As a business owner, it’s important to realise the value of your strategy. It’s your compass, your guideline, and your motivation. It’s everything from where you are to where you want to be. Not only that but also the business strategy is what aligns the leaders and the teams within the organisation. This clarity between the leaders and their teams is what makes the strategy the roadmap to achieve business success.
Defining a business strategy is certainly no simple task. It involves research, data, and, most importantly, the purpose. To begin with, business owners must ask themselves the big question: What do I want from my business strategy? The response could range from growth to liquidity and in some cases, control over the entire market.
Growth involves enhancing the financial value of a business. So that includes increasing sales, increasing the market share, and increasing product lines. Growth within the business strategy could be defined as short-term or long-term growth. It all depends on the current business environment and the business owner's goal. Growth could also involve the company’s societal and environmental impact and aims to enhance the positive impact of the business on society and be more environmentally conscious.
If liquidity is within the business owner’s strategy, then it’s important to enhance cashflow so that the business owner has more money to spend outside of the organisation. Here, the business owner is easily able to diversify their assets and support their lifestyles.
Guardrails are simply referring to metrics through which you will be able to measure the success of your business strategy. These metrics can include both financial and non-financial units. For instance, growth metrics include return on investment or total shareholder’s returns, whereas liquidity-related metrics include the dividend payout ratio.
In contrast, many business owners are focusing on achieving non-financial rewards through their business strategies. These include being inspirational leaders to their team, expanding geographically, and/or expanding within a new sector. Additionally, having a harmonious business environment where leaders and their teams have a clear view of what they are supposed to do and what they are supposed to achieve. Last but not least, business owners are prioritising their social and moral values within their business over financial gains in many instances. This could be seen by many businesses that avoid dealing with non-ethical suppliers, being part of a high carbon footprint supply chain, or harming their society in any way. It’s clearly evident that many business strategies are taking a stance against any harm to society or the environment.
You need to communicate and identify this strategy to all your stakeholders. You need to be as specific as you possibly can and ensure your strategy has well-defined objectives. A well-defined objective is specific, measurable, attainable, realistic and timely.
How is success identified within your business strategy?
This is an important question to address as there are so many changes within the business environment that we all need to be aware of.