11 Steps to Creating an Effective Business Strategy for Small to Medium Businesses

Post by 
Published 
M

any small to medium business leaders don’t have a business strategy. In the early days of a business, it’s all about the product and making sales. We try things, succeed, fail, learn, test and adjust. Repeat. Usually it works. Sometimes it doesn’t.

As businesses scale and grow in complexity, the ability to rely upon sheer determination reduces proportionately, making an effective strategy an essential part of a business’s DNA. The problem is though, that strategy can be a fairly abstract concept that’s difficult to operationalise, and many business leaders don’t understand its value. For many, strategy is the exclusive domain of enterprise businesses.

Nothing could be further from the truth.

So, in an attempt to decode the cryptic and nonfigurative nature of business strategy, we’re going to break it down for you here in a way that’s practical and easy to operationalise. To do so – we’re going to let you in on a well-guarded secret that bridges strategy and real business operations – the Target Operating Model.

Step 1. Develop your Design Principles.

These are almost the operational values of your business. Ability to scale, ability to launch into new markets, new product speed to market, lean operations, agile operations, low-cost base, technology investment, people investment, low-working capital, high product quality. These are some examples of a genuinely inexhaustible list, but they must reflect what you truly want your business to be. We’ve found that having around 5 – 7 design principles is a bit of sweet spot.

Step 2. Understand your own culture.

There are some simple culture mapping frameworks out there that can be knocked over in about ten minutes, such as the Hofested Framework. This is a critical and often-overlooked step in strategy development. Too often, a business will develop a strategy which articulates what they think they should be rather than what they are, either out of ignorance or in the hope that the strategy will change their culture. This can only lead to failure.

Your strategy must align with your culture.

Step 3. Develop your strategic objectives.

Now that you understand your culture, develop a set of objectives that bring your culture to life. Objectives will ultimately be driven by individual organisational culture, so there’s no real formula for establishing these. However, an important objective is a financial objective that should be both quantitative and time-bound – this doesn’t have to be expressed as profit or EBITDA (Earnings before interest, tax, depreciation and amortization) – for a newly established company it could be time to first profit or simply revenue. The important thing is that it provides something tangible against which to both aim and measure success.

Step 4. Understand your customer.

This isn’t just a requirement to get a good marketing strategy but is essential for establishing the correct business strategy. Everything you do in your business should be aimed at delivering to your customer exactly what they need, at the right place and time. Robust customer journey mapping is an important tool to achieve this. This shouldn’t just consider your customer’s buying journey, but all elements of your business. How customers experience your products or services, what they experience after you’ve fulfilled their order etc. This will drive your internal business processes.

Step 5. Map your processes.

I can hear the eyes rolling as many read this, but never understate the importance of having effective processes in place. They don’t have to be super-detailed, or super-rigid or super-prescriptive, but should be appropriately detailed, appropriately-standardised and appropriately descriptive.

Without effective processes in place, it’s exceedingly difficult to either deliver a consistent customer-experience or operate efficiently.

At the end of the day, while it might seem a little reductive, if your business can achieve these two things, it should ultimately exceed.

Step 6. Design Governance.

Again, this might seem like one of those boring things that’s easy to kick down the line, but without effective governance in place, your strategy can easily wander off into the wilderness without you even noticing. The core elements of effective governance are to ensure an appropriate level of oversight and accountability, which regularly reviews progress against the achievement of your strategy and manages risks and issues.

Step 7. Design delivery model.

A delivery model is how your business will deliver that excellent customer experience, and so shouldn’t be confused with a distribution model.

Your delivery model is the interaction between all the elements of your business required to deliver that excellent customer experience.

This should consider elements such as Marketing, Finance, IT, Procurement, Operations and Supply Chain, and how they will interact and integrate. This will spurn a requirement to develop subordinate strategies for each. This is a critical step and can be a little tricky depending upon the nature of your business, so do some research before designing your delivery model.

Step 8. Design Organisation.

Understanding what the organisation required to deliver your strategy looks like, is another critical step, not just for the obvious reasons. First and foremost, it helps you to define your talent acquisition strategy (grow vs buy etc.) based on the skills within your current organisation and those required to deliver the strategy. Secondly, it assists in prioritising your growth agenda. Few businesses have the financial luxury of being able to embark on a wholesale workforce expansion, so identify those positions that will have the greatest impact, are the easiest to acquire or represent a critical path.

Step 9. Design Technology Stack.

In the current era, having a specific plan around your technology stack is critical. Consider basics such as productivity software (word processing and email), more advanced considerations around cloud, CRM and marketing tools, to more complex requirements such as ERP, end-user-compute, centralised-compute, networking & telecommunications, managed print, development and integration. Having a plan before you get underway can pay massive time and cost dividends down the track.

Step 10. Design Information Requirements.

First things first – technology, data and information are all quite separate. Data doesn’t tell you anything until it’s turned into information. That said, identify the strategic KPI’s that will assist you to measure the achievement of your strategy and the type of data you need as the input to inform all of your businesses internal processes. Secondly, identify where data will come from and where it will be stored. Third, articulate how data will be connected and processed to deliver the information you need to make management decisions. In other words, link your data to your strategic KPIs.

Step 11. Develop Implementation Roadmap & Implement.

This is where the rubber hits the road. Develop and categorise all the initiatives you need to do to implement your strategy, and identify the critical path (any sequencing that can’t be rearranged without undermining the value of the plan). Prioritise your initiatives based on how much effort will be required to execute them, and the strategic impact they’ll impart on your business. Identify quick-wins based on things that have relatively low effort, and then prioritise implementation based on the easiest and most impactful initiatives. Identify implementation resource requirements and commence execution of the plan. Remember to ensure robust governance is in place to keep your implementation on track.

So, there you have. That’s how to develop and implement a business strategy.

Sign Up To Our Newsletter

We never share your info. View our Privacy Policy
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Join Our Amazing
Community
THere's More

Post You mIght Also Like

All Posts
Strategy
//

Knowing Where Your Target Audience Goes

The problem many businesses face is knowing which platform has the highest concentration of potential customers. In this article, we’ll explore some simple techniques to find out.
Strategy
//

7 Steps to Unlocking Long Term Value Through Co-Marketing

How to maximise returns in both the short and long-term for both partners and vendors by optimising the strategic approach to MDF.
Strategy
//

Finding your Optimal Marketing Mix

The marketing mix is typically explained through the four P’s which are the most crucial fundamentals to an effective marketing strategy and business growth. Find out how to determine your optimal mix.
Strategy
//

Four tips for upstaging your competition in 2021

By applying these four steps, you can get ahead of your competition and hit the ground running in 2021 to ensure it is your best growth year yet!
Strategy
//

The Formula for Growth Hacking

Growth Hacking is a cascading marketing strategy – creating virality for a business - that starts with a product or service that provides a solution to a problem.

@limehub_marketing