5 Reasons You Need a Business Strategy [Blueprint Building Block #3]
We’re back with the next installment of Blueprint Building Blocks (B³): the series where we explain hot topics in the CFO world.
Today’s hot topic is business strategy.
A solid business strategy isn’t something that lives in your head. It’s designed, discussed, and documented for the whole company to reference.
Below, we’ll cover five reasons why a business strategy is so important — starting with a personal anecdote.
Psst… missed the previous installments in the B³ series? Catch up here:
Here’s What Happens if You Don’t Have a Business Strategy…
Our founder, Mike, serves on a nonprofit board that does not have a business strategy.
The leadership tends to make decisions in the moment. Instead of understanding how each situation fits within a greater framework, the leaders tend to react to each issue with a blend of emotion and urgency.
One of Mike’s first contributions was questioning the lack of a business strategy and recommending a plan to work on one… which was met with a series of dead stares and questioning about relevance.
Not surprisingly, the organization is also adverse to change. Merely talking about the need for strategy only set off more emotions.
Mike’s role is now convincing the group why strategy is important. (Good luck, Mike…)
5 Benefits of a Business Strategy
We could point to the thousands of business books that talk about the need for strategy.
But let’s summarize all those books into a clear answer to the question: Why is a business strategy so important?
Here are five reasons your business should definitely have a strategy.
1. Direction
What do you want to accomplish with your business?
For instance, if it’s a family business…
Do you want to transition the business to the next generation someday?
Do you want to maximize the value to the owner group?
Do you want to double or triple your revenue?
Do you want to hit a certain profitability or cash-flow target?
Do you want to be the most admired company?
By setting a target for some period into the future, you have provided a defined goal for your whole organization. Now, all leaders, stakeholders, and employees can be on the same page.
2. Focus
This is sometimes defined as a “mission” or “vision.” Essentially, you are setting up a filter for what you will or will not do to accomplish the goal.
Focus is unique to each business or owner. Your leadership team will use this filter to determine if an opportunity will be a good fit or if it’s something to turn down.
3. Resources
Once you know what direction you’re going, you can now define the tools required to accomplish the goal.
If your goal is to triple revenue, you will focus your efforts into finding the resources, people, and machines that will execute the delivery of the revenue.
4. Measurement
If you have a 10-year strategy, you need to break that down into actionable chunks, such as:
Five-year target
Three-year target
One-year target
Quarterly targets
This isn’t college, where you can pull an all-nighter to deliver a paper the next day. There are too many moving pieces to orchestrate in order to accomplish the ultimate goal.
A wise person once said, “You achieve what you measure.” We agree with that!
5. Flexible Process
Once you get into the action of strategy setting, you’ll want to reset it at least:
Annually for direction
Quarterly for actions
Sometimes you need to react faster. No one anticipated COVID-19 and its impacts on life and business — but the businesses with a strategy were able to adapt better to those changes.
By having a business strategy, you will have a competitive advantage over others in your field.
Need Help with Your Business Strategy?
Do you need help setting your business strategy?
Reach out to one of us at Blueprint Business Advisory. We’ll help you set the best strategy to hit your goals.
Get Our Monthly Newsletter!
Subscribe to our newsletter for more exclusive business tips in your inbox: