How to Develop a Strategy for Your Small Business

May 30, 2016

 

Q.  I think I need to develop a strategy for my small business. Do you have any suggestions?

A.  There have been books written on this topic. We’ve read many of them and could give you lots of high level theory on the topic. However, what we think will be more useful is a pragmatic approach to developing a strategy for your business. 

If you are going to develop a strategy for your business, begin with a clear definition of the word “strategy.” For us, a strategy is simply your plan to achieve your business objectives. If you accept this definition, developing a strategy must begin with goal setting. Once goals are established, you’ll need to develop a plan to achieve the goals.

Develop clear goals – If you have effectively written goals, everyone can pull in the same direction. However, to set a clear direction, you must write your goals correctly. Poorly written goals won’t provide the needed clarity. If you want to develop well-written goals, use the acronym “WHY SMART.” 

Written – First, you must write down your goals. If goals aren’t written down, day-to-day events will overtake them every time. The urgent will trump the important. To be useful, you should write down your goals and review them regularly.

Harmonious – You will inevitably have more than one goal. That’s great, but they must be harmonious. The goals shouldn’t conflict with each other. They should work in concert.

Yours – You will have to own the goals, but if you have employees, they will need to embrace them as well. We recommend involving your employees in the goal setting process. The probability of success increases exponentially when those who will have to execute against the goals are completely committed to them.

Specific – Vague goals won’t work. A goal to “be more successful” could mean many things. Does “being more successful” mean growing sales, increasing profit, improving quality, or something else? If goals aren’t specific, they won’t provide a clear direction for the company.

Measurable – Whenever possible, goals should be measurable. You need to know when you have achieved them. “Reducing rework by 25%” is a measurable goal. “Improve quality” is not.

Action Oriented – Write your goals so that there are specific actions that can be taken to achieve them. Goals that aren’t action oriented are just hopes.

Realistically High – Goals that are very easily attained aren’t useful. Achieving goals should require a stretch. At the same time, goals that are set so high that there is no realistic expectation that you can achieve them aren’t helpful either. The trick is to set goals so that with extra effort, they can be achieved.

Time and Resource Bound – Goals must be accomplished by a specific time.  In addition, you should specify which resources the employees might use. Open-ended goals with no time constraint aren’t useful. To ensure that you achieve your goals in a profitable way they must be time and resource bound.

Asking if each goal meets the requirements of the “WHY SMART” acronym enforces a valuable discipline. When the goals rise to this standard, they will set a clear direction for the organization.

Develop a plan to achieve the goals – Ask yourself what is keeping you from attaining each goal. If nothing is keeping you from attaining the goal, why haven’t you already achieved it? There will be obstacles between you and the achievement of every goal.

Once you have identified the obstacles, determine the action steps you will have to take to overcome each. Check to make sure that if all of the action steps are accomplished, you will have achieved your goal.

Finally, assign a single person to be responsible for each action step and a completion date. Resist the temptation to assign multiple people to an action step. The accountable person may need to call on others to achieve the goal, but having a single person responsible for each action step is critical.

The steps outlined above are a pragmatic. They will help you identify your goals and develop a plan to achieve them. This is the core of a strategy.

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