Business strategy, at its core, seems rather simple: Create a product or service people need. Acquire customers in sufficient quantity to drive revenue. Make more in revenue than you pay in expenses. The profit is yours to keep or reinvest.
Why then, do so many business strategies fail?
Most entrepreneurs can pick quantifiable targets that become goals, and most are also pretty good at visionary thinking.
However, the bridge between setting a goal and realizing that goal is the ability to support your vision with a strategic plan. That means devising the plan, focusing on the plan, and executing the plan. And this is where most strategies turn to mush.
Related: Elements of a Business Plan
1. You think you don't need a plan
More than 80 percent of small businesses don’t have a clearly articulated, written strategic plan. As a consulting firm, this is what we usually hear:
- We’ve always made it up as we go so we can be flexible and innovative.
- The plan's all in my head, but it’s solid.
- The plan is so brilliant it has to be top secret.
- We had a plan. It didn’t work, so we don’t do that anymore.
It’s easy to run a business with the attitude of, “I'll just take advantage of opportunities as they arise." But how do you recognize an opportunity if you have no plan?
The human mind is drawn to patterns it considers important -- either for safety or for pleasure. Be clear about which patterns you want to attract, and you'll be more likely to find them.
The same principle applies to your business. The discernment problem gets worse as the company gets bigger. You end up with everyone heading in multiple directions, tackling work that doesn’t further the strategy and failing to recognize opportunities that are begging to be picked.
2. You have the wrong type of plan
Traditional business plans are for investors and banks. They don’t really give you day-to-day guidance for implementation.
You need enough big-picture thinking to know where you're going in the long run. But ultimately, you need to plan out what you're going to do today and tomorrow to get there, and everyone on the team needs to be clear on their part. The focus needs to be on execution and results.
3. Your plan is too rigid
If you're clear on the destination, your plan can be flexible on how you get there. Things will happen to derail your plans, but when you know your goal is to get to a specific destination, you can take an alternate route.
If your plan is highly detailed and long range, it will require a lot of work to revise it. This may cause you to follow it stubbornly or abandon it when it approaches a dead end.
Agile planning is the solution. You need a compelling three-year vision, but you’ll set goals for the next quarter. Get crystal clear about what you need to do today and tomorrow, and take action.
4. Your plan ignores your culture and business structures
Setting a goal is not the same thing as creating a strategy. In fact, without a realistic plan to get from where you are now to the goal, you don’t have a strategy.
For an effective strategy, you have to consider all the factors:
- Products and services
- Marketing and sales
- Business systems and tools
- Success metrics
- External factors
5. You don't really want to succeed
You say working on business strategy is important. Yet, if we look at where your time goes as individuals and as a team, it isn’t on planning or even execution. It's spent on the fun, crisis or busy work.
When you want results more than you want the status quo, where you spend your time and effort will prove it. The world needs more of the 10 to 20 percent of successful entrepreneurs who plan and implement strategies with great effectiveness, drive innovation and create jobs.
Now what are you going to do about it?