Guide to writing a Business Strategy
Having a well-defined business strategy is vital for companies of all shapes and sizes. Regardless of whether you are a start-up or a multinational corporation, growing a business can prove to be very challenging.
While it is important that you have a very clear idea of the direction in which you are heading, the rest of the stakeholders in your business also need to understand what your final goal is, and how you plan to get there. And this is what a business strategy helps you achieve. It essentially sets out all the objectives in a very consistent manner.
Basic Components of a Business Strategy
Often, the toughest part of creating a business strategy can be deciding what goes into it. Since every business is different, every business strategy is also different and may have different components.However, there are certain basic elements that your plan should have in order to ensure you embark on the path to success. Your business strategy will include:
- Company Mission Statement– This clearly mentions what your company is attempting to achieve. The mission statement sets employees on the right path and helps in internal decision-making. With reference to external parties like your customers, partners,andinvestors, the mission helps inspire and motivate them to take action.
- Goals-Every successful company sets goals and strives hard to achieve them, making goal setting a vital aspect ofyour business strategy.
- Elevator pitch-This is a depiction of what your business’s detailed turnover and profit are. It’s important that nothing be overstated or exaggerated in the pitch. However, it’s also the time to dream big. Create a plan of where you want your company to be in the next five years. Again, it’s very important to be realistic and set achievable targets.
- SWOT Analysis (Strengths, Weaknesses, Opportunities & Threats) –When you map out a strategic plan, it gives you an idea of which opportunities will help you achieve your business growth goals. You will also be able to determine whichstrengths you need to focus on in order to improve thechances of success.
- Key Performance Indicators (KPIs) – A great business willalways focus on and understand their KPIs and metrics. Regular measuring and tracking of KPIs giveyou a clear idea of how your company is performing, allowing you to make adjustments as required.
- Target Customers-This section is focused onidentifying the needs and wants of each of your targeted customer groups. You can then center your marketing efforts on these audiences, which will give you a higher ROI on the efforts and expenditure you put into it.
- Industry Analysis– While this doesn’t need to be a detailedreport of the workings in your industry, conducting an analysis helps you determine whether there is scope for expansion. If you feel that a particular business niche is plateauing, you might want to focus on identifying newer growth opportunities and diversifying.
- Competitive Analysis & Advantage– Like your industry analysis, this competitive analysis need not be a detailed report that lists every aspect of every single one of your competitors. But it should make note of their strengths and weaknesses. Use this information to determine how you can develop new advantages based on what your current competitive advantages are.
- Detailed Marketing Plan– It’s a good idea to craft a comprehensive marketing plan that outlines exactly how you will attract new customers, convert them and enhance customer value in the long term. Your strategic plan should have a detailed summary of this marketing plan.
- Team-In this section,you need to list down names and designations of all your team members. This will give you a better understanding of which individuals you will hire over the course of the year in order to achieve your goals.
- Operations Plan– This will help you work on all the goals and opportunities and transform them into reality. Here, you will identify which specific projects comprise the broader goals and the steps you will take to complete these projects. Map out every single initiative; it will ensure you know exactly who will be spearheading the project and when it will start as well.
- Financial Projections– This is the very last section of the strategic plan and financial projections helps in a number of ways. You can assess potential results by using a detailed financial model that outlines every business opportunity you feel is worth pursuing.
Once you have determined which these are, the financial projections will help map out the goals. For instance, you will have a clear idea of what your next month’s target is and how many customers you would need to attract in order to achieve it.
- Executive Summary- This component is a summary of all the other sections. It is an important part of the document as it helps investors, advisors,andemployees understand and quickly support it. It gives all the stakeholders a view of what’s included in the strategy.
From this strategic plan, you can then craft a detailed business plan that details exactly how the company will achieve all its strategic goals. An established company will rarely ever craft a business strategy& plan from scratch. This strategy is generally drawn during the inception of the business.In simple words, a business strategy is a pathyou follow to grow your business; and the future success of your company hinges on how well this is crafted and followed.
How Often Should You Write a Business Strategy?
When you have a very clear view of where you are, it gives you a strong point to move forward from. You can use this strategic planning process to help you look outside ofyour business’ existing operations, diversify, and expand your reach into areas that will give you the scope to up your profitability and improve your bottom line.
However, you’d also need to review the strategy regularly to ensure it’s relevant to your company’s capabilities and the existing market conditions. A business strategy should be written seriously only every three years.
Most companies write a five-year vision statement, which acts as the foundation for the three-year strategy. A one-year business plan is then generated from it. Some other triggers that may require you to refine or review this strategy include:
- Regulatory changes
- Market disruptions
- Concerns regarding your company’s performance in comparison to your competitors
- A new acquisition
- Change in chief executive
Business Strategy-Other Aspects To Keep In View
Now that we have a better understanding of what a business strategy is, let’s take a closer look at some more important aspects of it.
Having an informative & consistent business strategy document is vital. However, what you do next with it, is equally important. It doesn’t make good business sense to create a strategy that will just like in some storage room gathering dust year after year.
While feeding into your business plan, this strategy has to also be clearly communicated to your company’s management team. It needs to filter down to all your employees so that everyone is aware of what role they play in helping your company achieve the outlined goals. Not every employee will receive the entire strategy document.
Specific sections might be circulated to various groups of people, depending on what their job function and relationship to your company is. Regardless of which sections different people see, each piece needs to have a consistent story. The manner in which you communicate this will depend on who your audience is. However, at the end of the day, everyone needs to be on the same page, telling the same story.
Why Is Having a Strategic Plan Important?
Many business owners wonder whether it’s really beneficial for them to spend time and effort in crafting a strategic plan. There are a number of reasons why a strategic plan is important:
- A well-researched and detailed strategic plan is the basis if your business’ growth.
- When your business operates seamlessly and reduces or avoids competition, you will find that you are able to move more easily into expansion mode.
- A clearly stated mission allows your business to move forth very efficiently and achieve your goals.
- When your employees have a clear understanding of your business threats and opportunities, they can focus on searching for relevant services and products and relevant outlets.
- When all the staff members have the resources and time to contribute to the overall success of your company, you are more apt to reward them for their efforts. This goes a long way in inspiring and motivating them to perform better, which has a positive impact on your profitability.
An easy-to-follow and concise strategic plan will help keep your business on the right track through any unprecedented or expected changes that can impact you. This plan helps reduce confusion and minimizes losses by creating highly organised and seamless workflow processes. What’s probably more important is that once this plan is in place and everything is mapped out well, you won’t find it challenging to find future success.