Think and Act Strategically
Some entrepreneurs think and act strategically all the time: it’s what they do best. Others are more involved with the nuts and bolts of a business, and spend their time resolving daily challenges.
Those in the latter group, however, must take a break from their routines from time to time. They need to consider whether their business strategies are still relevant, and how they can use them to improve efficiency and profitability.
Conducting a Strategic ReviewStepping back and conducting strategic reviews can be straightforward and rewarding if entrepreneurs break down the areas they need to look at. These include the following.
- All financial issues.
- The structure of the business.
- The development of staff.
- Sales performance.
- The future of the product or service.
- The suitability of premises, manufacturing methods, and IT.
SWOT AnalysisThose working in a busy environment may find conducting a review easier said than done. There are tools, however, that can help. These focus on issues such as business strategy and marketing strategy.
One of the most common forms of strategic business analysis is SWOT. This is an acronym that stands for strengths, weaknesses, opportunities, and threats.
The first two of these – strengths and weaknesses - emphasise the positives and the negatives of a business. When it’s clear what these are, entrepreneurs can decide how to take full advantage of the positive strengths, and how to reduce the impact of the negative weaknesses. The purpose is to improve overall performance.
Opportunities and threats may not be so obvious as strengths and weaknesses. Nonetheless, it’s worth spending time to discover what and where they are.
Opportunities are the chance to develop and expand a business. They may come in different forms, and recognising them can change the direction of a business and boost profitability.
Threats appear in many guises. These may be an aggressive competitor, a downturn in the general economy, or an increase in the price of running costs. Such threats can be disturbing; entrepreneurs must retain a strategic viewpoint, however, and look long and hard for the opportunities threats sometimes conceal.
Other Tools for Strategic AnalysisThere are a number of other tools available to an entrepreneur for the analysis of business strategy and marketing strategy. Consultants use them regularly either to supplement or replace SWOT analysis. For an entrepreneur, they boil down to certain key factors that can assist strategic thought and action.
For example, every business is subject to external influences outside an entrepreneur’s control. Such influences are economic, environmental, legal, social, and technological. Identifying these, and working with them rather than against them, can help a business thrive in the most difficult conditions.
This approach blends into other analytical techniques that help a business meet its objectives over a three or five year period. Essentially, these techniques stress the importance of maintaining a flexible attitude at all times. In other words, entrepreneurs must be prepared to adjust business plans to match changing circumstances.