Grow Your Business: Be Strategic
Dan Arens is an Indiana-based business growth advisor.
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowDavid’s small service business had done fairly well since it was started almost eight years ago. He had taken it beyond the start-up phase, but because of increased competition, he clearly saw sales leveling off, a familiar refrain for many businesses.
The increased pressure felt by David and his business probably wasn’t just because of increased competition. There were many moving pieces that had developed over time as his company went from the start-up trials and tribulations phase to the growth phase. Technology had changed dramatically. David saw many of the functional areas of his business (Accounting/Finance, Human Resources, Sales/Marketing, Production/Operations, and Information Technology) in transition.
Fortunately for him, he was able to take a step back and realize that making gut decisions or decisions on the fly were not going to be the way to advance his business to the level he thought it could achieve. He needed a more disciplined and multi-faceted approach. He began to investigate strategic planning.
In the case of many business owners, strategic planning conjures up visions of war rooms, dry erase boards with diagrams, and countless hours being spent on developing a plan that is put on a shelf, never to be looked at again, much less implemented. Further, some business people contend that any kind of strategy can negatively impact the flexibility of a growing organization.
Roger Martin, author of "Playing to Win: How Strategy Really Works," put it very succinctly when he said “In strategy, helpful practice means setting out your logic about a choice in advance — e.g., I think consumers will react in this way, competitors will react that way, we will be able to deliver this and we achieve this outcome — and then watching what actually happens against this predicted logic. This is the only way you will learn; the only way you will figure out whether your logic was entirely sound or flawed in some way. And when I say setting out your logic, I mean actually writing it down in advance, not just thinking it through. That is important because of our human capacity for ex-post rationalizing absolutely anything and everything. If you don’t write down in advance what your logic was, you will find that you will convince yourself that everything worked out the way you thought it would — and you will learn nothing. In golf, your swing coach can keep you honest — no, you didn’t lead with your hands through impact. But in strategy, you need to keep yourself honest.”
The Kauffman Foundation of Kansas City offers an approach to help business people frame their strategy. In order to think strategically, the individual running the business needs to have critical decision making abilities and know where they are taking the company. Simply put, your business strategy will set out how you PLAN to achieve your goals and accomplish your vision, as alluded to by Roger Martin.
Basically, there are three components; your vision, goals and strategies.
- Goals: Should be Specific, Measurable, Achievable, Relevant and Timely. They are S.M.A.R.T. goals. The goals feed into various strategies.
- Strategies: Are more broad based areas of accomplishment.
- Vision: Where you want your business to be at a certain point in the future.
Here is an example:
- Vision: To be one of the best run companies in my industry by 2020.
- Strategy 1: Improve Overall Profitability
- Goal A: Review customers and categorize by all products sold by October 31st.
- Goal B: Identify higher margin product and cross-selling opportunities with existing customers by November 15th.
Each part of the example fits together. Most importantly, it shows how goals feed into a particular strategy and how the strategy aligns with your vision.
The pieces and parts of your particular strategy will result in a directional heading for your company. They will allow you to paint a picture of the future of your business. The more clear and succinct you are in outlining the strategy, the easier it will be to determine whether you are succeeding or not.
From a revenue standpoint, your business will not be able to achieve miracles overnight. The company does not have to be the leader in all segments of your market. It should, however, be able to distinguish itself from competitors.
Consider taking some small steps to define your business strategy. Engage your team and focus on some specific goals that represent a particular strategy and still fit with the overall vision of the company. You might be surprised at the results and how your business grows.