I am writing this blog with the intention of discussing and generating ideas to create a business strategy for the first time in a new business. Irrespective of type of business certain points need to be clearly understood for creating a business strategy.
To begin with, let us clarify the term business strategy. In fact, we should first clarify the fundamental difference between the terms ‘Objective’ and ‘Strategy.’ In simple words, Objective is ‘What we want to do’ and Strategy is ‘How we want to do, what we want to do.
Now, generating a business strategy for the first time would involve crafting a roadmap for the business, which can be used as a guideline to decide a comprehensive long-term plan for the business in alignment with the business vision, that aims to achieve the business goal successfully.
Basic components of a first-time Business Strategy:
Let us now devote our thoughts on each of the following actions/activities that need to be performed while crafting a business strategy for the first time;
- Defining business purpose.
- Deciding Vision and Mission Statements.
- Analysis of business environment.
- Deciding target market and the competitive advantage
- Setting measurable goal.
- Deciding actionable plan of work
- Deciding steps to work on plan
Let us focus into the details of above activities;
1. Defining Business Purpose:
Here we must understand and clearly define the problem we are going to solve for our customers and the clear purpose of our business, beyond just making a profit. This is going to answer why our business is required and why our business can find a space in the environment. A well-done exercise, on this, will help us deciding the next action.
2. Deciding Vision and Mission statement:
Vision relates to aspiration for the business, where it want to establish itself in the long term and Mission is short term objectives and action plan, to meet the requirement of business in alignment with its long-term achievement of vision. Therefore, in short, we need to decide a concise description of what our business aspires to achieve (vision) and why it exists and creates value (mission).
3 .Analysis of Business Environment:
This would require systematic understanding of internal environment, finalising internal resources, analysis of capabilities and planning for human resources and other relevant factors. This step would also require to analyse the factors of external environment, that are going to impact business operation and can be categorised using frameworks like PESTEL analysis and Industry analysis.
4. Deciding Target Market and Competitive advantage:
This step is comprised of actions/activities in four stages in sequence. The first stage is thorough market research to gather and analyse information about our industry, market size, growth trends, and customer preferences. This will help us to identify our target market, customer demographics, behaviours, and pattern of need. The second stage is a research work on our direct and indirect competitors’ products, pricing, and marketing strategies to identify their strengths and weaknesses, which will help us to find our unique positioning. The third stage is an honest appraisal of our internal Strengths and Weaknesses, and external Opportunities and Threats. This will lead to the fourth stage of finally deciding our customer or target market and most importantly help us to understand in what way our business outcome (product or service), is going to be unique and what is going to be our strong unique selling proposition and competitive advantage.
5. Setting a clear measurable Goal:
This step involves quantifying the target outcome of the business in terms of “how much?” or “how many?”, within “what timeframe?”, in order to monitor and control the progress. The purpose is to set both short-term and long-term objectives using the SMART goal-setting framework.
6. Deciding an actionable plan of work:
This step require preparation of an outline of specific tasks with timelines and optimum allocation of resources (people, budget and technology), which are required for achievement of business goal. This step will also required to outline the operations strategy, promotional strategy, marketing and sales strategy, distribution network and most importantly customer care strategy.
7. Deciding steps to work onthe plan:
This is the step towards converting a strategy into action by executing the plan decided. Here the first action would be to decide and finalise Key Performance Indicators (KPI) to track progress of work, timely control and adjustments of the process and evaluate success of operation. The next step would be deciding a complete schedule of all executable actions and finally giving a green signal to proceed on the business followed by Continuously monitoring of performance against the established metrics and timelines and regular review of the progress to identify any roadblocks or areas for improvement. Finally, it is very important to remember that business environment never remain fixed and it keeps on changing over time. So every business strategy should have flexibility as an important characteristic, in order to ensure sustenance of the business in changing environment.
Goutam Ghosh, Assistant Professor – IQ City United World School of Business, Kolkata
