether you reached it or not.
This is when you add a number. Am I trying to make a certain personal income, like $75,000 per year for the next ten years? Am I trying to employ 50 people? or 100 people? Am I trying to become the leading seller in the local market?
It’s important that these goals are achievable. These are not wild dreams, because in a couple of steps you will need to outline how you will reach them. Many companies will set three levels goals:
- conservative – what is the bare minimum you would consider success?
- moderate – what do you think you can most likely achieve?
- aggressive – what is the most you think you can possibly achieve?
One thing about goals: they need a timeline. Otherwise it’s just a “someday wish.”
So your goal needs to have a date when you are going to reach it by… and if you can’t, then it tells you that it’s time to close the business because it’s not able to meet its goals.
Yes, your strategic goals are that important.
Who will your business serve?
There it is: the dreaded Target Customer (also known as a persona or avatar).
Yes, you need to know who you’re trying to sell to. And it needs to be more than “moms” or “people who are single or married.”
I’ve written about target market a lot so I won’t repeat it all here.
You need to have a really solid idea of who the people are that your business is looking to serve.
Yes, I said “serve.” You are going to be knocking yourself out making products, marketing to these people, and providing customer service. You will be serving them, like a server at a top-end restaurant. And you need to know your regular customers really, really well. Their names, what they like, what they don’t like, when they usually come in, when their anniversaries are… only then do they give you the best tips.
What does the market look like?
Your plan needs to include analysis of what the current market looks like. Who are the major competitors, what companies are growing, what companies are shrinking, and why are those changes happening?
This section usually includes a SWOT analysis, which stands for:
- Strengths: things your company is really awesome at and other competitors will fear you for it. These are also called “competitive advantages.”
- Weaknesses: things your company needs to be good at but it isn’t, so you probably need to invest in improving them
- Opportunities: things you could do that will help your company get ahead of the competition.
- Threats: things your competition could do that will help your competition get ahead of you (note: to your competition, these are “opportunities.”). This section can also include environmental variables, like large-scale economic changes (like import tariffs or increasing unemployment) or a change of tastes (like if you make breakfast cereal and everyone is going low-carb).
What you plan to do
You’ll notice that the description of what kind of product or service you offer comes pretty late in the list. That’s because that is the solution. And you need to understand everything above this (also known as “the problem”) before you can come up with a solution.
If a market is completely saturated and there are tons of new competitors joining every day, then don’t be just another business in the same market! Come up with something else or come up with a new way to offer it. If you’re going to claim to be creative, don’t tell me that you best express that creativity by making the same thing as 87 other people.
This section usually includes a list of product lines and how they will stand out from other products on the market.
How you’re going to do it
Finally, we get to a section on “how.”
This is when you get into some details, such as:
- how you will test whether anyone likes the product
- how you will make the product
- how you will price the product
- how you will market the product
- how you will provide service and followup to customers
- which eCommerce platforms will you sell on
- how will you drive traffic to those platforms
That’s not an all-inclusive list. It’s just to get you started.
The Mission Statement
Most strategic plans include a missions statement.
This is a short paragraph that summarizes the goal, values, and purpose of your company.
I would write this last, since many of the items above will influence what goes into it.
The nice thing about it being short is that you can print it out, frame it, and hang it over your desk to remind you of what you are trying to achieve in your business and why.
How Often Should I Work on Strategy?
As you can probably tell by now, your strategic plan will be a pretty large document and it can be pretty painful to revise the entire thing.
Every quarter, I would recommend at least reading it over and evaluating the Market Conditions.
Once a year, I would recommend reading over the entire thing and considering which parts of it you want to change. No more. No less.
Less often than that could mean the market is evolving faster than your business is and you could get left behind.
More often than that could be a sign of a lack of the discipline and focus needed to prove to a market that you care about them and you’re not just chasing fads.
It’s a good thing to have rough ideas for three, five, and even ten years included in your strategy. Again, so you think it through a little, write it down, and can refer back to it later. You can also adjust those goals when you review the plan each year.
Congratulations on making it this far. Seriously. I threw a few serious body blows at you and I’m sure some of it was hard to hear.
This article is only the beginning. I’ll be posting more on strategy as time goes on.
I also highly recommend my two articles that relate to it:
- Your external, customer facing strategy for a successful Customer Journey
- Your internal operations strategy, which has a ton of tasks to keep coordinates
If you enjoyed this article and would like daily content to help you improve your business, join the WaltzWorks Facebook Group (be sure to answer the survey questions to get in).