Putting tactics without strategy before strategy is the noise before defeat, to quote Sun Tzu in “The Art of War.” Running and growing a business in the modern world is no less than fighting in a war. Trade wars govern most other economic and political factors on the international landscape. Doing business has become an art with subdued complexities. Therefore, it requires a strong, effective business strategy.
What exactly is a business strategy?
A business strategy is a set of plans and courses of action to ensure sustainability for a business in the long run. It is your blueprint for business operations and developing a competitive edge.
It is figuratively a magician’s trick box with a plan of action for every external or internal challenge. Furthermore, it dictates your business process flow and the overall marketing, finance, supply chain, and human resource orientation.
In short, the action plan is not limited to just one aspect of your business. It entails an overall 360-degree view of your business, including branding.
A good business strategy can either make it or break it for your business. It either takes your business to skies of success or drags it down to the dumpster.
Therefore, you must carefully devise your approach. If you have been struggling to do so, this article can help you. Below are four ways to build an effective business strategy.
1. Plan a convincing value proposition
People are continuously on the lookout for products and services that provide them a higher value than what they have at present. However, it can be challenging for you to discern which segment of the population values which factors the most.
Since businesses cater to large audiences, determining each customer segment’s value proposition becomes a tedious task. And utilizing age-old research techniques does little to no benefit, coupled with managers’ and entrepreneurs’ antiquated analytical skills.
A viable approach would be learning about the essentials of advancing business research and practical research tools to identify and monitor customer behavior. You can allow your existing employee pool to update their research and analytical skills and learn about current business practices and strategies.
What could serve as a better platform than online learning to fulfill this purpose? Most business professionals and aspiring entrepreneurs prefer online MBA no GMAT required as it provides the flexibility to work and study simultaneously.
Once armed with the necessary knowledge, you can successfully carry out research and identify varying customer needs. You can develop value propositions accordingly.
The best way is to search for social and domestic routine issues that people desperately want to resolve. Then, devise your value proposition around that problem.
Ideally, you will propose a product or service that resolves the average person’s issues. Otherwise, it will be challenging to make a solid and positive market perception for your business.
Remember that social and environmental stimuli largely influence the contemporary business environment. Your value proposition must consider these factors.
2. Know your cost and revenue streams for an effective business strategy
Do you think footballer (soccer player) Cristiano Ronaldo earns his millions just from playing the sport? If so, you’re mistaken. He has almost a dozen different revenue streams that fetched him a whopping $105 million in 2020.
Similarly, you must identify all the possible revenue streams for your business. You might benefit from the high rise of e-commerce and expand there as well. All such platforms, from your business website to social media platforms like Instagram, form a part of your overall business strategy.
At the same time, you must identify all the possible cost structures. Knowing the avenues that will harm your investment is important. Try to carefully weigh all the cost factors so you can strategize your initial funding and investments.
The ultimate aim of a business is to produce profits. You can never generate enough profits unless you incorporate cost and revenue stream properly in your business strategy.
3. Identify the key partners and activities
Your network is your net worth. Your business is nothing without the strategic partners that collectively drive the value for your business. According to a survey by Workspan, 57% of companies rely on partnerships for better market presence. At the same time, 45% of executives believe that maintaining strategic partnerships is among the most significant business challenge.
Therefore, you must carefully select these key partners. Also, you have to invest efforts in strengthening your relationship with these partners continuously. Otherwise, it will harm your business.
Once you have made the necessary strategic partnerships, aligning the key activities is the next step. There are always a handful of activities that serve as the backbone of your organization.
If you are offering consumer goods that need to sell quickly, then it’s mainly your marketing. If you are operating on an industrial scale, it’s your business-to-business dealings, including B2B probing and selling.
To summarize, all those activities that drive the main revenue channels are your key activities. Therefore, incorporate them into your business strategy with proper considerations.
4. Determine the channel requirements
Should you focus on e-commerce or traditional retail? Is it better to focus on logistics, or outsource instead? Should you accept online payments, or deal with hard money? All these questions are basically about the channel requirements of your business.
You must carefully recognize the proper channels that suit the infrastructure of your business. Your strategy should integrate the channels with your resource capacity.
The right match of business resources with the parallel channels results in smooth business operations. Subsequently, it reduces switching costs and produces more profits for your organization. Therefore, determining the channel requirements is an essential part of your business strategy.
Final thoughts on crafting an effective business strategy
Your business strategy provides you with the blueprint for long-term business viability. It ensures that your business operations run seamlessly without any interruptions.
However, this strategy is your source of staying close to your roots in case of any disruption. It provides your business with its philosophical fabric and value proposition. What you have read above is the framework for devising such a strategy. Now, it depends on you to develop these steps into a workable plan.