Ask a business owner about their strategy and many will say they don’t really have one.
That doesn’t mean they lack ambition or intent. Every day they make decisions designed to improve the business.
The more important question is: where are those decisions taking it?
Strategy is often associated with formal plans, workshops, mission statements and large organisations. It doesn’t need to be.
At its simplest, strategy starts with having a clear sense of what you want the business to achieve and making choices about how you intend to get there.
The objective doesn’t need to be complicated.
It might be a larger or more profitable business. It might be reducing dependence on the owner, entering a new market, building something that can eventually be sold, or simply creating a stronger and more sustainable business.
What matters is having some sense of where you want the business to be in one, two, three or five years.
Once there is a destination, the decisions made today have context.
Employing another salesperson, increasing marketing expenditure, changing prices, adding capacity or entering a new market are no longer isolated decisions. They become choices about how the business intends to achieve its objectives.
And every one of those choices has implications.
Consider an owner who wants to grow a $5 million business to $8 million over three years.
Putting $8 million into a forecast doesn’t make it happen.
The additional $3 million has to come from somewhere. Customers have to be won. Capacity may need to be added. People may need to be employed. Working capital may need to be funded. And all of this may need to happen before the additional revenue and cash arrive.
There is no inherent right to growth or success. It has to be earned.
This is where strategy becomes more than intent.
Once we know what the business is trying to achieve, we can assess what will be required to get there, whether the strategy is financially viable and sustainable, whether the necessary resources and funding are available, and whether the choices being made are actually capable of achieving the objective.
Sometimes that analysis reinforces the strategy. Sometimes it identifies something that needs to change. And sometimes it leads to a better strategy before significant resources are committed.
The objective isn’t to replace judgement.
It is to give judgement better information to work with.
A Thought to Leave With You
“Strategy doesn’t have to start with a formal plan. It starts with knowing where you want to go — and then being honest about what it will take to get there.”
