Small Business #strategy
As more and more businesses ramp up their competitiveness business strategy becomes ever more important and is a make or break situation for most small businesses. Most small businesses have to do a lot of soul searching about why they exist as more “me too” businesses keep on starting that serve no real purpose and do not add value.
Small Business Strategy
What are the three main strategies that businesses usually adopt:
Differentiation strategy – differentiate yourself from your competitor in terms of product or service. Location, facilities, sales channels, logistics, customer service, management, principles etc
Cost leadership strategy – can you deliver a products or service as a considerably lower cost than the competition? Walmart and the old Dell Computers have been good examples of companies that were able to carve a niche in beating everyone out in using the cost reduction strategies. What does your firm provide in terms of reducing costs to the customer?
Focus strategy – focus on a particular niche or segment of the market that has particular or specific requirements that your company is uniquely positioned to fulfil profitably. Ensure that you have the ability to reach that segment cost effectively and service the same profitably. Many companies use the focus strategy only to realise that the market is too small to be serviced profitably or the cost of new customer acquisition is simply too high.
Core Business Processes
Also business strategy requires that you focus inwards in terms of developing specific processes to meet critical success factors.
Firm infrastructure needs– having adequate facilities to ensure maximum throughput will ensure that your company will be able to scale up quickly when the opportunity arises. A strategy that looks into infrastructure requirements will ensure that you take advantage of every sales order that comes your way.
Technology Development – as the internet and social media has boomed staying ahead of the technology curve has become a life and death struggle for most local businesses that have taken too long to adapt to changes in the cyber world.
Human resources – People are the most important factor in meeting your business goals. Always focus on new and more cost effective ways to train and improve skills of your work force.
Procurement costs tend to increase and inflate business costs as inflationary and unstable market conditions affect all financial markets. Ensuring that you are sourcing for the lowest cost and high value supplier will ensure that the company stayed ahead of the learning curve.
Sales and marketing – are you monitoring how much your spending on advertising and sales promotion and how much your receiving in terms of ROI on your spend? This can be a crucial factors for your business and cost of acquisition of new customers can been a company white.
Service – retaining existing customers is a key point to ensure survival in a world of cut throat competition – as more companies roll out elaborate loyalty promotion programs ensuring that existing customers do not defect – having your own program to manage customer satisfaction will ensure that you are well placed to meet threat from competitors.
Production – Production operations are key part of any business and take up most of a company management time – as processes have become more complicated using simpler methods to achieve more effective production management will become a challenge for small business. Standardisation and mechanisation is also a another area where small businesses will be challenged as there will be a greater need for higher capital investment.
Logistics – can make or break a business – many small businesses concentrate solely on logistics now to ensure that the throughput reaches market in time to meet customers ever higher and exacting standards. Having a great logistics plan could ensure that the company is differentiated enough to survive a market downturn.