Imagine deciding to take a trip. You know your destination, but you don’t know how to get there. Since you don’t know the route to take, you also don’t know how long the trip will take, but you’re really excited so you just get in the car and start driving.
This is what it’s like to run a business without a strategy. You have a rough idea of where you want to end up but no clear plan to accomplish your goals. You know just enough to get started, but without a business strategy, you can soon veer off course.
What is a business strategy?
A business strategy is like a road map for your business goals. It’s a set of guiding principles that helps you (and other employees) make decisions for your business and prioritize the steps you need to take to reach your goals.
The mission of your business defines what will be achieved and the strategy determines how resources should be used to accomplish the goals of the mission.
Why do you need a business strategy?
Just like driving to a destination without a map is less efficient, running your business without a strategy is also a less effective way of reaching your goals. A strategy determines the ways that you will operate in order to be successful.
Studies show that businesses with a clearly-defined strategy experience faster growth and reach profitability sooner than those that don’t.
3 Benefits of an Effective Business Strategy
A business strategy determines how you’ll run your business, as well as showing what you won’t do. It’s a set of guidelines for making decisions that are best for your business. Three specific benefits of an effective business strategy are knowing how to set the right objectives, having a clear direction for planning purposes, and knowing how to measure performance.
1 | Setting the Right Objectives
By setting business objectives, you’re steering your business in a specific direction. For example, if you know that your goal is to expand your salon into multiple locations, you’ll be able to make decisions about how to reach that goal. If you don’t know where you’re headed, it’s much harder to set the course for your business.
2 | Clear Direction for Planning
As you run your business, new possibilities will come up and it’s helpful to have an idea of which options to pursue. For example, if part of your strategy is to incorporate a retail space into your spa with only clean products, you know that you don’t need to explore any product line that doesn’t fit those standards.
A well-defined business strategy also makes it easier for employees to make decisions. Using the example above, your manager knows they don’t need to have a conversation with a sales rep about a line of products unless it meets certain standards. It saves time and energy for both you and your employees.
3 | Measure performance
It’s much easier to measure performance if you have a clear strategy. You can easily get caught up in comparing your spa or salon to other businesses in the area when you don’t know what standards to watch.
If you want the retail component of your salon to bring in 25% of the revenue, it will be easier to see the progress your business makes. Without a strategy, performance measurements are random.
The Bottom Line
A well-defined business strategy helps you direct your business in a more effective and efficient way. If you don’t have a clear strategy, check out our Business Basics course to get started. You’ll also learn tips about marketing, sales, and social media.