If there’s one thing certain about business, it’s uncertainty, and that’s a sentiment that millions of business owners will understand. In 2021, a record was struck when 1.4 million new businesses formed, and this year is likely to be no different. Some of those businesses will flourish while others won’t make it through the year.
However, whether a business is just an idea or it’s been around for a decade, every business could use a business strategy to help ensure its success. Let’s talk about how to develop a proper business strategy in the new year.
What Is a Business Strategy?
Essentially, a business strategy is a plan of action to help implement the vision and goals of an enterprise. Because businesses vary so widely in their operations and objectives, this strategy can take many forms.
Consequently, it’s important for every business to develop and implement its own strategies, as no two are alike. This will help with internal processes as well as external, such as acquiring funding, complying with regulations, and storing important data.
Why Would a Business Need a New Business Strategy?
Briefly, let’s mention that while business strategies are most often associated with new businesses, there are plenty of reasons why a business owner would need to draft a new one.
Honestly, there should never be a time when a business isn’t updating its strategy in one way or another, as it is always a work in progress. Trends change in marketing, business, finance, and internal to industries all the time. Consequently, business owners and executives need to keep up with the times.
Before we get into the nitty-gritty, we need to discuss what businesses need before they even apply for a business loan, permit, or anything else. First, they need an idea of what type of company they are trying to pursue. Let’s talk about that.
Defining Mission, Values, and Vision
The first page of a business plan will display the company’s mission, values, and vision. Here, business owners have total control, so it’s time to shape the company exactly how they want it.
Now, the reason this is important is that (among other reasons) a clear vision, mission, and message are essential parts of branding. Developing a clear and recognizable brand identity offers plenty of benefits to a business, and the sooner this is developed, the better.
To understand how beneficial a clear brand identity is, let’s do a word experiment. Picture a white void with four colors; red, blue, yellow, and green. What brand comes to mind?
Most people would say Google, which is correct. They’ve spent so much time solidifying their brand identity in our minds that such a simple description could remind the average person of their brand.
It isn’t just giant companies either. There are thousands of makeup brands, rock climbing gyms, and other niche companies with specialized markets who benefit from the same instant recognition. Any company can with the right strategy, but it has to start early on.
Developing Products and Services
Of course, a business can’t meet demand without a supply. What’s the easiest way to make sales? Having something good to sell.
By spending time developing the company’s products or services, a business can position itself best to make early sales and find what works.
While there are multiple approaches to product lines, the most common at the start are either to niche down or expand. For example, In N’ Out burgers offer only a few menu items, whereas McDonald’s offers dozens, but both are very successful in their own right.
Now, both strategies carry their own risks. If a business tries offering a hundred products or services and most don’t work out, then it may have lost a lot of initial resources. However, if nobody likes niched-down products or services, that’s hard to recover from.
Proper market research and competitor research are certainly important to developing a proper supply. Whatever is favored, owners must choose wisely. From there, it’s time to set reasonable prices relative to industry standards.
Defining Their Long-Term Goals
Both growth and financial goals are critical to understanding long before launching a business. Once the owner understands the nature of their business, along with their products and prices, it’s time to conduct some market research and get a general idea of the business’s goals.
How much revenue should the business expect in the first six months? First two years? How is the business going to grow in the future? Answering these questions and more is crucial to a business strategy.
No matter how successful a business is, changing strategies often requires capital. In many cases, that will require outside funding for businesses to succeed in their strategies.
First, let’s mention the importance of a business strategy when it comes to acquiring funding. When an owner establishes a business plan, it needs to be rock solid for investors and financial overseers. We will help you along the way, but both lenders and investors need to see a quality business strategy to feel comfortable offering their money.
Before we even consider launching our business, we need to have a plan for acquiring funds. A lack of funding is the primary reason why 90% of businesses fail. Fortunately, there are plenty of ways to acquire these funds nowadays. However, we first need to have a set amount in mind.
Crunch the Numbers
Before heading to a bank or looking for investments, businesses need to determine their budgets for the duration of their strategy. To determine how much they need during this period, they need to add up all of the expenses they know of and consider the ones they don’t. Essentially, they should plan for the worst and hope for the best.
