What is business strategy and why is it important?


Whether you are just starting your business journey or have had your business for a long time, you need a business strategy.

Person playing chess

This post will cover:

  • What a business strategy is
  • The difference between a business strategy and a business plan
  • Why a business strategy is important
  • The different types of business strategy
  • Why business strategies fail
  • When to get a business consultant in

What is business strategy?

Business strategy can be summarised simply as a road map for your business. For a start up sole trader, just a simple who you are, where you want to be and how to get there will cover it. Bigger organisations can go into more detail and depth such as looking at operational unit strategies such as marketing or finance. The best strategies and plans are the ones that will be used and followed, so keep it simple and high level.


Business strategy vs business plan

Business strategy consists of the top level stuff, no details. It is the direction that the company is heading in. A business plan fills in the details of the strategy and will include details on areas such as operations, marketing, finance and HR.


Why is business strategy important?

A goal without a plan is just a wish. – Antoine de Saint-Exupéry

If you don’t make any plans, you cant take the company forward. Every company needs some kind of roadmap and directions to follow. Business strategies can be used to:

  • increase sales
  • attract customers
  • enter new markets
  • grow
  • gain a competitive advantage

or simply as a road map to go forward in your business. A business strategy can be used to ensure that everyone in the company is moving in the same direction and working towards the same goals.


What types of business strategies are there?

There are three types of business strategy:

  1. Cost
  2. Differentiation
  3. Niche

All businesses fall into one of the three categories of strategy.

Cost is one of the most common strategies. Companies will advertise their products or services as the cheapest.

Differentiation – What makes your company different? What is its unique selling point? How are you different to everyone else? For this strategy to work, the differentiation needs to be difficult to copy.

Niche – Do you have a product or service that is only for a very specific group of people? If so, then your strategy will focus on the niche you serve.


How to plan and write a business strategy

Business strategy is like any other business planning. Start with who you are, where you want to be and how you are going to get there.

Who you are – What do you do, and what is the purpose of the business

Where you want to be – What is your vision, mission and your goals. Where do you see the business in 5 or 10 years time

How are you going to get there – Are you going to be the cheapest, or differentiate with something unique, or offer something to a small niche.


Why business strategies fail

Common reasons that business strategies fail are:

The company doesnt pick a clear strategy from the three strategies.

The business strategy is not simple or clear enough for everyone to follow

It is unrealistic. We all have to have big goals, but some are just unrealistic, especially when it comes to resources.

If its in a company with several employees, then leadership, lack of communication and lack of accountability could be a problem as well.


When should I use a business consultant, business adviser or mentor?

As an ex-business adviser, I would always suggest using business consultants, advisers or mentors. They are there to be a sound board for your strategy, provide some support and to help be a sanity check.

As a business designer, I will always ask what your strategy and vision is, so that your website is built to reflect this.


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