Some start-ups become money-generating empires while others just remain small businesses. Some ventures sustain while others brutally collapse. At one point their names would be on everyone’s lips, and then they turn into ghost towns. All these successful and failed ventures are divided by a thin line that is drawn by a business strategy. Having a good business strategy will ensure you’re in the safe zone. Whereas a bad one, or no strategy at all will leave you threatened to fall.
If you have a business of your own or are thinking of starting one, you must know the importance of a business strategy. But there is a huge difference between knowing what a strategy is and creating a good one. Based on the book Business Strategy Essentials You Always Wanted To Know by author Callie Daum, this blog will clarify your basics about a business strategy and give you tips to formulate a good one.
What is business strategy?
A business strategy is a blueprint of the course of action an organization must take to achieve its mission, vision, and goals. Business strategy and strategic management are one and the same. Therefore, it involves not only creating a strategy but also successfully implementing it using appropriate management tools.
A business strategy is designed to create value for the company or business. But that value need not only be in terms of sales or profits. A good business strategy also involves ensuring great leadership, communication, and effective management to improve the overall performance of the company’s workforce. A well-thought-out business strategy can be a great tool to push any organization toward success.
How to make a good business strategy?
The 3 key steps involved in creating a business strategy
In Business Strategy Essentials, author Callie Daum pours out her 20 years of experience in project management and strategic development to comprehensively explain what goes into creating a good business strategy. These are the steps that she discusses in her book:1. Environmental Scanning
Understanding your environment is the first and most crucial step that needs to be checked off before making your business strategy. Callie explains that environmental scanning needs to be done for both external and internal factors. External factors involve knowing the industry cycle, market trends, and your competitors. On the other hand, internal factors involve assessing the environment within your organization, such as employee communication, and management activities. A SWOT analysis is an excellent tool that can be used to conduct environmental analysis.
You can use this template to perform a SWOT analysis for your business
Callie’s book has detailed chapters dedicated to explaining internal and external analysis as well as a guide on exactly how to perform a SWOT analysis for your business.
2. Formulating a business strategy
Now that you understand your business environment, it is time to make a strategy that will help your business thrive in that competitive environment. A good start would be writing a business statement or a strategic statement. A business statement involves the following components: strategic intent, mission, vision, and objectives. Though this may seem fairly simple, clearly defining your business's intent and mission is crucial to creating a strategy that will help you achieve your goals.
To create a fool-proof business strategy, you need a thorough understanding of various core concepts like strategy levels, competitor rivalry, behavior, and competitor dynamics which have been explained exhaustively in Business Strategy Essentials.
3. Implementing and evaluating
After creating a foolproof strategy, it is also important to create a foolproof plan to implement that strategy and keep evaluating it from time to time. For smooth execution of business strategy, it is also important to have a fixed structure of organization in your company. This will ensure that there are adequate people in place to make important decisions and execute your business strategy. Business strategy essentials provide thoroughly researched flowcharts of organization structures that are known to work in the real world.
So why do businesses fail?
Answering the question that we first started with is now easier as we know what goes into creating a business strategy. Simply put, drawbacks or poor execution in any of the steps given above will lead to a poor business strategy and a poor outcome. For example, if you miss an important market trend while carrying out environmental scanning, you will miss out on a huge opportunity to make profits. Or if the structure of hierarchy in your organization is haphazard, no action will come to fruition even if you have your goals and strategies in place.
Business Strategy Essentials comes in as a great resource for individuals to understand the core concepts involved in creating a business strategy. It comes in useful for business starters and also those who are looking to expand their business and re-evaluate their strategy. Moreover, it also includes case studies of both successful and failed businesses to really help you understand where businesses go wrong or right and what you need to do with your business. You can also refer to our Business Strategy Essentials 101 to learn about the skills and careers related to business strategy.