For example, if they know that they need thirty employees to pay X amount weekly, which is usually the largest expense, then they should factor that in with:
- Cost of equipment (permanent fixtures and disposable supplies)
- New locations/expansions
- Cleaning supplies
- Covid-19 PPE
- Business and liability insurance
- Licensing and inspection fees
- Sales tax
- Benefits premiums for employees (if applicable)
The list goes on and will be different for every business. Once they have considered all of the expenses they know of, owners should always plan for the worst. Expect to pay on the high end for each of the costs mentioned above and others that you discover, and plan for unexpected expenses as well.
If they believe operating costs for the next six months will total $100,000, then they should plan for $120,000 just in case. Ideally, they want to use cash on hand for as many expenses as possible in their strategy, but it isn’t always enough.
Of course, they can always look for opportunities to save as they go, which may leave them with a surplus. However, as the expression goes: “it’s better to have it and not need it than need it and not have it.” Essentially, you can always pay back loans early if you need to, but you may not be able to apply for more.
1. Bank Loans
Business loans are the tried-and-true method of gaining business funding, but they are heavily dependent on the owner’s personal credit history. Bank loans should be considered a form of self-funding, as you are responsible for repaying that loan.
There is one major advantage that makes bank loans ideal for companies in need of new revenue, and it’s that you know how much you need to pay back. If you take out a loan for $100,000 at a 6% interest rate, then you know you will only pay $106,000 in return.
Contrary to investments, bank loans don’t take equity from your business, allowing you to control your business entirely if you rely primarily on loans. Once it is paid back, that equity is entirely yours.
However, bank loans are riskier for the business owner. If you don’t pay them back, it could destroy your credit and, by extension, prospects for future business and personal loans. Also, if you have poor credit, or if the bank doesn’t trust you for whatever reason, you may have a difficult time securing a loan.
Also, you will often need to use collateral, especially for larger loans. Likely, this will be your house or the largest asset you own, which means that a failed business could be a major personal loss.
2. Private Investors
Private investors are a saving grace when you can’t get enough funding through loans. Also, you may not feel comfortable seeking that much debt in the first place. Either way, investors can purchase equity in the business with cash for a mutually-beneficial arrangement.
As an undeniable benefit, there is less of a personal risk when using investors to fund a business. A business owner will not destroy their credit rating or lose collateral if the business fails. Instead, it will simply be a loss for the investor.
Of course, the obvious downside of using investors is that they take equity from the business owner. As a business grows, you will owe them more when they decide to liquidate.
Crowdfunding is when you post your initial offering on a crowdfunding website along with a detailed business plan and (usually) small-time investors may choose to invest. Keep in mind, these are still private investments.
A major benefit of crowdsourcing is that it’s convenient and readily available. If one investor says no, you don’t have to continue looking for others. One post is all that it takes.
However, similar to finding investors the traditional way, you will be exchanging equity for cash.
If the business really needs cash, the owner may consider incorporating the business, allowing for equity to be publicly traded. However, the initial public offering (IPO) does have to be in compliance with the SEC.
There comes a time when gaining private investors simply isn’t enough to stimulate growth anymore. Incorporating is a major step for a business that can drive capital into the hands of companies in need from public investors.
In most cases, but not all, businesses will only incorporate once they have steady revenue and enough brand awareness to get on Wall Street’s radar. However, that’s not always the case.
You will not have the same control over the business as you would with a sole proprietorship, but you will have easy access to potential investors, both big and small. It’s a trade-off many companies choose to take.
Prior to incorporation is also one of the most common reasons why business owners would need to write a new business strategy. Well, let’s talk about how to start.
How to Build an Effective Marketing Strategy
After a lack of funding, a poor marketing strategy is the next most common reason why so many businesses struggle to grow. Every business needs to develop an effective marketing strategy, one that is both effective in the short term and building toward something greater for the long term.
If an owner doesn’t have any marketing experience, they may consider taking on some marketing services or business consulting. They will have to sacrifice one of their most valuable resources; either their time or their money. Either way, here’s how to get started.
Build a Website
We highly recommend seeking professional web design services, as a business website needs to live up to the standards of the time. We cannot stress that enough, as a company’s website is easily the most valuable asset for growth, no matter what type of business it is.
No other asset affects advertising, organic traffic, email campaigns, social media activities, and every other tactic as much as a website. If a website is the center of a company’s marketing strategy, then it needs to be designed properly.
