What is a business strategy and how to build one?

In this article, we talk about the main notions of business strategy and the importance of knowing your market, defining clear objectives and remaining adaptable to changes in the business environment .

What is business strategy?

First, let us try to understand what precisely a business strategy is. It is somewhat like a plan or roadmap through which an organization achieves its long-term goals. Simply put, it is like a map guiding the organization in navigating through a competitive landscape and achieving the dreams for its business.

Creating an excellent business strategy is no recipe. Instead, there are certain must-do steps that every business, be it small or large and in what sector, should take.

Steps to define your business strategy

1. Know your business

You cannot put up a strong plan unless you have a thorough understanding of your company. You’ll be aware of what sets you apart, including your offering, target market, rivals, and advantages and disadvantages. To get a comprehensive view of the state of the market, use SWOT analysis.

Benchmarking tools are essential to evaluate your company’s performance and procedures against those of the industry leaders in the face of competition. You should assess your company’s primary rivals and examine metrics like customer happiness and operational effectiveness.

2. Goal setting

Once you know the sharper version of your business as well as what to expect on the market side, the next step to take in developing a good business strategy would be to set goals for what you intend to achieve with the business. What do you hope to achieve from having this particular business? Be specific and ensure that those goals are measurable.

To work, these objectives need to follow some premises:

• Specific and measurable : Steer clear of vague statements and poorly defined goals. Instead of “boost sales,” say “boost sales by 20% the following year.” From there, define metrics that allow you to track the work being done toward your goal. For example, “increase market share by 5%” is measurable, but “increase market presence” is vague.
• Realistic and relevant: It is always very interesting to set challenges, but let your goals be realistic. Unrealistic targets can be very demotivating to your team. Also, be honest to yourself when taking a truthful judgment over whether your goals are realistic and in line with the macro strategy.
• Flexible: While it is good to set specific goals, it must also have the flexibility of changing if circumstances demand you make adjustments in your goals. Business environments can be dynamic, so you may need to change your strategy.
• Shared and understood : Make sure everyone in the organization understands the goals and is committed to achieving them. Share them with your team and establish a sense of common purpose.

3. Identify your competitive strategy

Every business requires a unique competitive strategy. You can either be the cost leader where you offer products at significantly lower prices than your competitors or focus on differentiation, where you promote unique, high-quality products or services. Choose a strategy that will align well with your goals and resources.

Besides, while implementing this strategy it is fully essential to clearly mention differences of your product or service and what you give to the target-audience in other words, needs that you would help to solve.

There are several tools that help you discover the pain points of a specific audience and position a product in relation to them. The best-known is the Value Proposition Canvas, which visually and simply organizes these elements into two blocks: value proposition and customer profile. It is worth investing some time to understand how these two elements relate to each other and to visualize the differences in the solution you are going to offer to the market.

4. Develop an action plan

Now that you have clear goals and a defined strategy, you must work out an action plan to achieve your goals. This is now about formulating specific tactics to achieve the defined goals.

Let’s start to dissect each of these goals into smaller, measurable tasks-easier to track and assign accountability for. For example, if your objective is “increase sales by 20% next year,” you might break this down into tasks such as “launch an online marketing campaign,” “expand into a new market,” or “improve sales team training.”.

Identify who would take responsibility for which task and clearly outline the deadline. It brings a sense of urgency and keeps the things on track. For every task, define the performance metric to measure the progress on the spot. This may include KPIs relevant to the job like sale growth, conversion rate, customer satisfaction, etc.

Next, prepare a budget that includes the costs associated with implementing the action plan, ensuring that it is financially viable and in line with available resources.

Review your action plan at regular intervals to ensure it continues to be in support of your company’s strategic goals. You need to update in response as your circumstances and goals change.

5. Monitoring and adjusting

A business strategy isn’t something you finish and put away. You need to keep tabs on where you are and be open to changing things when they aren’t working. If a tactic isn’t working, don’t be afraid to let it die and try something else.

Monitor performance metrics using appropriate monitoring tools. For instance, it could be a CRM for customer relationship management or data analysis to ensure that marketing campaigns are performing effectively.

Listen to customers as well as other stakeholders who can give important insights into your strategy’s effectiveness. Customer needs and expectations change over time. A strategy must adapt to the changes in customer needs and expectations.

Every company is immersed in a complex business scenario, and they must master the understanding of a business strategy to win. Business strategy from in-depth market understanding to defining aligned goals and metrics creates a never-ending pursuit for excellence in a seamless manner.