30 Nov Finding a GOOD strategy
“A GOOD STRATEGY IS HARD TO FIND”
Startup success stories are inspiring.Take Sophia Amoruso of fashion retailer Nasty Gal.Amoruso was a community college dropout who started her business by buying clothing from vintage stores and reselling it on eBay for a profit. From those humble beginnings, the brand grew massively.It attracted funding from venture capitalists, led to stores in Los Angeles and Santa Monica, and landed Amoruso on Forbes’ 2016 list of America’s richest self-made women. In addition to the growth of her business, Amoruso also published a best-selling memoir about her journey, which was adapted by Netflix into a series that debuts this year.Nasty Gal’s rise is one of those stories that inspires startups and small business to grow, but it also serves as a warning: the once-thriving business is currently in the process of filing for bankruptcy. The primary reason cited for the company’s surprising demise? Its rapid growth.
The risks and rewards of business growth
42% of failed startups cited lack of market need as the primary reason for their failure.
Business growth can lead to revenue loss if assumptions are made, competition is not thoroughly vetted, or pivots in products and services aren’t driven by a significant amount of market research. In fact, 42% of failed startups cited lack of market need as the primary reason for their failure. By documenting your growth strategy, you can minimise these risks. A growth strategy allows you to anticipate when you’ll need to add new team members and leaders and take your time finding the right people to bring on board. It also embeds time for market research into your growth plan, ensuring your decisions are based on data—not assumptions.
With a documented business strategy, you’ll be in a better position to avoid the risks of business growth and, instead, amplify the rewards. The most effective business strategies are documented so they can be shared across the organization. Having a documented strategy creates cohesiveness, allowing decisions and initiatives across the company to be catered to established goals. While initial planning is crucial, iterative planning is important as well. By revisiting your business strategy in regular increments, you can make strategic shifts based on new information, market changes, and historical data. For example, if an initiative fails during the testing phase, all goals and strategies for that initiative should be removed from or replaced in the strategy document.
How to write a business strategy
There are a few approaches you can take to documenting your business strategy. You could document your business goals and strategy at a high level, for example, or in great detail. Or you could use an agile approach to business planning, with short-term goals considered in detail and future goals presented at a high level.
None of these approaches are wrong. Even high-level business strategy documents create a framework for decision-making and reduce risk. However, taking an agile approach to documenting a business strategy may be ideal. It significantly reduces the risk of near-term initiatives by presenting goals and strategies in detail, and it enables faster finalization of your business strategy by eliminating the need to provide minute details for future goals. First, decide on what approach you want to take. Then, follow the steps below to document your business strategy.
Step 1: Define short- and long-term goals
The first step in writing a business strategy document is to simply document the goals you hope to achieve in the next five years. Goals can be both small and large and can be either specific (increase revenue by 20%) or general (increase brand awareness). Here are some examples:
Increase product offerings
Grow organic site traffic by 35%
Open a second store
Expand into new markets
Launch an affiliate program
Increase sales by 15%
A brainstorming session with all company leaders and/or stakeholders can be helpful in the goal-defining phase. At this stage, all goals should be considered and documented. In later stages, you’ll make decisions on which goals are worth pursuing.
Step 2: Prioritise goals
After your brainstorming session, you should have a long list of potential goals to target, but not all will be viable. Additionally, some goals may be compounding, meaning you must complete one before you can target another. For this reason, you’ll need to prioritize your goals. Goals at the top of your list should be those that meet one or more of the following criteria:
They’re the most important to your business, its leaders, and its stakeholders
They offer the highest return on investment
They’re achievable using existing resources
It helps to use a relative prioritisation: if you have ten goals documented, each should receive a priority of 1–10. Prioritising relatively doesn’t mean you can’t work toward multiple goals concurrently, but it does help with decision-making when you lack the resources or funds to execute on multiple goals.
Step 3: Define strategies for meeting goals
Now that you have prioritized goals, you need to investigate strategies for meeting those goals. To form strategies, you need to think through—in detail—the steps that will be required to meet those goals. The strategies may require operational shifts, marketing initiatives, and acquisitions, among others. Some examples goals and strategies are listed below.
Goal: Open a second store
Conduct research to determine ideal location for new storefront
Ensure existing revenue can support the operational costs, initial inventory costs, and personnel costs of new store
Hire a general manager, assistant managers, and store personnel
Launch a marketing campaign to advertise the grand opening of the new location, driving initial sales and visits
Goal: Expand into new markets
Conduct market research to determine ideal markets for expansion
Review laws and regulations pertaining to conducting business in new markets
Secure needed licenses and approvals for conducting business
Hire staff to manage operations and sales
Launch a marketing campaign to grow brand awareness in new markets
As you work through this process, you may find that some goals are more complex than you originally anticipated and that they’re unachievable with existing resources. If so, deprioritize those goals or remove them altogether.
Throughout the entire process, you’ll be working towards developing an achievable growth strategy. Doing so will require eliminating initiatives with a high risk of failure.
Step 4: Evaluate the competitive landscape or market demand
Once you’ve defined goals and strategies, it’s time to validate your assumptions. Opening a new store or launching a new product may sound like an exciting way to grow revenue, but it can fail rapidly if the market is highly competitive or if there’s little demand for the products/services you’re offering.
First, you need to conduct thorough research on your competitors. Answering the following questions can help guide you through this process:
Who are your competitors?
What products/services do they offer?
What are their pricing models?
How do they market their offerings?
Where does their marketing fall short?
What are customers saying about them?
By investigating the answers to these questions, you can determine the best ways to differentiate your offering from those of your competitors. If you can offer the same products and services at a lower price and remain profitable, that’s your selling point. If you discover that customers are generally dissatisfied with a competitor’s customer service, you can differentiate by offering exceptional service.
Conversely, if you find that your competitors have lower prices than you can offer, have extremely loyal customers, or offer higher quality products, you may need to revise—or abandon—your original goal. In some cases—particularly if you’re offering an innovative product or service—you may not have competitors. In these instances, it’s crucial to investigate market demand. You can conduct market research yourself or hire a market researcher to do it for you.
As you conduct competitor and market research, you should also revise and refine your strategies based on new information and remove any goals rendered risky after further investigation.
Step 5: Define timelines
Once you’ve defined your goals and strategies and have validated your assumptions through detailed research, you’re ready to set timelines for enacting your growth strategy. Timelines can be set by goal priority or in sequence.
For example, your highest priority goal may be to open a second store. But meeting that goal requires that you first increase sales at your existing store by 15% to cover the operational, staffing, and inventory costs of your second store.
Even if increasing sales at your existing store is a lower priority, it needs to be executed first in order to achieve your highest priority goal of opening a second store. For near-term goals, you may want to detail strategy timelines by month or quarter. For future goals, you might only specify the year you’ll begin executing on the goal.
Step 6: Evolve & Commit
How do we adapt and evolve?
How do we drive changes?
What do we want to avoid?
Why do we exist?
What are we measured on?
Look back on the last year what did we do well?
Looking forward on the year ahead?
What are the pathways?
What are the roadblocks?
What are our expectations?
CONNECT & INSPIRE
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