With a proper user experience (UX) design, a business will see a boost to its conversion rates from ad campaigns (and other marketing efforts) as well as a boost to organic traffic from search engines. The more that’s put into it, the more you will get out.
If a business owner does not intend to allocate much funding toward their website, then they need to dedicate time to build one properly. Websites are essential to compete in the business world these days, especially considering their role in marketing.
Also, websites are the best possible place to showcase a brand, including its mission, values, and aesthetics. Ensure that every page of the website is on-message and on-brand.
In terms of making short-term gains, there is nothing better than advertising. The best part is that there are so many great options to choose from, some of which will offer a free boost to new users.
For example, when a business uses Google Ads for the first time, they typically receive early credits of up to $300 for new businesses, which is excellent to help them experiment with your campaigns early on.
Just remember to target your ads as closely as possible. Initial market and competitor research is needed to prevent unintended waste in your campaigns. You need to use the right keywords and filters to maximize the efficiency of your ad and avoid losing money.
Consequently, you should set an advertising budget in advance and list it within your business strategy. It’s recommended that small businesses allocate between 7% and 8% of revenue toward marketing efforts, and advertisements will likely make up the bulk of that early on.
Of course, if you don’t have revenue, then use those same percentages with your overall cash on hand. Focus on improving your conversion rates to get the most out of each campaign, especially early on. Ads are a great way to generate fast revenue, so spare no expense.
Use Free Marketing Tools
Fortunately, we live in a world filled with endless opportunities to build free traffic to our websites and, by extension, new customers. Social media and email marketing are entirely free to start, and they’re very effective ways to build brand awareness, drive traffic to your site, and retain existing customers.
Not only will concrete strategies in your business plan help you build funding, but they will help you implement the appropriate strategies moving forward. For example, you may have a content strategy for social media in advance. From there, you will only have to time your posts correctly.
Social media and email marketing are great places to develop your brand, build brand awareness, and interact with your audience appropriately. Branding should be a key part of these strategies early on. However, it won’t matter if nobody sees them.
Both of these tools should be used to increase customer retention, as an increase of 5% in customer retention leads to an average of 25% increase in profits. It pays to keep your customers.
Social media is a great place for businesses to interact with existing users and customers, allowing them to stay up to date with the brand’s latest news and promotions. An even more effective tool is email.
To build your email list, you should leave prompts throughout your website at the time of purchase, top or bottom of every page, or as popups. It doesn’t cost more money to send an email to ten thousand people than it does to send to ten, so start growing your list as soon as possible.
To build a social media following, use organic options like hashtags, trends, and proper content timing. Comment on viral content, share user content, and run promotional content to help spread the word about your company. Remember, this is all free, so use it to the fullest extent possible.
Optimize These Tools
A plan for social media and email marketing should include proper timing and content creation. Marketing teams and planners should discuss, plan, and implement a schedule to time their content.
Moreover, there are best times to post on social media, and best times to reach someone via email. When businesses time their content correctly, they expand their reach for free.
While this can be done with advanced automation software, marketers can also create content in advance, set a timer on their phones, and post or send the content at the appropriate times.
Using the right templates, visual imagery, and trends will only help expand your reach and improve the efficiency of a marketing campaign without spending an extra dime. Businesses would be remiss to ignore such an easy advantage.
Building Organic Traffic
Now, with a little research and groundwork, this is another entirely free marketing strategy that has the potential to drive free traffic for years to come. The best way to do this is with a content marketing strategy that is focused on quality.
Once you have a quality website (which is essential), the foundation is set. From there, you can build a blog, podcast, or any other type of content you want to promote. However, don’t just do it for Google.
Even if organic traffic is your goal, Google has penalties for low-quality content that manages to rank higher. Consequently, the only way to ensure long-term success for your content strategy is to promote quality content.
No matter what type of content you produce, use a healthy mixture of long-tail and short-tail keywords. Long-tail keywords will help you drive more incremental growth, but that growth will come sooner.
Your end goal should be to rank on the top page for relevant short-tail keywords, as these have the highest traffic (but also the highest competition). For example, a fitness center would use short-tail keywords like “gym” or “health club” and long-tail keywords like “cycling classes in Providence, RI” or “personal training services near me”.
Sure, fewer people search for the latter two, but they are easier to rank for. Also, the traffic they bring in is highly relevant and much more likely to generate leads and conversions. Organic marketing should be a part of every business strategy in 2022.
