Are you a small business owner who feels like you're always putting out fires?
Are you struggling to find time to plan and strategize for your business?
It's not uncommon to feel overwhelmed and underprepared when it comes to running your own business.
Having a clear strategic plan that will help you prioritise, focus and make better decisions is an incredibly helpful tool for a small business owner looking to grow with only limited time and resources.
One thing we often find is that many entrepreneurs have a plan in their head, and they are under the impression it’s good enough.
Quite frankly, it isn’t.
And there’s a number of reasons for that.
Lack of clarity manifests in:
- Poor decision making about new products
- Who to hire
- Where to staff a sales team, and
- What equipment to buy.
When these decisions are made in a vacuum and without sufficient data and context, a management team has to spend a lot of time fixing these mistakes.
This is why the notion that we don’t have time to plan is really just a rationalisation (one could even call it an excuse).
The greater proportion of our time we spend planning (instead of reacting), the less time we waste, and the more impactful our decisions and time becomes.
Other small business owners will rationalise that they can’t plan because the world is a volatile place - and it is.
But the businesses that plan what they can control, are in a better position to react to the things that they can’t.
There are ways to make strategic planning easier for you.
In this post, we'll discuss some tips for small business strategic planning that will help you focus on the most important things that will move your business forward.
What is a strategy, to help small business grow?
The first thing to get right is to be able to answer the question… “what is a strategy?” so you can be sure you are addressing the right questions.
A lot of things get called “strategy”, or “strategic”, but they’re often not.
Strategy is pretty simple really - it’s how you are going to compete against all the options available to your customers in the marketplace.
That means understanding who you are trying to create value for, and how you will create it in a way that will see your business generate good profits.
The Harvard Business Review article “What Is Strategy?”, written by one of the seminal business strategy academics Michael Porter, is certainly required reading for all strategists.
In it, Porter boils down strategy to two very broad options
- Do what everyone else is doing (but spend less money doing it), or
- Do something no one else can do.
Competing by doing what everyone else is doing means, he says, competing on price (that is, learning to be more efficient than your rivals).
But that just shrinks the pie as, in the rush to the bottom, profitability declines for the entire industry.
Alternatively, you could expand the pie by staking out some sustainable position based on a unique advantage you create with a clever, preferably complicated and interdependent set of activities (which some thinkers also call a ‘value chain’ or a ‘business model’).
More recently, there’s been deeper academic thinking on strategy that essentially revolves around three more options for competing in business:
- Doing something new (similar to doing something no one else can do)
- Building on what you already do (applicable to businesses who are already somewhat successful), and
- Being prepared to react opportunistically to emerging possibilities (assumes again, you are an existing business already succeeding at some level).
Personally, I like this summary from Joroen De Flander who emphasises the following points:
- Compete to be unique, not the best
- Compete for profit
- Know your industry
- Make choices - where do you focus
- Say “no” often
- Keep moving, and
- Consider a range of possible scenarios.
Strategy development basics
So how do you clarify your strategy?
There are many ways to devise a strategy, but to save time it helps to work with proven strategy experts and helpful frameworks
A classic approach to developing strategy for a small business, although potentially somewhat simplistic, is covered in the following 10 steps:
1. Define your business goals
Quite simply, if you don’t know what you’re trying to achieve, you’re never going to get there.
Clarifying what your business is looking to achieve from a financial, lifestyle and impact perspective is incredibly useful to ensure you are measuring progress in a meaningful way and that your actions are aligning with the result you really want to achieve.
2. Clarify your strategic environment
Use a SWOT or similar - and determine the key data you need to confirm any critical assumptions.
This is often overlooked but the most powerful competitive strategies are often developed by those who have better insights into key competitive factors such as markets, customers or costs.
Ensuring you have solid data to back your assumptions can mean the difference between a bet on success or doubling down on failure.
3. Outline your ideal target market and customer base
Getting very niche and specific in the targeting of your ideal customer is a powerful way to ensure you are defining a market where you can compete and win.
Not being clear enough on your target customer means you're likely to create an offer that is too diverse, and unlikely to differentiate itself in any meaningful way for the prospects you are looking to bring on as clients.
4. Research the competitors in your target market and what they're doing that's working (and what's not)
Understanding what competition your customers are comparing you against is important to help you understand how you can be different and what unique value you can focus on with your products and services.
If you focus on the same value as your competition you are reducing the available pie rather than building more for everyone.
5. Refine your unique value proposition and the key messages and promises you are making for your customers
Unless your product or service is offering the value that your customers are looking for, you are not going to win substantial business and it will be very hard to grow your small business.
6. Consider collaborators and strategic partnerships to develop that might accelerate your growth
Having the right partnerships - to help secure clients, or to help deliver your products and services - can be a powerful growth accelerator.
7. Create a marketing strategy (including social media, PR and advertising plans) to reach your target customer
If no one knows about you, you are a good secret but you’ll never be a great business.
