In the last article, I talked about key success factors for an entrepreneur and I spoke about company culture as one of the essential components. In line with that theme, in this article, I will elaborate a bit more on the importance of business strategy. It’s important to point out that how you define your business strategy will determine the direction of your business and what it will look like in the future.
It is useful to remember that you cannot be all things to all people, something that is very obvious. However, this is one area that many entrepreneurs make a mistake on as it is very tempting at the initial stage, especially when there is pressure to get revenues, to go after any segment/market that can contribute to increased revenues.
The business strategy shapes the priorities for the company and management team and helps you attract and retain the talented workers you need. This also ensures that all departments and people are pulling the company in the same direction, something which is very important at all stages of an entrepreneurial life cycle but more importantly at a start up / scale up phase. Most importantly the process of strategising brings in discipline and provides focus. The actual plans itself may constantly change, but that does not matter. As Dwight D Eisenhower once said: “In preparing for battle I have always found that plans are useless, but planning is indispensable.”
Business plan
It is therefore important to spend time and resources on writing a business plan that captures the key components of the planned strategy and here is a simple checklist of what a business plan should contain:
1. Vision Statement
2. Specific Missions to alter the current state
3. Time Bound Goals
4. Goals for your business should be ‘SMART’:
Specific – Clearly defined by those who have the knowledge about their impact
Measurable – Quantifiably defined in such a way as to gauge progress
Achievable – Challenging and rewarding, but still within reach
Relevant – Tied to current critical tasks and abilities of the team
Time-based – Linked to an agreed-upon timeline
5. Resources Required (Human, infrastructure, marketing, Financial, Legal, etc) to achieve the above
6. Specific Product / Service offering – what is the specific need that it seeks to satisfy and how is it unique. What is the value that you provide that others don’t
7. Evaluation of the market - Size, type, growth,
8. Evaluation and assessment of competition – profile of competitors, their offering, their USPs and history, substitutes,
9. How will you make, move or shake the market
10. Financial projections – both costs and revenues
In addition, I advocate the following for entrepreneurs
-What is your life goal; how does your business plan fit into your life plan
-How do you define success and happiness?
In the words of Mahatma Gandhi, “Happiness is when what you think, what you say, and what you do are in harmony.” It can as easily be applied in business.
What constitutes success for you – is it money, happiness, balanced – life, social contribution, good health?
How do you achieve work-life balance? How will you balance the needs of the business and the needs of your family. Many entrepreneurs are a financial success but a failure in all other aspects of their lives. Health is often ignored until it is too late or the needs of the family are ignored.
Meaningful innovation
Another area that is crucial for any business today and more so for start-ups are the need to continuously innovate. You need to differentiate yourself in a meaningful way. You can structure the process of innovation and this happens only when you have a clearly set path forward. I strongly advocate a written document that sets your strategy for innovation.
All strategy is only as effective and good as much as it is implemented. In the final analysis there can be no overstating the power of a satisfied client and there is no better way for me to explain this than through my actual experience.
We started off doing a small database project for a large Anglo-Dutch database company. This was a taxonomy enhancing study for their UK office and involved updating/validating data for 2,50,000 companies to enhance the quality level from 30 per cent (of the webcrawled data) to 90 per cent. The client was extremely happy with the consistent quality that we delivered that they gave us a second and a third assignment in slightly different areas. This then led to the client referring us to their US counterparts where we did an attribute listing exercise.
From there we expanded our reach to their counterparts in Australia, New Zealand, Singapore, Netherlands and Germany.
The power of referral from a satisfied client cannot and should not be underestimated and attempts must be made to put in place a system that captures referrals at every opportunity. This is better implemented if the strategy document encapsulates your vision of a satisfied client and how you are going to translate this additional value for the business.
There were a few things that we emphasised to our key team:
1) Deliver more than you promise faster than what is expected
2) Keep on the look out for adding value to what you do for the client and bring it to the notice of the project heads. We can then implement the same that will either result in greater revenues or a more satisfied client
3) Look for newer areas in the client’s areas of business where we can make a pitch
4) Ask for referrals
5) Above all stick to the core values of the organisation
Every organisation however small should articulate their core values, what the leader and the team stands for. This I will elaborate upon, using my own experience, in the next article.