In my last Discover, Design, and Deliver post, I described your business objectives as the turning point of your business plan. You need simple objectives with timeframes and outcomes you can turn into graphs to guide your actions and help you achieve your vision. Objectives answer WHAT you must accomplish. Now you must determine HOW to achieve your objectives.
The next level down from objectives are strategies. Strategy is often viewed as something between myth and confusion, but strategy is really a simple concept. If you know where your business is going (your vision) and what you want to accomplish (your objectives), then strategy is simply how you will achieve your objectives.
Since many small business owners want to increase sales, I will use a sales example to illustrate the difference between objective and strategy. A business may want to increase its sales by 25% in the next 12 months. That is an objective. It is very specific. It has a timeframe (12 months). And you can create a graph to measure your progress. A simple graph like the one below can show whether your sales are increasing or decreasing.
The company’s strategy now must answer how it will increase sales 25% in the next 12 months. Strategy will differ greatly among different firms. There are as many ways to increase sales as there are businesses looking to increase sales. Here are five different strategies businesses may use to answer HOW they will accomplish the objective of increasing sales.
- A consulting company may introduce a training program focused on a new industry.
- A bank may target its existing deposit customers to move their mortgages to the bank.
- A men’s fine clothing store may introduce a new line of casual clothing.
- A restaurant currently not open for breakfast may start offering breakfast.
- A bicycle shop may begin to offer repairs and service instead of just selling bicycles and accessories.
Entrepreneurs must carefully consider their companies’ business model (link to ATW video on creating value) and personal strengths, weaknesses, opportunities, and threats when choosing the right strategies to follow. If the strategy is not consistent with what the business does well or its ideal customers, the strategy may prove to be a failure. McDonald’s tried a strategy of selling higher-price, healthier food through different restaurants several years ago. The strategy failed miserably because it was not consistent with what McDonald’s did well and did not take advantage of McDonald’s world-famous brand.
I have always found creating strategies to be the fun part of business planning. If you have clear objectives and understand your own business and personal strengths, creating strategies is where you can design a business that you enjoy and can make a great living doing.
How are you turning your objectives into strategy? What is one question you have about creating a strategy? Share your thoughts and questions below!