What is strategy?
The very word strikes fear into the heart of some small-business owners, because it sounds very grand. In truth, it simply means having a plan of action to get your business to where you want it to be. Strategic planning can be as longwinded or brief as you like, but the key is to focus on what you're trying to achieve and what you need to do to make it happen.
Strategy sounds like something for bigger businesses?
All businesses need plans. Knowing where you're going is the equivalent of checking the route before you set off on a car journey – it makes getting to your destination simpler. Having an overall strategic plan will help you remain focused and more disciplined about the things you do. If you're spending time working on something that doesn't take you closer to your overall goal – you're working on the wrong thing.
Where should I apply strategy?
All areas of your business – it helps you develop 'congruent goals' – basically, where everything everyone does moves you forward smoothly and all in line with your plans.
But can I 'over-think' things?
That can be a danger. Many people spend months creating a strategic plan only for it to become an unwieldy document they never update because it's too difficult. By all means, do the thinking, but don't get hung up on it so that you don't 'do' the 'doing'. You need an action plan with milestones and review points; that way you can see if you're making progress as expected – and take corrective action if not.
Should I have a strategy for surviving the first 12-18 months?
The key time when many new businesses fail? Developing a strategy will help you remain focused on what you're trying to do – which will increase your chances of survival. It will also help you identify problems. As part of the strategy and business planning process, put together a financial forecast, which will tell you if your idea can be profitable. Monitoring actual results against this will show potential problems early and most importantly – help you avoid cash flow problems – the bane of most start-ups.
How often should I review my strategy?
Most start-ups constantly review their plans and tweak their original idea as real events pan out. You must also take time out every now and again for an objective review. It's easy to get bogged down when you're busy, but if you don't occasionally step back and reassess, you risk blindly following a strategy that's no longer relevant.
So my business won't grow if I don't have a development strategy?
Lots of people start businesses based on enthusiasm and a 'back-of-a-fag-packet' idea – and some are very successful. However, having a sound development strategy will help you to chart a clearer route through the start-up stage, potentially reduce your cash needs and get you to your desired destination quicker.
Should my strategic thinking change as my business develops?
Not necessarily – if it ain't broke, don't fix it. However, as time moves on, things can change and you need to feed this into your overall thinking. If changes are likely, decide if you need to change or update your business goals.
How do I start planning?
Do some looking around. Is there a real market need for what you're planning to offer? What competition do you face? How are you different? Where are you trying to get? What are your business idea's strengths, weaknesses, opportunities and threats? Then you will know where you're starting from and where you're going, which means you can start planning your move from the former to the latter.
Should I write down my strategic plan?
Most people find it helps to write things down, but in the initial stages, it's more important to do what works for you. Once you've gathered your thoughts, put them into a suitable format for whoever else needs to read them, which could well mean a written plan. A strategic plan is likely to be shorter and much more visionary than a business plan. It will cover: vision; the mission statement (purpose of the business); values (culture); objectives; key strategies and milestones.
How important is it for a start-up to remain agile?
All businesses need to remain agile, that way you can go after new opportunities and deal with threats as they happen. Starting a business is tough and it's natural to feel defensive about your idea. But if you're objective, you'll be more able to change your idea, which could make a big difference.
All of us think our idea is best, but if no one's buying it, you'll waste a lot of energy and money on something that isn't a viable business. If you can't be objective, talk to someone who is – and not just family and friends. Seek honest opinions – it could prevent you from making a big mistake.