When you mention the word “strategy,” a lot of people’s eyes glaze over – some still see it as an airy fairy term, that lacks substance, something that large corporations spend thousands on whilst SMEs get by just fine without it.
That, to me, is the beauty of SMEs – they get by “just fine” with a fraction of the support large businesses have, but I would love to see how they’d perform with a little support.
What is “Strategy”?
First up, what is strategy? Strategy is defined as a plan of action designed to achieve a long-term or overall aim.
All businesses have a purpose, whether formally or informally documented. In the case of SMEs, the purpose of the majority of businesses is to make money.
The strategy simply sets out how that purpose is fulfilled, i.e. how the business is actually going to make money.
Why would you bother defining the strategy for your business?
The strategy sets the tone for a business. It highlights the business’s biggest strength, impresses this upon its staff, shows customers what they are paying for.
A business’s strategy should be the focal point in all aspects of a business – from the website to digital marketing, traditional marketing, staff training, customer service. The strategy is evident in the purchases a business makes and the sales it generates.
Defining a business’s strategy therefore will assist in decision making – who to hire, who to buy from, where to invest, where to divest – it helps to prioritise.
In a world where we are being sold to ALL THE TIME, having a strategy will keep you (and your pennies) focused on achieving your business’s overall goal.
Let’s say you own a little pub, in a little town in rural Ireland. There are 5 pubs in the town.
The purpose of the pub is to help the owners make a living.
Your strategy will set out how you intend to generate income.
You look around on a Saturday night – it’s quiet, youngsters aren’t drinking as much as they used to, and drink drive legislation means that your old customers are more likely to have a few drinks at home.
Do you keep doing what you’ve always done, hoping the tide will turn and the pub will get busier? Or do you make a decision about how you’re going to get more people to come and spend money in your pub – i.e. define your strategy?
Types of Strategy
Although a strategy will be tailored to your business, the key types of strategy are:
~ Growth – pretty self explanatory, you want to grow your business, grow sales, grow market share
~ Product differentiation – setting your product apart from your competitors
~ Price skimming – setting prices high
~Acquisition strategy – buying out competition
~Survival – even if your plan is to maintain your businesses present position in terms of sales, you need to decide how this will be achieved.
If you would like to discuss your business’s strategy, feel free to contact Marion today!