- Take time to step back from your business and define your goals, strategies and tactics.
- Think about where you are now and decide where you want to be.
- Consult with staff and/or advisers.
It’s easy to get so caught up in the day-to-day running of your business that you lose sight of larger objectives. Here we highlight the importance of taking time to think strategically and how to do it effectively.
Strategic thinking is about stepping back from day-to-day business to make sure you're heading in the right direction.
Distinguishing between goals and strategy
Your vision helps you to decide your goals: What you'd like the company to look like in the future. For example, if you run a dog day care business your vision may be: “To be the first choice for busy dog owners in Sydney who want to make their lives easier”.
Your strategy is how you’ll get there. Considering the dog day care business, your strategy might be to differentiate yourself by making it more convenient for customers to deal with you than your competitors. Without a strategy, you can waste a lot of time and energy doing things that aren’t important.
People can often get confused between strategy and tactics. Strategy is the broad plan for your business while tactics are the specific steps you need to take to make it happen.
Your tactics to achieve that goal might include:
- Finding premises in locations that are convenient for customers to drop their dogs off on their way to work
- Extending your opening hours to align with your customers’ working hours
- Offering extra services like grooming to give your customers ‘one-stop shop’ convenience
Follow a structured planning process
1. Take a step back
It’s easy to get so tangled up in day-to-day issues that you don’t make time to think strategically. Being too close may also blinker you to opportunities or threats.
Start by stepping back from working in your business, so you can better see the wider picture.
Schedule in time to do some thinking away from your business, consider strategic directions and change your focus from management to leadership.
2. Think about where you are now
Strategic thinking starts with analysing and clearly stating your current position.
- Conducting a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to identify where your areas of focus should be. For example, is there an external opportunity that aligns with an internal strength? Or is there a weakness you need to address in order to tackle a potential threat?
- Assessing current marketing and operating strategies, such as distribution channels, and any alliances and joint venture partners.
- Prepare a Marketing plan, read "Why every business needs a marketing stratgey and plan."
- Consider external factors that may impact on your business; use frameworks such as ESTEMPLE to help identify the most important factors:
3. Decide where you'd like to be
Next, decide what you'd like the business to look like. Set specific targets and timeframes. For example, your current market share might be 10% of the total market and your profit margin might be 34%. You might decide to set two targets to achieve, such as growing your market share to 20% and increase your gross profit margin to 40% within three years.
To get where you'd like to be, you'll need a strategy (that is, a set of decisions about the path you’ll take).
You might decide to:
- Form new alliances or joint ventures
- Reposition your business in the marketplace (for example from low priced products and services to top of the market)
- Differentiate your business and develop your competitive advantage
For each decision, you need to develop a list of actions and steps (tactics) to implement the new strategies.
4. Make your strategy unambiguous
Once you’ve decided on your strategy, take some time to word it clearly and make sure everyone understands it. It is your business roadmap. You want everyone heading toward the same place.
Consult with staff and advisers
As owner and leader of the business, you decide the strategy. But you’ll benefit from asking others for input.
Tap into your workers’ knowledge
Your staff often know more than you realise. For example, if they deal with customers more often than you do, they can probably tell you what customers want and need.
Gain staff buy-in
People are more likely to commit to goals they’ve helped set.
Some questions you might consider at a staff meeting are:
- What has changed over the last 5 years?
- What is likely to happen in the next 5 years?
- What trends should the business discuss?
Speak to your advisers too
Involve your advisers and stakeholders (such as your accountant and bank) in the strategic planning process. You’ll tap into their professional expertise and their knowledge of trends.
Check your bearings and alter course if you need to
Strategic thinking isn’t something you do once and forget about. The broad terms of your vision are likely to remain true, but you will need to adjust along the way to allow for changes you didn’t expect or anticipate in both the environment and market, and your business as a result of implementing your strategy.
Download our SWOT analysis template (PDF 137kB) to help identify your strengths, weaknesses, opportunities and threats.
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