Welcome to the module Developing Your Business Strategy, part of the EduGrowth Entrepreneurship programme.
The purpose of this module is to help you acquire the knowledge, skills and understanding needed to build an effective business strategy.
It will help you understand what a business strategy is, its significance in making your business a success and to enable you to write your own business strategy.
You will also learn what is different between your business strategy and your business plan and how they interface with one another in order to make your business a success.
Creating, and continuing to develop, your business strategy will be an essential component of the process of succeeding with your business and also ensuring your business’s future sustainability and growth.
Key Topics in this Module
Upon completion of this module you will:
What is a strategy? What is its purpose?
Every business needs a strategy – something to outline the key goals of their organisation. A well-outlined business strategy is essential for the success and sustainability of any business venture. Without one, your business could lack direction, effectiveness and profitability.
A helpful definition of business strategy is a long-term plan designed to achieve a particular goal or set of goals or objectives. It states how your business will be conducted to achieve your desired goals.
Key elements of a good business strategy
Your business strategy needs to have a time limit set on it so that you know that you will be able to describe what the success of your businesses looks like at a specific point in the future.
Many business strategies are three of five years long; others even longer. When you first start a new business, it might be better to look at the first 12 or 24 months of your business, as things can change very quickly at the beginning of your business journey.
Your business strategy in not your day-to-day action plan for your business – that’s where your business plan lies.
Your business strategy needs to set what goals (headline achievements) you want to deliver within the time period you have set above.
These are real big picture achievements (goals) – such as, turnover of £250,000 or 1000 items sold or your business is the preferred supplier of dental floss sticks to the National Health Service.
These goals should be specific.
Clear vision and mission
You will learn much more about these two things in the next section but developing your vision and mission for your business are an integral part of creating your business strategy.
Your vision will describe what you want your business to become – the biggest supplier of book markers to the school sector in the UK or the go-to place for your wedding bouquets in Yorkshire, for example.
Your mission will describe who you are and why your business exists – we’re a family run business with family values who you can trust to focus on your child’s learning needs (a nursery) through to we’re a focused, technology driven partnership providing cost effective online solutions for your small claims needs.
Your business strategy will have some reference to the market you will operate in, identifying competition and customer bases and outlining the opportunities you intend to take. You can undertake your own research (this is known as primary research) by various means – such as online searches and customers surveys etc. Secondary research refers to information on your market which has already been undertaken by someone else – perhaps a trade magazine or an online publication.
There are some key questions you will need to ask as part of your research:
Who are your target customers?
Who are your competitors and what are their strengths and weaknesses?
What price will customers pay?
How often will they buy?
There is more information on marketing analysis and research in the EduGrowth module 1 Assessing Your Business Idea and module 12 Researching Your Market.
Clear and structured
It’s important that your business strategy is well thought through and is clear in its content and well-structured in its design. You may wish to use it to evidence where your business is going in the future for example to providers of external funds or to your staff as basis for developing team objectives etc, so it is important that your strategy is coherent.
Underpinned with a SWOT analysis (strengths, weaknesses, opportunities and threats)
So, you can be confident that your business strategy is a realistic and achievable set of aspirations for your business, you will be best served by undertaking a SWOT analysis of where you are and where you want to be. Being realistic about accessing the resources (financial, human, physical and technical) that you will need to achieve your goals will be a key part of that analysis.
Strengths can be identified by asking what advantages your business has and what its unique selling proposition (USP) is. It is important to consider what other people in your market see as your strengths i.e. a brand name, patent or a workforce with a particular skillset. So, questions like:
What do you do well?
What are your unique skills?
What expert or specialised knowledge do you have?
What experience do you have?
What do you do better than your competitors?
Where are you most profitable in your business?
Weaknesses would include – what your business could do to improve, what you should avoid (be it due to brand name/reputation, resource etc.) and what factors ultimately lose your organisation sales. Possibly questions like:
When identifying strengths and weaknesses, it’s important to compare your organisation to its competitors. Some of your proposed strengths could simply be a requirement of your chosen market and therefore not actually a strength.
Opportunities are the things you want to achieve with your business and the conditions (external and internal) that will help you attain those goals. Think:
Threats are those things which, if they happen, may provide a barrier to the success of your business. Think about:
It’s also critical to be honest! Lack of honesty is a common pitfall in undertaking a SWOT analysis, so remember this is a document that you are going to use to critically assess your current position. Using realistic information will ensure that a high-quality output is achieved.
Watch the video below where we talk about a SWOT Analysis in a little more detail.
Sets your business direction – your strategy will set out your main purpose of your business, what your key goals are. If you have employees, a well-planned business strategy will ensure your entire organisation is working towards the same goals and it instils a sense of shared responsibility. As a sole trader, it is an important statement of the key goals which you have set yourself.
Creates a measure for success – your business strategy will enable you to measure your performance and growth against your desired goals. Are you achieving what you had hoped to achieve within the stipulated timeframe?
Increases adaptability – In our ever-changing world, businesses need to be responsive to change and your business strategy will help you to predict and meet the changing demands of your chosen market. By analysing and reviewing your customer’s expectations and needs, your business can better identify new market trends and adapt your strategy as required.
Drives decisions – your business strategy will enable you to identify your business’s strengths and weaknesses. An effective strategy will help you decide where your efforts and resources are best spent. These decisions are crucial in ensuring your business has a profitable and sustainable future.