Top Two Formulas for Creating a Small Business Strategy

If you think that a business strategy is not important because you only have a small venture, then you need some serious rethinking to do. Creating a strategy is a crucial task of a business owner. Even if you only have a garage-type operation or an Internet-based home enterprise, the strategic direction that you will set for your business will determine your failure or success.

Unfortunately, most small business owners are intimidated by the word strategy. They will simply create a short-term business plan for their weekly or monthly operations. If you are following this approach, then you will have a difficult time transforming your small business into a big and highly successful corporation.

You have to remember that creating a business strategy need not be too complicated. There are simple ways of devising a strategic plan for your small venture. Here are the top two models or formulas that could help you.

The Goal-Focus Graph

Creating a strategy graph that focuses on your bigger goals is the easiest and simplest way to formulate a strategic plan. You do not have to earn a business degree to create the goal-focus graph. In fact, you can finish creating the strategy in a few hours.

What you need to do is to get a clean sheet of bond paper. Consider this paper as a representation of your 5-year strategic plan.

The bottom edge of the paper is year zero while the top-most part is the fifth year. On the bottom part of the paper, write the current status of your business. Then you should write your five-year goal on the upper edge of the graph.

The blank space of the paper should represent the x-number of years or months and you must set concrete and quantifiable milestones for each year or month. Make sure to set the major tasks that you have to accomplish to reach a milestone. Once you complete the goal-focus graph, then you will now have a working business strategy which should guide you for the next five years.

Following the Kaizen Model

The Kaizen model is a Japanese invention focusing on performance and productivity. It is practically a hands-on business strategy which could become the unique culture of your enterprise. Even the global MNCs of Japan are following the Kaizen model to chalk-up more achievements.

The Kaizen business strategy is not complicated. In order to simplify your approach, you need to focus your efforts on improving two things: customer relationship and employee morale.

Your intra-corporate strategy should be centred on teamwork, quality, rewards system, discipline, and thrift. On the customer or sales side, the focus of your strategy should be customer satisfaction, giving greater value, building lasting relationships, and maintaining cordial communications.

If you apply the Kaizen principle to your small business, then you are already half-way to your success. This is a proven business strategy that promotes greater customer loyalty and harmonious relationships within the workplace.

Creating a business strategy for your small business is not difficult. You can easily create a strategy as long as your business goals and objectives are clear. Once you have created a strategy for your business, you have to apply it consciously in order to achieve greater success.

What Does Exit Strategy Mean To You?

What does “exit strategy” mean to you and when do you think you should start thinking about it?

That’s not an easy question to answer without some context or specific examples. Here are a few:

  1. It (exit strategy) might mean how you intend to sell your business. Will you use a broker? Will you try to sell it yourself?
  2. It might mean saving, perhaps into a pension, while you run the business so you can retire regardless of what happens to the business; maybe you plan to shut the doors when the time comes and walk away.
  3. It might mean succession planning – training a family member or trusted right-hand person to manage the business after you retire. Maybe you’ll have a phased buyout for your successors. Or perhaps you’ll put your shareholding into trust for your family.
  4. It might mean you will build it to sell to a specific buyer or type of buyer. If you’re developing a new brand of vodka, for example, you might aim to sell to Diageo.
  5. It might mean building a business that is profitable and grows whether you are there or not so that you own a valuable asset, which you can sell easily as a going concern or take a passive income from after you put it under management.

With these thoughts in mind, when should you start thinking about it? In other words, how long will it take to develop your exit strategy and execute it to fruition?If an exit strategy means example 1 to you, then you’re probably looking at 12-18 months. The others will take more time.

For instance, if option 4 is your choice, you may have missed the boat if you didn’t consider your exit at day -1, in other words before you even start the business.

For the other options, you at least need to start thinking about exit planning as soon as your business becomes profitable, the third phase of business. Why? Because it will dictate, or at least guide, how you use the profits.

Of course, this might all make sense logically, but you’re busy growing your business, you haven’t got time to think about exiting.

Except having an exit strategy is all about growing your business.

Have a look at those examples again. What do they all have in common?

They all involve (with the exception of example 1):

  • making more money than you need today because you will invest for tomorrow,
  • growing an effective team,
  • delegating day to day tasks to other people

Which of those aren’t about growing your business today? The more day-to-day tasks you delegate, the more time you can spend on finding ways to grow your business and make more money. The more money you make, the more you can invest in, among other things, hiring great people, to delegate even more to.This is succession planning in practice. It’s also how to build a more valuable business. One that is more sellable.

For privately owned businesses, having this kind of exit strategy is good business strategy.

Have you started working on your exit strategy? It’s never too soon.