Three Business Strategies to Have in Place
No Plan? Ouch.
Charging off into the business world without a clear strategy is like riding in to battle without a plan — things are going to get messy.
In order to be successful, businesses need to have clear objectives and strategies in place to help them meet their goals.
Three Main Business Strategies
Having a gung-ho attitude in the business world is all well and good (sometimes it’s great to throw caution to the wind and just get on with it in certain circumstances) but when it comes to the general running of your company it pays dividends to sit down in your office’s “Situation Room” and create a plan.
Here are three business strategies you should spend time on.
A financial strategy is an important to a business’s overall strategic plan.
The financial strategy sets out how the company will finance its operations to achieve its objectives now and in the future.
A financial strategy identifies your business’s targets and outlines the milestones that need to be achieved to reach these targets over a 3-5 year period.
Here’s a few things to keep in mind when drafting a financial strategy:
1. Where is the Business Now? Outline where your business is at this moment. Include things such as the resources you have available and the key risks you currently face.
2. Where is the Business Going? Focus on key financial targets over the next three to five years.
As a minimum, this section will include:
- The funding mix that you’ll have to secure to reach your goals (i.e. the balance and sources of restricted and unrestricted funds)
- Funding dependency. This is the realistic level of funding to accept from investors (or donor agencies) expressed as overall income
- Calculation of reserves. This is usually expressed as the number of days that the business could continue without external funding
3. How Will the Business Get There? This outlines the actions you will take each year to finance the plan and achieve your targets. This section of a financial plan should include:
- How to finance core costs
- How to increase reserves
- How to replace and maintain fixed assets
- Making use of under-utilised resources (such as office spaces or vehicles etc.)
- Increasing fees for goods or services to recover costs of making goods or providing the service.
A marketing strategy is your overall game plan that outlines how you aim to reach more customers and grow your customer base.
However, a marketing strategy and a marketing plan are two different things. A marketing strategy outlines what you want to achieve for your business and marketing efforts whereas a marketing plan outlines how you will achieve those goals.
Before writing a marketing strategy you must know how your product or service is unique (known as a USP or “unique selling point”) and how it benefits your customers.
You should then do some market research to understand your competition (and there is ALWAYS competition) and your target market.
Once you’ve done all this fun stuff it’s time to discuss the 5 Ps of marketing:
- Product. What are you selling? What’s unique about it? How is different to your competitors? What benefits does it provide to your customer?
- Price. What’s the price of your product or service? What are the margins involved? How does this price compare with your competition?
- Place. Where is your product or service going to be available for purchase? Does this place align with your brand (i.e. is it a luxury brand or budget focused?) What is the cost of getting your product out to clients? What’s your returns or refund policy?
- Promotion. How are you going to get your brand out there to the market? What marketing tactics will you use and does this align with your brand’s values, message and target demographics? What do you anticipate will be the results of these methods?
- People. If other people are involved in the business it’s good to identify them and the roles they play. What is their level of experience?
When writing your business plan it’s always important to be thorough and to always keep your brand’s message or “voice” in mind.
Another helpful marketing tip is to create 4-5 marketing personas. For more information on marketing or “buyer” personas check out our “How to Make a Marketing Persona” blog.
The pricing strategy takes in to account your financial strategy and marketing strategy (as well as other factors such as market conditions, competitor pricing, margins and costs etc.) and will play a pivotal role in your business success.
If you get the pricing of your product or service wrong (be it too high or too low) you could be setting yourself up for failure before you’ve even begun.
These are the 4 main pricing strategies:
- Premium. If a strong competitive advantage exists then the business can command a higher price point then similar goods and services. The iPhone, Lewis Road Creamery Milk, or luxury cars are an example of premium pricing.
- Penetration. This is where the price is set low to gain market share and entry quickly. This is typically done when a new product/service is first introduced and prices will raise to more sustainable levels once market share is achieved. An example of this would be Uber offering your first ride for free.
- Economy. Margins are tight and an economy price point is all about reaching a wider audience and gaining a higher market share.
- Skimming. This is a pricing strategy that predicts future competitors will come on board and reduce the profit margins of the industry. It aims to maximise the profits until other suppliers come along that will force the industry to reduce prices. An example of this would be with the TV industry. It wasn’t uncommon to see LCD or Plasma TVs priced at over $6k. Nowadays TV prices have plummeted thanks to good quality, cheaper models from overseas suppliers such as Veon etc.
If the idea of being alone in a room with a notepad titled “business strategy” is a little daunting to you then luckily Quentosity is here to help.
At Quentosity we are a digital marketing consultancy that helps businesses up and down New Zealand create and identify their objectives and then put a business strategy in place to help them achieve their goals.
If you’re ready to take your business to the next level contact the digital marketing experts at Quentosity today by emailing us at firstname.lastname@example.org or giving us a call on 0800 467 8932 for a no obligation chat on how we can help your business grow.