Lots of business owners don’t have a strategy or even a plan. They tend to react more than think ahead and many are so bogged down in day to day operations that strategy is an afterthought.
I do think it’s fair to say that most business owners have an idea of the direction they’re heading, even if it’s only short term. But the larger your business becomes, the more essential it is to have a clear strategy that will enable you to navigate your path in a rapidly changing world.
Here are five really vital ingredients for creating sound strategy:
- Gather your information
I know this sounds dull, particularly for the creative entrepreneurs, but if you don’t have information on what’s happening inside your business and outside in the market, you have no idea what’s really going on. Sources of good information include:
- Client surveys
- Staff surveys
- Management reports and financials
- Competitor analysis
- Market analysis – innovation, different business and delivery models, changing consumer behaviour, market shifts and demographic trends
- Do the analysis
There’s no pint in gathering all this information if you don’t analyse it and don’t know how it all fits together in terms of the relevance to your business.
If you want specific steps on how to do a mini review to analyse internal company information, download the free guide on my homepage called ‘Take Control of Your Business’
- Ask ‘What if?’
You need to ask good questions that resonate with you. For example, don’t ask ‘what if we were to become the number 1 company for X in Australia?’ if that sort of scale and growth is not in alignment with your goals.
Asking ‘what if’ can tease out both the upside and the potential downside, so it’s an excellent tool for scenario planning. Do not underestimate the value of this as it can prepare you to act faster than competitors in an emergency risk situation and when faced with a sudden opportunity.
- Understand that risk and strategy are intertwined
Business strategy inherently has risk considerations. Boards are responsible for overseeing company risk management, risk monitoring and setting the overall risk appetite for the company. Business owners – as directors of their companies – have these responsibilities too.
For example, if your company supplies to major retailers in this rather tumultuous market, it would be foolhardy not to address inherent risks in retailer closures, repositioning, de-ranging products and whole categories, and being disrupted by the physical and online presence of major behemoths like Amazon. To develop a strategy based on a ‘business as usual’ approach would be full of risk.
- Have a decision-making framework
Once you have worked through your strategic planning essentials, you need a calculated way to make decisions based on your company’s most important priorities. This structured approach – a framework – will be your sanity check again and again, as long as you’ve followed steps 1 through 4.