A reliable and solid business strategy is one of the key points of running a successful business, that can easily outstrip the nearest competitors, and get the highest ROI of it. By building the most effective strategy, the business owners hope to enhance their business model, develop various tactics, create a specific roadmap for business growth, and define the main targets for it.
In fact, a successful business strategy can define the further success of the company and whether it can stay competitive enough in the industry. That is why today we will look deeper into the importance of creating a strong business strategy, its types, and benefits, and also the things to consider while launching a strategy for business.
Let’s get it started!
The Importance of Creating a Business Strategy
Before getting into the details about the types of business strategy you can choose from, it’s critical to understand why you need it and the main benefits of following a business strategy.
According to Forbes, a strategy is a long-term plan that you build for your company to reach the desired, future state you envision. Usually, it covers the company’s goals to reach during the estimated period of time, the ideas of products or services you are going to realize, the target audience you are focusing on to make the business work, etc. Basically, that’s a solid ground of the prospects you are focusing on to develop your business.
A well-planned strategy or great business intelligence solution can bring rapid and brilliant growth to the business and make it competitive enough in the industry. For a competent drawing up of a plan, it will not be superfluous to consult with experts from essaytigers.com.
Here are the main benefits of the business strategy implementation you can easily get for yourself:
- estimate concrete targets and goals to focus on;
- establish the ways for the business constant growth;
- find out the target audience;
- create some other new products/services to include in your business;
- plan the budget and make profitable investments;
- set the priorities on different projects within one strategy;
- allocate and optimize the resources;
- track the progress;
- increase the business’ overall ROI.
As you can see, a smart strategy can greatly increase the chances of a business successful establishment and further development.
Types of Business Strategies
But which type of strategy accurately fits your business? Stephen L. Nelson suggests 3 basic types of business strategies: a cost strategy, a differentiated product or service strategy, and a focus on a niche strategy. Let’s look deeper at each of them.
This type of strategy implies offering extremely profitable deals for customers in any industry. For instance, one of the leading positions of the businesses which nailed this is Walmart or Costco. By providing a lot of economic benefits via the products’ low prices, these businesses managed to significantly enlarge their target audience, which consequently leads to the revenue increase.
Nevertheless, it is still critical to keep in mind your business needs to retain some costs to get a higher profit than its competitors. That is why just setting the low-cost prices is not enough. Your business needs also to price the products/services enough to be able to get more revenue.
Strategy for Differentiated Products and Services
While selling unusual products or services, it is critical to make various strategies that can perfectly fit the products’ peculiarities and show their specific benefits in comparison to the ones of competitors. For example, Nordstrom department store has unsurpassed services offering a lot of high-quality products for sale.
The key point in this strategy is to charge the customers for the specific features more than they cost you. Such a differentiation produces increased revenues in excess of increased costs.
This type is a combination of cost and differentiation strategies. It implies a deep understanding of the costs management and audience targeting, so they can focus on selling the particular categories of products for the particular audiences. As a rule, this type can provide the best serving in a particular niche for the market and get a high revenue by creating focused approaches.
How to Create a Successful Business Strategy
In fact, a successful business strategy implies using a simple explanation of what is your business and what are its main targets. Basically, there are only 5 components needed for creating a business strategy.
Step 1. Identify Your Business
In the first stage, it is important to create a business identity, which implies forming one short sentence about the value proposition your business can provide to your customers.
For instance, the Amazon review website defines its identity as follows: “We offer an expert opinion on the products you consider before a purchase”.
A great business identity identifies what is your business about and the value it can provide to potential clients. So, to get a close idea of it, try to answer a simple question “What do I do?” to set up the right value proposition.
Step 2. Consider the Customers’ Pains & Problems
The next step of making your perfect business strategy is to define the problem you can solve with your products/services. These should be the short and strong points for making your potential customer get interested with the probable solution offered by your company. Also, to make it more clear for the customers, try to avoid the “wall of text” by making the bullets of the main pains clients often face.
For example, here is how the pet accessories shop nailed it: “We know how challenging a dog harness can be. It should be easy to put on, safe and comfortable, and functional for your comfortable utilizing it with your four-paw friend.”
Step 3. Find out the Solutions
At this stage, you should provide the exact solution for your clients. According to the article on Medium, customers do not buy the product itself - they just purchase the solution to their problems. A good example of this is taken from Haje Jan Kamps’ words: “You won’t actually sell an iPhone by saying it has a 12-megapixel camera. Instead, you can sell it by presenting the awe-inspiring photos you can take with the gadget you always have by hand.”
Or else, assuming you would like to sell the cat & dog products, you don’t have to provide your potential customers with the product features. Instead, just provide them with the answer to what they actually get with this purchase.
Such an essential and effective method works like a simple marketing trick, which in fact can significantly boost the revenue, and help your potential customer make the purchase decision.
Step 4. Analyze the Market Situation
Next, think over your perfect customer and define the target audience you are going to focus on. Account the approximate number of potential customers to make sure you will have enough clients to build your business. In this case, you can also think over some additional features that will help to enlarge the audience.
For instance, for the pet shop that could be the dog and cat owners, or those who’re only planning about getting one.
The market analysis can provide you with an answer whether you can run a business with this idea or concept, or should you change something in your strategy to get more profit from it.
Step 5. Know Your Competitors
However, if you really want to set up a competitive business, then it is also critical to track the competition in this area. According to Statista, the main goal of competitor analysis is to get the overall idea about the various businesses’ performance in a predefined market. That’s one of the critical processes to define the future development of the business and its success.
In order to conduct a profound competitor analysis you first of all need to define businesses that provide that same type of products or services to a similar target audience.
After you have the list of your competitors, it is important to analyze their strong and weak sides, understand what consumers like and implement these features to your product along with adding some unique functions to it as well. If you are doubting which method is best, feel free to use split testing to get the most of your business development.
And, needless to say, these tricks can be used while developing your new business strategy or creating a new one from a scratch.
To sum up, is the business strategy important for your project’s success? The answer is YES. By developing a strong and detailed strategy for your business, it becomes much easier to set up the goals and make the plan about their achievement.
Of course, the business strategy can be implemented while preparing your new project or developing the existing business. But after giving it a try, you will notice the awesome results of your business progress. So, what are you waiting for? Start checking it yourself right now!
Must have tools for startups - Recommended by StartupTalky
Subscribe to StartupTalky
Get the latest insights delivered to you right in your inbox