Developing Practical Business Strategies: A Step-By-Step Guide
Running a successful business generally requires more than a good idea and a good product or service. It requires careful planning, execution and adaptability. To build a solid foundation for growth, a company can employ practical business strategies that enable effective goal setting, efficient resource allocation and successful navigation through challenges.
Without a clear business strategy, organisations can lose focus, waste time and money and struggle to compete.
This guide will walk you through a step-by-step approach to developing a practical business strategy, from setting objectives to monitoring implementation.
Why An Overall Business Strategy Is Important
An effective business strategy can provide direction for an organisation. It can also ensure that all efforts and financial moves within a company align with its long-term goals.
Good business strategies can help organisations make informed decisions, optimise resources and anticipate industry shifts before they happen.
Without a business plan, companies might make reactive decisions and scramble to keep up with competitors rather than being proactive and leading the market.
An effective business strategy typically allows businesses to gain a competitive advantage. Successful companies often use business strategies to simultaneously focus on sustainable growth, innovation and efficiency.
For example, Apple’s strategy focuses on product differentiation through design and innovation. This approach has given them a competitive edge, helping them build a strong brand identity and maintain a loyal customer base, even in a highly competitive market.
No matter the size of your company, having a clear business strategy can help ensure stability, consistency and long-term success.
Creating A Business Strategy
Business strategies aren’t as hard to build as they seem. With tools like the SWOT analysis (that will be discussed later), task delegation and careful monitoring, business owners can create a good business model for the future.
1. Set Clear Objectives And A Vision
Every successful business plan starts with a clear mission and vision based on its core values. This statement defines your company’s strategic direction.
A company’s mission and vision can be better supported by SMART (Specific, Measurable, Achievable, Relevant, Time-bound) objectives to ensure progress can be tracked.
For example, if a company’s vision and mission statement is to become the market leader in eco-friendly packaging, some SMART business objectives might include:
- To reduce plastic usage by 50% within three years
- To expand into five new global markets by 2026
- To use research and development to create a 50% cheaper sustainable packaging alternative
- To increase sales by 20% annually through sustainable product lines
Without well-defined objectives, companies may risk setting vague, unachievable goals that lack direction and measurement.
2. Ensure Employee Awareness
Even the best business strategies are only effective if the organisation understands and supports them. Employees who know why a strategy exists and how they contribute to it will typically be more engaged and productive.
To make sure all stakeholders are aligned, business owners may want to:
- Host regular meetings to communicate organisational goals and updates.
- Use internal newsletters or dashboards to track strategic milestones.
- Train employees on their specific roles in achieving strategic initiatives and success.
For example, companies like Google maintain employee alignment by holding “all-hands” meetings, where management directly discusses updates and strategic goals with employees.
3. SWOT Analysis
A SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis can help companies stay current on their position in the market and figure out areas for improvement.
Here’s an example of a potential SWOT analysis for a coffee shop:
- Strengths: Strong local reputation, high-quality ingredients, increased customer loyalty
- Weaknesses: Limited digital presence, high operational costs
- Opportunities: Growing demand for sustainable coffee, the potential for online ordering
- Threats: Rising production costs, increasing competition from large coffee chains
A SWOT analysis can use data, market trends, market position and the company’s success as key elements to inform a company’s marketing strategy in the future.
4. Task Delegation And Resource Allocation
Once a sound business strategy is developed, businesses can delegate tasks and allocate resources effectively to achieve operational efficiency.
- Assign clear roles: To hit organisational goals, it may be helpful for every department or team member to be aware of their tasks and responsibilities.
- Prioritise critical areas: Invest time, money and people in key initiatives that drive business growth.
- Use technology to optimise processes: Project management tools like Trello or Asana can streamline workflows.
Strategic delegation can help avoid overworking teams and help all resources be used to their fullest potential.
Smaller businesses may wish to apply for business loans to maximise their growth. Lumi has a range of customised loan options that are ideal for small businesses.
5. Strategy Execution
Turning strategy into execution usually requires a comprehensive plan with clear steps, deadlines and accountability.
- Break the strategy into milestones: Define short-term and long-term business goals.
- Assign KPIs (Key Performance Indicators): Metrics to track success, such as sales growth or customer retention rates.
- Monitor progress regularly: Hold regular meetings to review the strategy’s success.
- Adjust based on feedback: Be flexible and willing to adapt when necessary.
For example, Netflix shifted from a DVD rental service to an online streaming platform by strategically executing a gradual transition, analysing customer feedback and behaviour and continuously innovating.
6. Monitor Business Strategy Implementation
Even the best business strategies can benefit from regular monitoring to stay relevant.
- Use data analytics to assess sales, customer engagement, market performance and other tangible data.
- Conduct team meetings to evaluate execution progress.
- Identify slowdowns or roadblocks early and adjust strategies if needed.
By consistently tracking performance, businesses can refine their approach and stay ahead of competitors.
Business Strategy Examples
Different businesses might adopt various strategies to stay competitive.
Here are a few notable approaches that small businesses may want to adopt.
1. Cost Leadership Strategy
Walmart focused on business strategies like low-cost production and competitive pricing. It also reduced operational costs through bulk purchasing and supply chain efficiency, giving it a price advantage over competitors.
2. Differentiation Strategy
Apple focused on product innovation and premium design. They created a unique brand experience that continues to attract and maintain a market of loyal customers.
3. Market Expansion/Growth Strategy
Starbucks expanded into new geographic markets and adjusted its offerings based on the local business environment. They also used strategic partnerships and digital engagement to drive growth.
Conclusion
Developing a strong business strategy is not a one-and-done activity. It’s a constant process that requires consistency, execution and adaptability.
Business strategies can make all the difference by setting clear objectives, involving employees, conducting a SWOT analysis, delegating tasks, executing strategically and monitoring progress.
Whether you aim to be the lowest-cost provider or the most innovative brand, the right strategy can help guide you towards your goals.
Additional resources and working capital can help small businesses follow through with their business strategies. Business owners can benefit from fast, flexible and transparent funding that meets their business’s unique needs.
Visit the Lumi website or contact our Lumi team via phone on 1300 005 864, or email at sales@lumi.com.au for more information on Business Line Of Credit and Small Business Loan options.
At Lumi, we provide small businesses with the best Business Line Of Credit in the market, as awarded by WeMoney Awards 2024. This revolving finance solution provides ultimate flexibility with no ongoing fees, making it a more cost-effective financing option for small business owners.
Your business could also benefit from Lumi Small Business Loans with various features that let you tailor the funding solutions to suit your unique business needs.
