A successful business in a competitive marketplace will likely have an effective business strategy at its core.
An effective strategy details how an organisation plans to compete in its relevant market and intends to scale while generating a return or growing market share. A well-planned and executed business strategy can have a dramatic impact on the potential success of an organisation.
What is a business strategy?
A business strategy is a plan of action to achieve a specific goal or objective. Typically, it will encompass a clear statement of who the customer is, what value they are looking for, and how you will deliver that value in a mutually beneficial way.
It may be as simple as a new marketing campaign or as complex as a multi-year expansion plan. A good business strategy considers all an organisation’s resources and capabilities. It sets a clear direction for how those resources will achieve the desired goal.
There are many different types of business strategies. The best one for an organisation will depend on its specific situation and goals. Some common strategies include diversification, product development, market expansion, and cost reduction. The most important thing is to develop a strategy that supports the organisation’s growth potential and will help it achieve its desired objectives.
It can take time to determine what this strategy should be.
You may need to set new business priorities, outline plans for growth, create a product roadmap or plan your investment decisions. The best way to develop an effective business strategy is to work with a team of experts who can help you assess your organisation’s specific needs.
A management consultant can help you unlock a successful business strategy – read our guide to hiring a management consultant to learn more.
Why is a business strategy important?
An effective business strategy is essential as it provides a roadmap for the business, outlining the necessary steps to achieve specific goals.
When clearly articulated, it helps to ensure that all employees are working towards the same objectives and can be used to improve decision-making by clearly defining the organisation’s priorities.
Finally, a well-crafted business strategy can give a business a competitive edge in the marketplace.
Fundamentally, a business strategy allows successful organisations to meld the decision-making realities of their everyday operations with the idealism of their mission statement. Making sound decisions on how and where to allocate resources is essential. It also provides guidance on project prioritisation, optimisation of resources, and other activities that lead to a positive return on investment.
What to consider when creating a business strategy
1. Identify your vision and objectives
Before creating your business strategy, it’s essential to be clear about your organisation’s vision, core values and objectives.
Start by creating an outline for your organisation’s long-term future – aim to be realistic but ambitious. Be clear about what type of products and services you will offer and identify answers to the following questions:
- Who are the target customers? What need are you addressing, and why should they buy from you?
- What is the target market? What are its characteristics?
- Who are your competitors? What are their strengths and weaknesses?
- Is there a gap in the market your business could fill?
Translating those insights into a strategic vision can provide a much-needed north star for the strategy. It can help you formulate goals, processes and go-to-market approaches to support growth.
2. Conduct a SWOT and PESTLE analysis
SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats.
It is often used in business and marketing to help assess and evaluate a company or product. The idea behind SWOT is that you can make better decisions about the future by understanding the internal and external factors that can affect a business or product.
Strengths and weaknesses are internal factors, while opportunities and threats are external. Some common internal factors that might be considered strengths or weaknesses include a company’s financial stability, reputation, customer base, and ability to innovate. External factors include the overall economic climate, the competitive landscape, changing consumer trends, and new technologies.
One of the critical benefits of SWOT is that it can help you identify potential threats or opportunities early on. This can allow you to make changes to your business or product before they have a major impact. SWOT can also help you better understand your customers and their needs. By assessing your company or product using SWOT, you can make more informed decisions about its future.
PESTLE is an acronym for Political, Economic, Social, Technological, Legal, and Environmental.
These are the six factors that businesses must take into account when operating in a given market. Political factors include things like government regulation and tax policy. Economic factors include inflation and interest rates, while social factors include demographics and consumer behaviour. Technological factors can consist of R&D and the advancement of technology. Legal aspects may include intellectual property rights and employment law, while environmental factors include sustainability and climate change.
You should consider all these factors when formulating a business strategy.
3. Market research and competitor analysis
A deeper understanding of your target market – typically informed by SWOT and PESTLE work – can help you shape an effective strategy.
Competitor research – Competitor research is gathering information about your competitors to better understand their strategies, strengths, and weaknesses. There are a few different ways to conduct competitor research, such as by assessing their website, social media accounts, and any other online presence they may have. You can also look at their marketing materials. You can also examine their sales and growth numbers if you have access to their financial information, such as annual reports or Companies House filings.
Market research – Market research helps you learn more about consumers and the market to make better business decisions. This can include conducting surveys, interviews, and focus groups and analysing data from existing customers. The goal of market research is to understand your customers’ needs, as well as the overall market trends.
4. Set strategic objectives
As a business, it is crucial to have strategic objectives to ensure that you are moving in the right direction and achieving your overall business strategy. Objectives can be milestones and deliverables that are steps to success.
There are a few key things to keep in mind when setting your strategic objectives:
- Use SMART goals: Specific, Measurable, Achievable, Relevant, and Timely.
- Align objectives to your company’s mission and vision.
- Keep objectives realistic and attainable.
- Support with actionable tasks and have a plan for how to achieve them.
- Keep objectives reviewed and updated regularly.
Could your business benefit from some expert advice? Read our guide on 10 signs your organisation should hire a consultant.
5. Define business targets
A business target is a specific, measurable, attainable, relevant, and time-bound goal that an organisation sets to achieve its goals.
Some examples of business targets are:
- Increasing sales by a specific amount in the next quarter
- Launching a new product by a particular date
- Entering a new market
- Increasing market share
- Reducing costs by a certain amount
- Improving customer satisfaction ratings
Targets clarify what the organisation needs to achieve and can help assemble the processes, platforms and people required to achieve them.
6. Create an implementation plan
Transforming top-level strategic plans into actionable tasks for teams and individuals is vital in bringing the strategy to life.
Break down goals into smaller chunks, assigning owners such as departments or functions, and putting KPIs in place to provide localised team goals.
Consider encouraging individual teams to translate the strategy into implementation tasks and plans, setting their targets and assessing what they will change or do to hit them. Consider making KPIs part of a team or individual objectives to provide a sense of ownership of the strategy and foster a stake in its success.
7. Monitor and review progress
Establish KPIs and ensure these are monitored, captured and regularly reviewed. Consider creating an overall strategy dashboard with key drivers as KPIs, such as sales, marketing, customer and operation-related metrics. Departments and teams can create their subset of KPIs, feeding into the overall organisational-wide metrics.
Ensure KPIs are transparent, celebrate success when milestones are met, and ensure accountability for below-expected performance. KPIs should be used to ensure the plan is on track and which parts of the organisation are effective in its implementation.
How a consultant can help achieve a successful business strategy
Hiring a management consultant can be a game-changer for your business, providing you with the expertise and knowledge you need to pivot your business and prepare it for the future.
Management consultants have a wealth of experience and know-how to help you create a successful business strategy, bringing in outside perspectives and fresh ideas.
Find out more from Portevo on hiring an independent management consultant via our consulting marketplace to help you create the best business strategy for you.
