Small business owners often request that we review their existing business strategy and offer advice on how they can grow their businesses. While this is often dependent on details specific to the business and the industry, it is possible to employ some simple tools to evaluate a business strategy in such a way as to generate growth, operational efficiencies, and ideally, increased profits over the long-term. We use the Business Model Canvas to evaluate a company’s strategy and the major components of how to translate that strategy into actionable steps to grow their business. Consider the following actionable items from conception to execution.
IMPACT: Are you hyper-focused on one business concept? Often times we see business owners that have an interest in multiple facets of the business but lack focus on any given one. Whether you are starting a new venture or you are several years into growing your business, it is critical to focus on doing one thing. It is easy to start something and put a ton of energy into it, but 3 months later become intrigued by a new idea and switch their attention to that new concept. Thus, neglecting to ever fully implement the first concept.
Have you considered your target market? Who are you selling to? What are the best-selling channels? How do your customers like to buy? Where? When? Who is the actual buyer? Is it the end consumer (for business-to-consumer businesses)? Or is it the CEO, CFO, or other role within a company (for business-to-business services/products)? Ensuring that you know your audience and that you have created a product or service that uniquely meets their needs is a key pillar in any business model.
Why should they buy from you? How do you differentiate yourself from your competitors? These competitors can be direct or indirect. Breaking through a crowded space entails investing heavily in marketing to develop your unique position in the market. What makes you different, unique, special, etc.? How can you get that message across quickly and cost-effectively to lower your sales and marketing expenses, decrease your sales cycle, and improve profitable growth?
How would you define your business goals? What is your company trying to achieve? Defining a clear vision is important for many reasons in that it can help you attract employees who believe in the mission and help you execute it and your surpass our goals. Clarity of purpose crystallizes your thinking around the tough decisions. Once you know exactly where you are headed, you will work that much harder to not deviate from the path to success. Once you have the goals clearly delineated, it makes creating the business model and corresponding financial model easier.
What is the degree of risk involved? High risk, low risk? Identify the inherent degree of risk involved with your strategy to date. The riskier the enterprise, the harder it will be to execute, raise capital, attract partners/employees, etc. However, it also lowers the potential rewards. There are many ways to mitigate the risk of success, dependent upon the type of business you are building. It is important to note that some entrepreneurs are more risk-adverse than others. There is no “right” answer in terms of how much risk you should adopt. What is important is that you should not take on so much risk that it affects your well being.
How long are you committed? What is the window of your business? Short term. Long term? Some owners have a business that has a shorter shelf life simply due to the nature of the industry. Some people would prefer to build a company and sell it as quickly as possible so they can move on to the next idea (serial entrepreneurs). Knowing your time frame and ensuring that your leadership team (partners) and investors are aligned is a critical key to successful alignment of goals, and therefore, strategy.
ACHIEVEMENT AND EXECUTION:
Anticipating Future Growth- Is your strategy consistent internally? Can you achieve this on the outside (partners, investors, public interest, etc.)?
Can you get there with your current resources and allocations? If not, what resources do you need? Are you constrained by time, money, management or staff? Everyone hopes and plans for growth. Successful entrepreneurs ensure that their growth objectives are indeed supported by their business strategy. They tie these objectives to the resources that they bring to implement that strategy successfully across the organization. From hiring the right people to creating SMART goals for everyone in the company; from raising the optimal amount of working capital to actively managing the balance sheet for proper, risk-adjusted growth; and more.
How do you deliver? Do you have an efficient way to produce and deliver your products, services and your message? Think about your “supply chain,” i.e. all the moving parts, from initial purchase to creating your product, packaging, and shipping finished products. There can be dozens of people involved, both within your company and at suppliers. With consideration of all the available options, do you have the most effective process in place? Have you thought about how to increase throughput? For example, can you find near-shore (or even onshore) suppliers vs. offshore to cut shipping times? For a service-based business, can you streamline the number of steps and/or create economies of scale in how you deliver your services?
How do you charge? There are dozens of different ways to price your product or service. The key is to price in such a way as to make it easy to buy. Reduce “friction” in the buying process by charging in a way that your customers want to buy. The more difficult the process, the more frustrating the buying experience will be, likely turning potential customers away. When CEOs make things overly complicated because they are trying to capture every nuance or minimize every conceivable risk, they frustrate their customers and end up losing sales. Often, they do not know this is happening! Simplify your pricing and provide payment options that make sense to your customers (and provide you with profitability). Deploying effective strategies in the workplace is one of the greatest feats of a CEO and requires consistent assessment. At The CEO’s Right Hand, and through multiple interactive sessions, model reviews, analysis, internal reviews, and evaluations, with our clients, we underscore not only the areas that need improvement but also capitalize on what is working so we can integrate both into a business model that generates top-line revenue growth.