Why is a business strategy important?
A business strategy doesn’t have to be a concrete document, but usually is an ‘outline’ of all the ways a company plans to position itself, grow over a set period, and achieve its long and short-term goals.
These plans are the backbone of any successful business to achieve the long-term financial growth of your organisation.
Without it, you have little clarity on how your business is currently performing and what your capabilities are.
If you’re unsure as to the next steps toward your goals, it is recommended that you undertake research on the market you are operating in. For example, what are your competitors doing, how are you marketing to your customers, what are your operational costs. From here you’ll be able to form your thoughts on the future of your business. Whilst you might not have all the information you need for the future, right now, it could help you understand the financial solutions and support you may need in the future such as asset-based lending or a secured business loan to support your plans.
So when it comes to creating the guiding principles for your company, a business strategy can be the perfect way to make sure everyone is aligned and moving towards a set goal.
In this guide, our experts will talk about the importance of developing a strategy and how to use it in your day-to-day operations.
What makes a business strategy important?
There are always gaps and untapped opportunities in business. A strategy can help you spot these early on, as well as target weaknesses that could hold operations back - allowing you to overcome setbacks and focus on growth.
Here are some of the other reasons for investing the time and energy into a strategy.
Provides guidance
As well as providing insights into competitor activities and what needs to be done, a strategy gives a real-time snapshot of how a business is doing internally and whether support such as cashflow finance may be needed.
Identifies trends
A solid business strategy can help you spot future trends and opportunities. This also tracks consumer changes, as well as fluctuations in the market that are broader in scope, such as political, social, seasonal demand or technological influences.
From here, businesses can pivot current plans to adapt.
Clarifies vision
Small businesses can also use a business strategy to create a vision - and provide an integrated way to move forward. This allows all members of the business, from the founder to fresh employees to get a proper feeling for what’s expected and to stay aligned.
Offers a competitive edge
Businesses need to have strategies to develop a competitive advantage and understand what their offerings are, and where they are heading in the future.
From here, you can better gauge where you are in the market, determining what’s needed to gain a competitive advantage.
The difference between a business strategy and a business plan
A business plan has a more limited scope than a strategy, but its advantage is that it focuses on a smaller, more immediate goal and outlines the exact steps needed to get there.
On the other hand, a strategy is all about the overarching vision of a business, something that might take many years to achieve, such as opening 50 stores worldwide or making a certain amount of turnover reliably. A strategy plots how you plan to move from where you are today to where you eventually want to end, often pulling on smaller business plans to keep momentum.
What are the 4 key business strategies?
Each of these strategies takes a different approach toward the same goal – creating, maximising, and delivering value to customers to win more significant market share, higher profits, and long-term growth.
Cost leadership
Broad cost leadership is a strategy that prioritises the lowest cost of production and delivery in a company’s industry – without impacting their presence in the market.
This strategy targets cost-conscious customers with the lowest-priced products possible, aiming to gain a competitive advantage.
Differentiation
Broad differentiation focuses on creating unique products or services that build up a brand offering. The difference? These products provide exceptional quality, innovative features, or stand-out customer experiences.
This goal is to create a funnel of need, where businesses can charge premium prices.
Focused low cost
Focused cost leadership corners a niche segment of a company’s larger market. This is by offering products and services at the lowest price.
Businesses with this strategy focus on operational efficiency, reducing costs wherever possible, and narrowing the scope of business activities to minimise expenses.
Focused differentiation
Much like focused cost leadership, focused differentiation aims to dominate a narrow portion of the larger market.
Ed Rimmer, CEO of Time Finance says: “Finding the right strategy early on is especially crucial for businesses looking to expand, grow sustainably or tap into new markets.
“It is also useful for companies looking to supplement their activity with financial solutions, as a strategy can provide a useful tool for brokers who can help the business and make suggestions or recommendations to achieve their end goal.”
Choosing Time Finance to Support Your Business Plans
With a business strategy, your organisation can effectively begin to make decisions regarding growth, overall vision, and competitor analysis.
If you’re looking for a financial solution to supplement your plans, a strategy can also be used to help you strengthen your offering.
At Time Finance, we can use your strategy to best match you with a product that suits your needs and goals.
From much-needed cash injections and invoice finance solutions to facilitating acquisitions created through asset finance, our holistic approach takes the time to understand you and your business.
To find out more about how Time Finance can support you and your business, get in touch.