A good business strategy defines a business, its key stakeholders, what it brings to the market, and how it will deliver that product or service. A strategy sets the approach and direction for achieving your vision.

Throughout our experience, we’ve realised that standout owner-managed businesses not only have a well-considered business strategy that evolves overtime, but they also ensure it’s understood across the business and intrinsically linked to specific KPIs. Doing so allows every part of the team to understand their role in the business and how it contributes to the common vision. It empowers employees to seek ways to add value.

However, you’d be surprised how many clients we see with no written business strategy. It’s these same business owners who are struggling to realise their goals. The absence of a strategy can have a flow-on effect throughout the organisation that can inhibit future growth. It can create problems with funding, structuring, systems and the owner’s personal wealth.

The tips below will help you develop a robust written business strategy which will increase the probability of your business’ success.

1

Understand your current position

Assessing the current state of your business is the first stage of developing a robust written strategic plan and there are several tools and techniques that can assist.

SWOT analysis – The starting point for assessing the current state of your business is a SWOT analysis. SWOT stands for strengths, weaknesses, opportunities and threats and analyses the business regarding each of these considerations. This will highlight the areas that the business should be able to capitalise on while at the same time identifying risks that should be addressed and considered as part of the growth plans.

Benchmarking – This can be a valuable tool to understand how your business compares to similar businesses in your industry. Benchmark data is often available from your industry association or can be purchased from consultants and commercial suppliers. Understanding where the performance gaps are in your business compared to that of your peers will help with identifying the key areas of focus.

Market research – This is a powerful way to assess how your business is viewed by the market as well as your customers. Is your perception of where you sit in the market similar to what the market research is highlighting? Listening to your customers and understanding their needs and objectives will also assist with planning or designing your future products and services and considering how you may wish to interact with customers.

During this initial research phase, you should also be considering whether there are any trends in your recent trading history. What is that telling you about your customers? What is happening to your margins? How are we trending and what areas are worthy of focus?

2

Develop clear business goals

Having assessed how your business is currently placed, the next step in positioning for growth is to develop some clear goals that you would like to achieve. These might be broken down into key areas as they relate your business such as customers, products, employees, marketing, etc.

The goals should also be SMART; that is Specific, Measurable, Achievable, Relevant and Timely. It is our recommendation that you have 2-3 goals for each key area and then focus on achieving these goals. The more you have, the harder it will be to maintain focus.

Also important is ensuring you define which measures you are tracking your performance against – these Key Performance Indicators (KPIs) will assist you effectively measuring progress towards your goals.

3

Define the strategies you need and your action plan

Once you’ve identified the goals, you should identify the strategies that you intend to use to achieve each of your goals and what support you will require. This part of the process often takes time. Identifying the goal can be easy in theory but where it gets tough is identifying the strategies that will assist you to achieve the goal. Having a few clearly defined strategies is crucial to maintaining focus on achieving those goals that will position your business for long-term growth.

Once the strategies have been identified it is time to develop the key output from the process which is the Action Plan. The action plan should identify the following:

  • Overall goal
  • Strategy
    • Actions required
    • Timing
    • Responsible person
    • Resources required
    • Current status

4

Monitor and track performance

Meaningful performance measurement is crucial to providing useful information to stakeholders including boards, investors, potential buyers and lenders. Measuring performance also enables you to monitor the speed of growth (or decline) and doing so regularly can help to protect your business against any otherwise unforeseen issues. To measure performance across different areas of the business, you should develop relevant Key Performance Indicators (KPIs). For example, KPIs that track business development could include number of referrals, number of new customers making enquiries, and number of media requests. KPIs also allow for more in-depth reporting of your business’ performance and greater visibility over any areas that might be lacking.

Once you’ve developed your KPIs, it’s important to assign ownership to different departments and communicate your KPIs to employees so that they understand what’s expected of them and what they need to monitor.

Finally, you need to track your KPIs and keep a record of your results so that you can compare periodically and identify profitable times and external factors that might impact on sales.

Other key considerations to support the strength of your strategic plan

Utilising technology for the needs of your business

Staying current using the latest technological developments, such as cloud accounting, that suit the specific needs of your business, ensured that your business’ financial systems are as efficient as possible. These technologies provide you with the timely, accurate information you need to run your business.

Maximising your team’s potential

People are central to a successful business. Consider reviewing your remuneration strategy and implementing employee incentive schemes to ensure your key people are rewarded. Also consider any skills and coaching requirements as well as anticipating any leadership changes so you can develop effective succession strategies.

Advisory Boards

Advisory Boards may also be a consideration for emerging businesses. Establishing an Advisory Board with the right advisors, can provide you an independent view of your business and a place to discuss issues on a routine basis. A good Advisory Board is comprised of people with different skills and backgrounds for diversity of opinion.

For tailored advice from our Business Advisory experts on developing a business strategy no matter what your goal, contact us today.