Using Proper Analytics Tools
Business owners need a way to track important metrics related to their marketing campaigns so they can make adjustments as needed. For that, you need to use the right analytics tools.
Google Analytics is a great way to start, as it can measure key metrics on their website to determine how people land on their site, how long they stay, and how they interact with it. This insight will let business owners and marketers know what’s working and what isn’t, which will save them money in the long run.
Not only that, but they can also track their ad campaigns, email, and social media as well. Anything digital can be tracked, and there are plenty of available tools for it. Business owners must find which ones work for them and use them in their marketing strategy.
One of the biggest mistakes business owners make is to not integrate their marketing strategy. SEO, PPC, and other modes should not be viewed as their own categories, but rather as a piece of a much larger puzzle. Businesses large and small can benefit from integrating their marketing strategies to allow for maximum growth.
For example, if a business has a specific page where they want to direct users, then using this as a landing page for PPC and email campaigns, sharing it on social media, and optimizing it for search engines will ultimately yield the most favorable results.
Especially if the business is local, then there are plenty of ways businesses can use physical marketing to their advantage. Flyers, business cards, and word-of-mouth marketing are great ways to start, but it doesn’t stop there.
Hosting events, affiliate marketing, getting listed on local directories, and any other type of marketing you can think of will go a long way. The best part about physical marketing for local businesses is that you’re targeting the right people for little to no expense.
Another essential part of physical marketing is customer relations. Customers are a business’s best marketing tool, considering the effectiveness of word-of-mouth marketing. Improving a company’s customer experience will ultimately help grow customers but, more importantly, retain existing ones.
Figure Out Staffing
Part of your strategy should involve improving your onboarding process, specifically involving both recruiting and training. Some businesses rely entirely on one person, a team of freelancers, or something for customers to download. However, most businesses rely on their employees, who often play essential roles in business operations.
Whether full-time or part-time, one job or thirty, businesses need to determine how they intend to staff their business. Here’s how to build and manage a quality team.
Have a Recruiting Plan
Recruiting is a lot like marketing. There are so many online job boards and freelance marketplaces to list the jobs or gigs that businesses have available, and most only require a small fee.
First, business owners must determine which positions need filling. Do they plan to hire marketers, general laborers, cashiers, app developers, or anything else? Depending on the updated business strategy, a business may require a lot of new staffing.
Many positions are specific to industries, so we won’t list specific positions. However, planners must determine which positions need filling before recruiting practices can take place.
From there, they will post available jobs. Highlight specific reasons why people will want to work with your company, including company culture (or the one you seek to establish), benefits packages, salary, time off, schedule, mission, and more.
Also, diligence is key with application screening. Take the time to review resumes and applications thoroughly and only call people who are qualified. Once a business has consistent revenue, owners may begin taking chances on potential candidates, but not during the early days.
From there, recruiters can interview each potential candidate and ask them everything they want to know about their prospective teammates. Employees have some of the most control over business operations, so recruiters must ensure that they are choosing the right personalities and qualifications for the jobs that need filling.
Properly Train Employees
Setting appropriate expectations with your employees upfront and offering proper training will ensure that your daily business operations work at their best from the beginning. We mentioned the importance of customer experience, which should be a large part of training for employees who interact with customers.
However, there’s a lot more to it than that. Ultimately, it pays to continuously train your employees. Business owners should always seek to facilitate employee growth throughout their tenure, which all starts with proper training.
When businesses develop and implement an appropriate training plan for their employees, they will see improvements in their performance.
Remember, training is also an ongoing process. Try to allocate some funding for training and potentially ongoing training or education for your employees, depending on the nature of your business. However, this can be done later.
If you don’t have the budget for all-staff training, you can offer specific workshops or classes as a professional development option for your staff. When employees take courses outside of work, they can boost their resume and performance, and they’ll bring their skills right back to the workplace.
Performance evaluations are an excellent way to offer specific feedback to employees over time. When employees receive this individual attention, they are more likely to understand and retain the advice provided to them.
Once every six months or so, managers should sit down with employees and discuss their performance. Businesses should always keep a paper trail of these discussions and make notes afterward to follow up on the next evaluations.
How to Write a Business Plan
Now that you know more about company planning, this knowledge won’t go to much use if you don’t know how to write a business plan. Planning in your head doesn’t cut it. Not only do you want to write it out to show potential investors or lenders, but you want to have an organized reference to return to as needed.
