The importance of business strategy
Having a business strategy is important. It is like having a flight plan for the business. It sets out the critical steps and tasks to reach the defined business objectives. It aligns and integrates all the business units and departments. No one team or department should be flying solo!
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Get the business strategy right to enhance the business reputation, minimise risk and improve the financial metrics. Done well it will impact the standing of the business with customers, shareholder, suppliers, and competitors. It improves efficiency as each constituency aligns itself to the business strategy, they are all singing off the one hymn sheet. It makes the business more effective by making better use of the limited resource available.
Who sets the business strategy
It is the responsibility of the senior leadership team for setting the business direction and determining the resourcing to hit the agreed business goals. It is the SLT that sets the timeline for developing the business strategy and communicates how important it is to their team. How well they do this will reflect on how successful the business strategy is.
It is easier to start with an example
The senior leadership team has set the business objective for the year to grow sales by 20% within the next 12 months. The analysis conducted that informed the setting of that goal should also have unearthed the how of reaching that goal. Things like: a revised pricing structure, incentives to those who make a difference, sales team structure, marketing collateral, lead generation.
Or the SLT has set a goal to reduce the debtors listing by 30%. Ways of achieving this could include: Penalties for late payers, discounts for early payers, increasing the size of the finance team, setting new payment terms, set up an improved finance package.
Importance of getting everyone involved
How important the business strategy is to a business can be easily determined by the time, money, and resources it apportions to it. The more they invest suggests they are taking it more seriously. The team will know how important it is. Getting their input by asking for their thoughts will minimise maverick activities and enhance engagement with the business strategy.
The wider the scope the richer the strategy
No business is an island. And the SLT do not have all the answers, or the insights needed to make the business strategy risk free. They can however minimise risks by widening the scope of the information gathering by including more input from the team.
Communicating the business strategy
Making it memorable by naming the yearly business strategy works. Communicating the business strategy is vital. Obviously not the confidential elements, they should remain under lock and key. But boiling down the plan into the essential elements that can be communicated will pay dividends:
- Motivational – stakeholder will know the business is on a mission to success
- Metrics to celebrate success – setting KPIs ensures that everyone is aware of how well the business is performing. Positive or negative, it makes no difference. Communicate them
- Clarity – the business will only invest in those elements that will make the single goal more achievable – this prevents shiny object chasing
- Efficiency – reducing time, energy and resources wasted on non-core projects
- Engagement – if they were part of the business strategy design they will feel they own it and therefore have a personal stake in making it happen
Is it important to have a business strategy
Yes! Having a business strategy informs the various stakeholders where the business is heading and how it will get there. It ensures resources are available and appropriately allocated, the team are motivated, and the SLT communicates success via the KPIs.
If you need help with setting your business strategy then call us on 0117 230 3166 or email us on enquiries@businesscopilot.co.uk and we will get back to you.
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