Having the right sales and marketing strategy to reach your target customers and engage them in a compelling way is critical to business growth.
8. Confirm your financial model makes sense and what resources you need to access to implement your plan
A critical and often overlooked step is ensuring your strategic plan adds up to generate a decent financial return.
Having a good financial model and budget is a critical step to ensuring your plans make financial sense.
At Grow A Small Business, we believe this is so important that we have dedicated coaches available to work with you on this.
Make sure you reach out to our Community to get some direction and help with this.
9. Clarify the risks and obstacles you need to overcome
Everyone will encounter obstacles along the way to implementing your vision.
By proactively identifying what these are likely to be, and considering mitigation plans, you are better placed to steer around these and be successful in implementing your strategic plan.
10. Define the resulting action steps
This is crucial.
Unless everyone in your team understands what they need to do, and how it comes together to deliver the strategy, action is unlikely to result and your plan is dead in the water.
The more clearly you can explain what actions you are trying to coordinate and how they will help your business grow, the better the chance of success
Tools to help you develop your strategy
Now with over 300 casts live, our small business podcast is a perfect source of hearing what other small business owners with at least five team members, use to develop and execute their strategy.
A simple tool we recommend using for small and growing businesses to help you test and document your business strategy is the V2MOM.
V2MOM stands for Vision, Values, Methods, Obstacles, and Measures.
V2MOM is one in a series of cascading goal-setting frameworks.
You can start creating a V2MOM framework by answering these questions:
Step 1. Vision
What does your company want to do or accomplish?
State your vision in precise, clearly written sentences.
A vision statement outlines the current and future objectives.
It is intended as a guide to help you make decisions that align with your philosophy and declared set of goals.
A vision statement describes your purpose, what you are striving for, and what you want to achieve.
The vision is part of the strategic planning process.
It takes planning, time, and consideration.
Vision represents the “WHY” of your actions.
Step 2. Values
What principals and beliefs can help your company fulfil the vision?
For example, employee empowerment, employee engagement, integrity etc
Values help answer the question “why is the vision important?”
The best approach is to make a list of values, and no more than five.
Then rank them in order of importance.
By ranking the order will help identify and prioritise these values.
Not all values are ranked equally.
If every value is a priority, then none of them are.
Step 3: Methods
What actions are needed to meet the goal?
For example, time empowerment, engagement and inclusion to performance rewards.
Methods establish HOW you will implement your vision and values.
This part of the framework outlines all the actions and steps that you need to take to get the job done.
You can also rank these methods in order of priority.
Step 4: Obstacles
What challenges will your company face in fulfilling the vision?
For example, backlash from the team on policy and procedural changes
What challenges, problems and issues are standing between you and achieving success?
Which obstacles are the most critical to resolve, and how will you resolve them?
You should also rank these obstacles in order of priority.
How will your business measure its achievement?
For example, employee satisfaction surveys
Finally, we tackle the problem of coming up with the appropriate measures.
How will you know when you are successful?
You need to measure in order to determine if you are on the right path.
You need data and metrics to determine what success looks like.
It is also a key element of continuous improvement.
Measures should focus on the outcome of your work, not just the output.
V2MOM is ideal for the organisational alignment between your actions and the strategic intent of an organisation.
With this mindset, you can declutter your mind by disposing of outdated assumptions, eliminate distractions and allow yourself to focus on the WHY, WHAT, and HOW for the actions you perform.
Implementing small business strategy
A strategy is just empty words on paper without implementation
There are a range of models around to help you implement your strategy.
Again, I like the simplicity of the work done by Jeroen De Flander.
It largely comes down to coaching and communication.
Strategy evaluation and control actions include:
- Performance measurement
- Consistent review of internal and external issues, and
- Making corrective actions when necessary.
Any successful evaluation of the strategy begins with defining the parameters to be measured.
These parameters should mirror the goals set in stage one.
Determine your progress by measuring the actual results versus the plan.
So there you have it - a basic guide to developing your small business strategy.
It's not easy, but it can be incredibly rewarding.
And remember, no one has an exact roadmap to success, so don't get discouraged if things don't go perfectly according to plan in the beginning.
The most important thing is to stay focused on your goals and keep moving forward.
If you're feeling motivated but need a little help getting started, sign up for our Program.
Our ‘Business Transformation Program’ will walk you through everything you need to know step-by-step on devising and executing your strategic plan, and provide valuable resources along the way.
The Program will help you unlock time and improve productivity, in addition to providing a framework for growth.
- The 'Business Growth Formula' online course (strategy and leadership)
- The 'Kick-Ass Manager' online course (become a better manager, and develop the other managers in your business)
- An Accountability Group, with up to nine other business owners (a monthly group coaching webinar, two one-on-one monthly calls and unlimited emails with your Group Chair)
Join the waitlist now.