In the first couple of years of operating a business (and beyond), business leaders would be far more effective if they had a point of reference to review when making important decisions. Here’s how to get started.
Have an Organizational System in Mind
As you can tell simply by the length of this article, there are plenty of important aspects of a business strategy that require attention. Because of this, you need to develop a strong organizational system for your plan.
If you want a hard copy, then get a binder with tabs and label them based on each plan. Breaking sections into categories and subcategories is highly recommended. For example, a “marketing strategy” category with “organic marketing” and “paid marketing” subcategories is appropriate.
However, if you intend to keep your business plan digital, then use a program that will allow for proper organization.
Either way, this will help investors and lenders understand and review your strategy and make it far easier to use as a reference in the future. You don’t want to have to skim through a hundred pages to find your budget information.
Make Decisions Based on Facts
One of the biggest mistakes for business owners is operating on “what-ifs”, wants, and dreams. A clear vision is critical to the success of a business, but it has to be entirely rooted in reality. An attitude of “my product is the best, so this is going to work no matter what I do” is almost guaranteed to fail.
For example, if a business isn’t generating any revenue, then the business owner having “faith” that it soon will is not a concrete solution. Maybe it will, maybe it won’t, but there is no evidence to suggest that it will.
Instead, the appropriate response is to accept the fact that revenue needs stimulating and work to address it immediately. Having a plan for that in the first place is the best solution. In general, business owners should develop the habit of using facts in decision-making.
Start With a Rough Draft
Structure your rough draft exactly how you want your business plan structured and fill in the blanks. Think about it the entire time as if it’s the final product, but don’t give up once it’s finished.
Generally, you should start with an executive summary, which is the first page of the plan. Here, you will briefly summarize the vision, mission statement, and primary focus of your enterprise.
Next, you want to list your business objectives and goals, both long-term and short-term. This is a great time to discuss funding, monetary goals, and how much money you intend to earn/spend.
After that, you will need sections on your business and management structure, products and services, marketing and sales plans, and financial projections and analysis. These will all require individual sections. Anything else that is relevant to your own business, along with an appendix at the end, should be included after.
Remember, you will be showing this either to a bank or to investors, so it needs to be perfect. From there, review the entire plan section by section and make adjustments as needed.
Ask for Expert Help
If you’re a first-time business owner, we understand how overwhelming it can be to develop and implement all of these strategies on your own. There are too many learning curves between marketing, funding, and managing a company, so nobody is expected to learn it overnight.
Well, business consulting services can help you learn the ropes in as short of a time as possible and help you develop your business plan. Ultimately, this is the best way to set a business up for success, possibly before it’s even launched.
Don’t Forget About Ongoing Performance Management
Once our business is launched, we are not done by any means. Business owners work hard and if that doesn’t sound like it’s right for you, then it may be best to invest your money elsewhere and look for more passive means of earning an income.
You can’t properly manage or change an existing strategy if you don’t know how it’s working. Continuously analyze financial statements, marketing strategies, and other key performance indicators (KPIs) to understand how to make appropriate adjustments over time.
Also, ask customers for feedback regularly. They are your most valuable asset when it comes to understanding business performance, so ask them to fill out surveys or leave feedback both in the digital space and in person.
Make Daily Processes More Efficient
Through proper process management, work to get the most out of your employees, as well as day-to-day operations. Just like with your marketing campaigns, the more efficient you make all of your business processes, the higher your profit margins will be.
Asking for employee feedback is a great way to generate ideas. They are the ones who experience the most inconveniences and challenges (as a whole) throughout daily operations.
For example, if a team of three thousand employees experiences ten minutes of interruptions each day, that’s the equivalent of losing 500 hours of work.
Consider Outside Help
Whether it’s with your business strategy or the actual implementation, the business world is unforgiving. Fortunately, you can set yourself up for success with the right consulting services. However, you may not know which services are right for you.
Well, learn more about strategy consulting vs management consulting to help make that decision. Either way, you should take all the help you can get, especially early on when a business is most sensitive.
Build Your Business Strategy Today
Now that you know the key elements of a business strategy, how to write a business plan, and how to implement one, there is no time like the present to get started. The sooner you do, the sooner your business can take off. Stay up to date with our blog for the latest business tips and feel free to contact us with any questions.