The idea that all great businesses start with a great strategy and business plan is certainly nothing new, yet it’s amazing how many business owners still don’t take the time to create one. This is a huge mistake – it is the business equivalent of starting an expedition without planning your destination, your objectives or the equipment you will need on your journey.
If you are to be successful in business, it’s essential that you have a clear strategy.
There are many ways to describe a business strategy, including ‘big picture’; ‘overall plan’; ‘market positioning’; ‘niche’; and they all have an impact on the way that an organisation can change and adapt to a changing market and economy. Consider this example of how this sort of business transformation works in the real world…
If you were running a business before the invention of the car, making quality horsewhips out of leather, then you would almost certainly go out of business if you continued to define your business as ‘horsewhips’ once everyone began abandoning their carriages. However, if you defined your business as ‘leather travel accessories’, the introduction of the car could easily become an opportunity to expand the business, perhaps by adding leather steering wheel covers or driving gloves to your range of products.
This is the key to the kind of business transformation that keeps businesses afloat through changes in the economy. In fact, it is also the key difference between successful companies and the rest. For example, consider the transformation of Apple Inc. when it positioned itself not as a maker of computers, but moved towards music, telephones and subsequently portable devices. This all came from a change of business strategy. It added to their business, but took nothing away from the original business of making computers; indeed, it created more revenue to invest even more heavily in this area as well.
Defining your business in a way that is ‘future proof’ is the first step towards achieving business transformation. You need to really get to the heart of what you’re doing, so there’s no confusion in the minds of you, your people or your customers. Perhaps you could broaden your business base by subtly adjusting the way you define it, as in our earlier example?
The next important step is to put things into action. A lot of businesses get confused between a strategy and a business plan. In our experience you should distinguish between them as follows. A business strategy is about the overall direction of your business in the medium to long term; a business plan is all about how you get there, in simple stages, in the short to medium term.
This two step process means that you can adapt your business to the practical events and to changes in the market or economy.