Strategic Business Management
As a business owner, the things you want to do with your business are not necessarily documented. Advisors will say “you need a business plan”, bank managers will insist on one before approving that vital loan you need to fund your expansion. Whether or not you codify what you want for your business, you should have an understanding of what strategic management is all about so you can drive your business forward, ensuring you can achieve/maintain sustainable competitive advantage.
Strategic business management reduces itself to 3 easy questions:
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Where are we at the moment?
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Where should we be?
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How do we get there?
Understanding Your Current Business Position
Where are we at the moment?
The first question examines the position the business is currently in, this situational analysis may be in a variety of formats but as a broad guideline consider conducting SWOT and PEST analyses of where you are currently. Don’t be scared of these acronyms, they are actually very easy to understand and can give you interesting insights into your business and improve your thinking. You can brainstorm these with other team members, or your family/friends if you’re a lone wolf.
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SWOT Analysis
SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. Your strengths and weaknesses are internal factors in your business: What are you strong at? What are you better than your competition? What aren’t you doing as well as you could? Where are you falling short? Opportunities and threats are usually outside factors, so what opportunities exist in the marketplace? Threats might be from competition entering your market.
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PEST Analysis
Then it is essential that you consider the broader external world, there are numerous acronyms for this sort of analysis (STEP, PEST, STEEPLE, STEEPLED to list a few) but they all equate to essentially the same thing: Political/Legal, Economic, Social and Technological factors. I am not going to dwell too much on these since they are explained on their own, such as the arrival of the internet (Technological) that has and continues to influence heavily on business practices. Analyzing the general environment can enable you to identify areas for development or point towards a need for adjustment.
Where do we want to be?
So you’ve broken down where you are at the moment, the exercise itself will normally generate some intriguing ideas, then you have to consider where you would prefer to be. The solution to that question is the foundation of your strategic business goals, they can be broad in scope and do not necessarily solely need to be focused on turnover.
In a big organisation, there will be corporate goals that underpin the general direction of the business, these then feed down through the various departments who will each have their own set of goals so that there is a coordinated and synchronized approach to taking the business where it wants to be.
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Setting SMART Goals
In a small business you might only have a few goals but do try to think outside the box here, as the saying goes, “turnover is vanity, profit is sanity, cash is reality”. Don’t pursue turnover increases for the sake of it, your underlying profitability is what truly counts, and your goals must be realistic and attainable (more on that next).
When defining your targets it is not sufficient to put: ‘Increase sales’ or some other unsubstantiated sentence, your targets must be SMART, another acrostic, sorry, but a helpful one. Ensure your targets are satisfying this requirement, they must be: Specific, Measurable, Achievable, Relevant and Time-related. A sample of the above unclear goal made SMART would be: ‘To grow sales by 10% in the next 6 months’. These SMART goals allow you to measure the success of your strategy and tactics.
How do we get there?
You now understand where you are today and where you wish your business to be, but how are you to get there? How do you intend to meet your goals? This is where tactics and strategy enter the picture, your strategy being the big overall plan, while the tactics are the nuts and bolts of what you are actually going to do in order to meet your goals.
And there you have it, ask yourself
- Where are we now?
- Where do we want to be?
- How do we get there?
These are the building blocks of strategic management.
Measuring Success and Continuous Improvement
Lastly, don’t forget the feedforward loop either, this is the entire purpose of setting SMART objectives so that you can measure whether or not they’ve been met. Once you have executed your plan you must review how successful your selected strategy and tactics have been by asking:
- Have we arrived?
- Have we achieved our goals?
- If not why not?
Those responses feed forward into your next round of planning and the process begins all over again, rinse and repeat.
Logical Fox Marketing
Possessing a first-class honours degree in IT and Business Management from the University of Manchester, a Masters in Marketing with a specialist Internet Marketing course and a Postgraduate Diploma in Marketing, Colin is superbly qualified to analyze and guide upon the most recent in marketing theory and best practice. Having had a few years’ experience teaching Strategic Marketing Communications on the Chartered Institute of Marketing’s Postgraduate programme and having over 20 years of established commercial experience establishing a multi-million pound e-tail business.