Business strategy is all about how your company chooses to position itself to gain a competitive advantage. This means decisions for you, the business owner: how to allocate resources, build a plan, and anticipate what’s to come.
Questions to consider before choosing a strategy
Strategy decisions will guide your business in the direction you’re working towards. With so many different ways to go, it’s important to keep your vision top of mind. Here are some guiding questions to ask yourself and your team along the way:
- Who are we?
- How do we stand out?
- Where do we want to go in the future?
Once you have an overall picture of your business objectives, narrow down your questions to focus on the more immediate goals that will help you get there. Make sure to stay realistic: keep your plan of action within the resources that you have available, your user base, and your specific market needs.
Here are some business strategies to consider.
By adopting a structuralist strategy, you’ll be building your business operations around the current market conditions and working within the bounds of structural factors. That might mean that you order products or supplies using your vendors’ established processes, or you take barriers to entry into consideration.
If you’re choosing a growth strategy, it means you’re focused on introducing new products or features or expanding into new markets. Looking for a competitive edge by offering a unique experience your potential customers won’t find anywhere else? Found a new customer base through market research or professional networking? That’s when to consider a growth strategy for your business.
3. Cost Leadership
Becoming a cost leader is a way to set your business apart by offering a competitive price for your product or service. If you have a unique strategy to lower cost without sacrificing quality, use that to set yourself apart in your industry.
With a truly unique product or service that you can offer to potential customers, you can stand out in the market. It might even be an individual feature that gives customers more value than other alternatives.
For example, SkateXS specializes in custom-made, high-quality skateboards especially for kids. Owner Bryan Tracey says the best thing about running your own ship is “the freedom to implement your craziest and most creative ideas.”
Price-skimming strategies involve charging a high price for your product or service at the start to cover initial costs like production, manufacturing, and marketing. Usually, this approach makes sense for companies who are introducing something that hasn’t been done before and that’s worth a steeper price.
Purchasing another company, or a few of its product lines, can help small businesses expand into new markets without starting from scratch.
The idea behind focused approaches is that you can choose what segment of the market you want to target through any of the strategies already covered. If you see an opportunity to lead in a specific area, narrow in and focus your efforts on pursuing it. Sometimes, this can pay off more than attempting to capture the entire market through your business strategy.
Now that you’ve seen an overview of various business strategies, head to the SmartBiz Small Business Blog to learn more about setting your company up for success. You’ll find a variety of unique resources crafted just for small business owners just like you.