Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius — and a lot of courage to move in the opposite direction.
— Ernst F. Schumacher
Many online guides about strategy are superficial and difficult to apply to real businesses. It can be a struggle for a business owner to judge the direction of their business based on what common household names are doing.
Another problem that here at ProForecast we face often, is that business will claim to have strategies, but they will be nothing but financial goals and benchmarks. And with no real plan for how to achieve the goals, there is no real feel for what challenges the business will face in order to achieve them.
Aiming to help local and medium-sized businesses we compiled a guide to creating and improving your business strategy. It consists of only 5 tips that are easy to follow and even easier to implement your business strategy.
Mistaking goals for strategy
Chances are your current strategy looks a little like this:
- Bigger market share
- Increasing sales
- Expanding into other regions
- Optimizing ROI
Unfortunately, this is one of the easiest mistakes and the most common one too – mistaking goals for strategy! One has to admit that such list isn’t a strategy. It’s a list of goals. Many will also stretch this to “c’mon guys we are the only x away from reaching our ideal y”. It rarely motivates people and is hardly a strategic push for your business.
Instead, use a strategy technique suggest by Graham Kenny in HBR, which suggest that you should identify your stakeholders, who are they, what do they want from you as a business. What is different about this type of thinking is that a business needs to identify their stakeholders in a fashion that we normally wouldn’t think about in a business or financial strategy. G.Kenny suggests to look at all customers, employees, investors, suppliers, larger communities, and the environment, they are all interdependent and have influence over your business, thus – stakeholders. Thinking this way will give your business a strategic advantage and a better chance at biting a bigger piece of a market share.
Ivory Tower Syndrome
In much of the content we produce*, you will find this tip – involve your whole team! (* you can find it here, and here) Unfortunately, it is still a very common phenomenon in organisations keeping their strategic business and financial planning activity to the top tier. Ignoring all of the knowledge that comes from all your footmen, marketing team, project managers and everybody else in your business isolate you to deal with only top-tier problems and not anticipate any issues from others.
Best plans include knowledge and information from all of the departments. It quotes initiatives for common goals from a variety of teams and incorporates inputs from employees and other key stakeholders are communicated thoroughly and frequently to all parts of the organisation.
Find your silver lining – value and long-term achievements
You should define your company vision.
Many organisations give up on creating a higher value for their business. Commerce common ground is based on world domination. And that’s fine, all businesses have their ideal scenarios, however reverting to the first point, one must think about their stakeholders in order to help them.
To help you create a better long-term value proposition define your business future through SWOT analysis. By knowing your business is now, you can make a more informed prediction for where you can row and what can you do with that growth. Questions such as “Why is this business important?” and “What does this business do best?” are a great place to start. A SWOT analysis can also help you plan for making improvements.
Also, by questioning thing like “what needs more improvement?” and “what more can we do?” will help guide your strategic business plan.
The main goal of a strategic business strategy is to identify potential challenges the business is going to face. Unfortunately, this section is often missed in most of the strategies.
In this unpredictable business, environment managers need to accurately predict the future, those who don’t end up facing significant difficulty to operate, plan and deliver performance. In such a landscape, teams need the most reliable and relevant insights into risks and opportunities that their businesses are about to face.
Such exercises as scenario planning can help with a variety of possible future scenarios for your business based on your forecasts. This information can be used to analyse a current situation of your business against desired business targets and inform your strategy moving forwards or you can use scenario planning to ensure that your business can take whatever might be coming their way.
We cover tracking and metrics again and again on this blog…. So here it goes again!
How can you ensure your business or financial plan is on track? By measuring it! It’s the hard evidence your business is headed in the right direction, moving toward achieving your goals.
Your business strategy should include the list of metrics you want to track. You can divide them into milestones, KPIs or financial goals that you would like to reach. However, they must be measurable!
These milestones/goals/whatever you are tracking is going to be unique to each and every business. They might be tasks or just important events to your business, like loans or investments. If you are tracking more financial and business performance results it might be worth it to shop around for some financial planning software, as it can help to simplify the task at hand.