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A recent survey found that only about 39% of small businesses end up profitable. But why?
Many companies fail to make a profit because of a flawed business strategy. Sometimes a strategy is so complex that the team simply cannot execute it. In other cases, the problem may consist of clear, refined goals, but no overarching strategy or plan for achieving those goals.
Another failure of business strategy can be looking only at the short term instead of anticipating and preparing for what is likely to happen in the future.
Any way you slice it, a failure to plan is a plan to fail, while having a robust and sharp business strategy increases the chances of small business success.
Here are five hacks for developing a more effective business strategy and equipping your SMB for long-term success.
Related: 7 outdated habits that will cripple your business
Table of Contents
1. Target your market
A small business cannot be everything to everyone. It is essential to know the best audience for your products or services. Clearly defining your target audience helps you shape your goals and develop a strategy that positions your business for success.
After targeting the right market, you can determine how to reach those prospects and convert them into paying customers. This includes asking key questions such as “what media does my target audience use?” “What additional products do they use?” “Which providers currently serve them and what better way can I get them to become my customer instead?”
Targeting is key to developing your media and collaboration strategy and refining your product.
Related: 10 ways to learn more about your target audience
2. Make your strategic plan comprehensive
A solid strategic plan includes a clear, concise vision and mission statements, supported by goals and action plans. With these components in place, your strategy has focused objectives and roadmaps needed to move in the right direction.
A vision indicates where you want to see your business in the future. For example, a ceiling fan manufacturer’s vision statement may outline an ambitious desire to become the go-to for home cooling products. The mission aligns with that vision, but is generally more practical. A mission statement describes exactly what you do and why or how you do it. For example: “We will make high quality, innovative ceiling fans to keep the world cool.”
Savvy entrepreneurs generally get support from their team through their vision and mission statements. These statements are essential motivators because they tend to outline how your work improves the world. They also help to determine the direction of the company.
It is important to review your mission statement from time to time. The ceiling fan manufacturer may decide to produce other types of fans or air conditioning units. These products would likely still fit the company’s vision, even though the new products would require an expansion of the mission statement (beyond ceiling fans).
Goals describe what you want to do by a certain deadline. Goals can be focused on processes, behaviors or results. For example, a process goal could be refining your manufacturing processes to achieve ISO 9000 certification within five years. A behavioral goal could be to reduce absenteeism by 10% within two years. An outcome goal could be to capture a 51% market share within six years.
A fully developed strategy also includes action plans that describe what you will do to achieve each goal. For example, the goal of reducing absenteeism in the workplace could be an initial action of surveying employees to find out why the rates are so high.
Related: 8 Ways to Stay Accountable for Your Goals
3. Remove the strange
Sometimes strategies fail because they contain too many barriers.
For example, you have too much unimportant data, so you are likely to spend unnecessary time and money collecting and analyzing data. Or your processes may contain non-productive, redundant tasks that simply consume too many resources.
It is crucial to look at all aspects of your strategy and ensure that your roadmap is optimized and clear.
Related: 4 Reliable Signs Someone Is About To Waste Your Time
4. Focus on the brand
Developing a solid brand identity is a crucial part of an effective strategy. Your brand is more than just a product or service; it includes your company values and how they are communicated through the brand. Your website should reflect those values. For example, an IT consulting firm probably wouldn’t want old-fashioned fonts all over their website, nor would they want to build a website that provides a poor user experience.
Don’t forget that customer service also influences brand identity. In the age of sharing and commenting online, just one bad customer service is likely to lead to bad online feedback, which can quickly snowball and become a brand crisis. That’s why your branding strategy should include ways to consistently provide excellent customer service and exceptional experiences.
5. Play the long game
You want your business to be successful in the long run. To ensure longevity and consistently positive profit margins, it is critical to regularly review your business strategy. This is the best way to ensure it remains relevant and to avoid getting caught up in an approach that is outdated or no longer works.
As part of regularly reviewing your strategy, consider the customer journey from the customer’s perspective. How can you improve it? Also consider changing customer needs and how to meet them.
You may also need to scale your business and continually evolve your strategy. Often scaling your business means adopting an automation strategy. It can also mean using external resources for certain aspects of your business, such as back-office functions, so that your team can focus on the core aspects.
