Editorial note: This article appeared in Forbes on January 13th, 2017
As a business coach, entrepreneurs and executives often ask me, “Do I need a better website?” or “Should I be active on social media?” Before answering their questions, I often pose with curiosity, “What is your business strategy?” It comes as no surprise when I receive a blank “hmm?” or “I don’t have one” in response.
In the small business world, entrepreneurs often wear so many hats that they don’t have time to adequately design their business strategy or revisit an existing one. Consequently, they wind up spending time putting out fires, and getting more work done takes priority over strategizing. Entrepreneurs who are very clear about their business strategies are the ones who generate the best results because they can review and align their actions with their business strategy to foster consistency.
In the corporate world, people might have a firm knowledge of their company’s strategy at the beginning of the quarter, only to lose it in the execution phase or because of company politics. Sometimes only executives are clear about the business strategy and employees are not as well informed.
One prime example: The Softcard mobile wallet was a joint venture between AT&T, Verizon and T-Mobile. A huge effort was put forth to align these companies and infrastructures were built to enable mobile payment. The mobile app was released in 2013. At its launch, Jamba Juice helped promote the product by offering free drinks to those who used the app. Around that time, I had just left AT&T. With knowledge of the new technology, I enjoyed free drinks and helped many people use the app in Jamba Juice stores. However, I also wondered how the offer could have been messaged more effectively beyond the store promotion. In 2016, the product was terminated. If the business strategy had been well defined, a successful outreach program could have been implemented to spread the app more effectively.
So whether you work in small business or a corporate office, here is a simple process that you can use to define your business strategy before setting goals for the new year:
- Define a target market: What problem are you solving with your services or products? Who will benefit from the problem being solved?
- Define outreach strategy: How do you reach your target market? Online marketing? Networking? Cold calls?
- Define a pricing model: Do you want to serve a particular population with higher prices or a bigger population with a competitive price? Package deals or subscriptions?
- Answer the “Why you?” question: Figure out what differentiates you from your competitors and promote it by sharing stories.
- Define a business model that can expand: How fast do you want to grow your business? Is your business model allowing you to scale easily? Will acquisition and merging be your only options?
When I travel, I often stay with Airbnb and appreciate its business model. Take Airbnb as an example:
- Airbnb’s target market is people who travel and want to spend less on lodging.
- At first, outreach was by word of mouth, but it now utilizes social media.
- Its pricing model allows hosts to price their rooms with suggested pricing as a guideline.
- Airbnb’s differentiator is affordability and trust built upon the host/guest mutual rating system.
- Airbnb’s business model is enabling ordinary homeowners to supplement their income by renting out their spare bedrooms. Its infrastructure allows for expansion as its website receives more and more hits for listing, browsing and booking.
Once you define your business strategy, you can create an effective marketing strategy because you know the following:
- How to message the unique offer of your product or service.
- The target market and proper marketing channels. Therefore, the questions about having a better website or using social media are much easier to answer.
A business strategy might change over time based on the growth of your products and services. The key is to have it defined clearly and executed accordingly while making adjustments based on your company’s growth. Do you have a business strategy for 2017? Don’t waste any money on marketing before you define yours.