Do you Have a Business Strategy?

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Starting and running a small business without a basic strategy is a bit like getting in a car and driving west. You may end up selling things and making money but, as with the car, you're quite likely to end up getting lost down a dead-end street, in a swamp or going by a place you should have visited. Determining your basic business strategy involves asking what your goals are, how you are going to get there, how your business will interact with your customers, suppliers and partners and how you will position your business in the marketplace. It's easy to create such a strategy and it doesn't even have to be written down as long as it is clear in your mind.

The first thing to consider when creating a strategy is your goal. Do you want to be the next Bill Gates or do you want a bit of extra income for part-time work? If you're going to try to make millions, forget spending time with the kids, spouse, fixing up the house or anything else - your work will be your life for the near future. If you're after some supplementary income, decide how much time you're going to spend on your business and stick to it. If you're somewhere between these extremes, decide on the revenue and profit you want and the time you want to spend at it. Determine what's reasonable and then plan for that. It's important to get your goal clear in your mind because otherwise you might end up with the part-time income but the millionaire's time commitment.

Once you have a clear goal, it's time to think about how to achieve it. Are you going to sell lots and demand a low price or do you want to specialize in low volume but high price. Generally small businesses can't achieve the lowest prices effectively but they can give good value at a reasonable price. On the other hand, one of the strengths of a small business is the custom approach where you give the client exactly what they want and, of course, you can charge more for that. Where does quality fit into your strategy? Will you have the top quality, no matter what the cost, or will you cut a few corners to reduce the price? Will you standardize and give all your customers the same thing no matter what they want or give them the quality and value they're looking for with a corresponding price? The thing about a strategy is that there is no right answer - the answer depends on what you do best, your personal situation and your target market. The key thing is to make the decisions and stick to them unless there is a good reason to change. If you don't have a strategy and don't make these decisions, you are likely to end up selling poor quality as custom made at a low price and spend all your time dealing with customer complaints. You won't achieve any goals that way.

When you have a clear idea of your goals and how to achieve them, the rest is easy. Make sure your relationships with your customers, suppliers and partners match your goals and that you position yourself in the marketplace accordingly. If you decide to be a high-end source of custom products or services, make sure that you have the high quality business cards, letterheads, contracts, telephone system etc. in place and that your promotional literature refers to you accordingly. If you have chosen to concentrate on volume and value, those are your selling points - don't waste money on items that don't contribute directly to this strategy. Your customers won't expect fancy letters or invoices. They will be looking for the best value at the lowest cost.

One more thing - the most successful small business strategies aim at supplying special products or services at a reasonable cost or unique products or services at a substantial but not exorbitant cost. This kind of strategy takes time to build up a customer base and does not lend itself to limitless expansion and becoming the next Microsoft. It does tend to provide a good living once it gets going and it tends to become more profitable as the business matures and you get really good at specializing. It is also copy-proof - the only way to compete with you is to start from scratch and put in the time, just like you did. If you look around at successful small businesses in your area which have been around for a while, you'll likely find a lot of these.