Say the words “business strategy” and expect some blank stares. The word seems to inspire fear at times because it implies conceptualizing a future or changing direction, both of which require deep thought and careful planning. The reality is that building a business strategy does not have to be an overwhelming process. As Harvard Business School Professor Michael E. Porter said, “The essence of strategy is choosing what not to do.”
Where Not to Go
Another way to say the same thing is that strategy is a decision about what path to take and what path to not take. Deciding which paths to avoid and which could lead to success begins with analysis. A common tool is the SWOT analysis because it forces the entrepreneur to think about what makes the business strong and what weakens it.
It also identifies opportunities that fit the business core competencies. A common mistake people make when building a strategy is not sticking with what the business is best at doing. A family may start a meat-and-veggie restaurant, and a chef might open an upscale steak house. The family is not likely to serve $50 steaks, and the chef is not interested in serving collard greens and country fried steak.
Adhere to the Brand
Strategizing gets much easier when the business adheres to its brand. It keeps the business decision-making on the straight-and-narrow while serving a target market. The family restaurant caters to young families with children and senior citizens. The upscale restaurant caters to city-center Millennial professionals. At this point in the strategizing, the business has acknowledged the brand it wants to maintain and the target market it will continue serving. What’s next?
Well, the brand and the customers will determine what is sold. If the restaurant strategy is intended to grow the business, each of the restaurants will add menu items that will please the target market. An upscale restaurant that serves down-home food is not likely to succeed, while the family-style restaurant that decides to sell sushi is probably going to end up with a lot of stale raw fish.
Sticking with the Core Business
A strategy should not wander from the core business. It should present a new solution to a business problem or market need. When the business plan was originally developed, the new products and services were presented as a solution.
Strategies are developed in order to solve a new problem. Maybe the business wants to increase profitability, increase its market share, introduce new products, and so on. The strategy encompasses:
• Specific goals within the context of the operating environment
• Decisions about what will and will not be done to succeed
• Actions for succeeding
• Management and staff capabilities
• Core competencies
The strategy selected should not over-burden company resources, be consistent with the company mission and brand, and contribute to organizational success. There is no set process for building a strategy. Some say it is mostly common sense, but it is also easy to jump to the wrong conclusions. If that is a possibility, consider getting professional help with strategic planning. The process is just too important to get it wrong.
Illustrative business plan samples
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