Business Start

source by: businesstown.com

Why develop a strategy?
A company strategy is the unique formula for success that forms the foundation of a business plan as well as governing day-to-day operations. This strategy is not a business definition and summary of pertinent markets, but instead, it is an account of the one or two key factors that distinguish the firm from its competition and are most expected to contribute to the firm’s long-term success.

To be most effective, a company’s strategy should be no longer than one page, at most. For many businesses, a single sentence would be ideal. The strategy theme should be easily and frequently communicated to employees so that a cohesive business focus is always maintained.

Why develop a strategy?

All firms, from one-person start-ups to global conglomerates, should have a strategy. Following a good, distinctive strategy will ensure that a business builds, maintains, and continually strengthens a specific identity in the marketplace.

By serving as a jumping-off point for annual business planning, a strategy will become the nucleus around which an annual business plan is developed. It will also form a framework for helping to consider mid-term deviations from the plan. In addition it will help set a consistent direction for key functional areas. A good strategy should endure year after year, and hence will tie together one year’s business plan to the next. This will enable the company to easily build upon the accomplishments of the previous year.

Without a clearly defined or closely followed strategy, companies of all sizes tend to lose sight of their direction when they run into temporary difficulties, or when management just gets bored operating “the same old business.”

It is amazing to see so many very small businesses, after having had a few moderately successful years, adding completely unrelated product lines or services to their agendas that only muddy their identity. This tactic signals customers that the management has no clue as to what the nature of the business really is. What would you think if your favorite ice cream parlor began offering a full- service dinner menu literally overnight? Or if the local boat dealer suddenly decided to devote 50 percent of his floor space to lawn mowers? You’d think they were confused, right?

No one business type is immune from this appalling lack of strategic discipline—not “Mom and Pops,” not large corporations. Large or small, the sales and profit results from unrelated business diversification are almost always disappointing.

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