9 Crucial Things to Consider When Building a Business Strategy
Apple and Amazon, the two trillion-dollar companies in the world, are known for their superb business strategies and how they tie their strategy to their vision. A well-thought-out strategy is the crux of every successful company. When you are building your business strategy, you need to consider a lot of crucial things. Let us take a closer look at 9 elements that should impact your business strategy.
1. Long-term Goals
By its very definition, strategy is a long term plan. Its purpose is to achieve the company’s long-term goals. A such, you should be crystal clear about these goals and objectives. Without this you cannot build a long-term and realistic strategic plan. Strategy expert Ann Latham talks about the importance of strategic focus and clarity.
What kind of products and services does your company want to focus on? Which markets do you want to dominate and enter? Are there any new activities that you want your organization to be involved in? Questions such as these should be answered before you can create a business strategy.
Some opportunities that don’t exist today may be available in the future. A good business strategy is built by people who can anticipate opportunities down the road. Amazon operated at a loss for many of its initial years (albeit stocks kept rising). But it was part of the plan – the strategy – as Jeff Bezos saw the opportunity and profitability that laid ahead.
You may need to collect more data to support your identification of such opportunities. You should also diagnose any risks you anticipate as you pursue those opportunities. Suitable mitigation plans should be created to address them.
You need to make sure your products and services remain unique with well-defined differentiation. And they should be aligned with your business. When Apple launched the iPhone, arguably its biggest stride in innovation, the company dropped the “Computer” from its name Apple Computer. The new iteration, simply Apple Inc. was perfectly aligned with the strategy of the company to become not just a computer company, but a consumer electronics company.
A competitive strategy is a good strategy. Professor and consultant Enrique Dans highlights the importance of controlling your company’s competitive advantage. If you are planning to enter a market, it’s best to choose one that is underserved (or not served at all), without considerable competition. Being the first one in a market has huge advantages and entering such a market is a good example of building a competitive strategy. It primes your company for building a bigger and better brand.
5. Economies of Scale
Ideally, your business should benefit from economies of scale over time. And a good strategy should account for this advantage. If it works for your business, lower your prices while being innovative. When you offer unique service features and quality customer service, the economies of scale start turning in your favor as you attract a large customer base.
6. Time to Market
Have the build vs. buy debate. If it’s more cost effective to buy part of your products or services, do that. Time to market has a huge impact on sales, market share and profitability. As such it should be given due attention as you create your business strategy.
7. Failures and Risks
No company is without failures. The most successful companies learn from their mistakes and assess all risks when creating a new business strategy. So use your insights gained from failures, learning from your past to improve your future. Consultant Russ Alan Prince breaks down the process of learning from business mistakes for future success.
You need to review and update your strategy periodically. This ensures your strategy is valid and relevant. Market needs and company objectives may change with time and your strategy needs to reflect these changes.
Once you finalize a business strategy, share it with all your stakeholders, starting with employees. Explain how the strategy related to them. Create a separate plan for external stakeholders such as partners, investors, suppliers, customers and industry analysts. Let them know what your company is doing, why it is doing it and how it will affect future revenue and shareholders’ value.
All in all, a business strategy can mean the difference between success and failure. Encourage all your “strategy people” to consider the elements discussed above as you set out to craft a new business strategy. Sooner or later, a well-thought-out strategy starts paying its dividends.
Fatima Mansoor is a writer at Aepiphanni, a Business Consultancy that provides Management Consulting, Implementation and Managed Services to business leaders and entrepreneurs seeking to improve or expand operations. She specializes in business & entrepreneurship, digital marketing, and health & fitness. Her focus is on creating compelling web content for small and medium businesses form diverse industries. She mostly writes for entrepreneurs and marketing agencies across the US, Australia and UK.
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