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Picking A Strategy For Your Small Business

May 22, 2008
So, now you have achieved your goal. You own your own business. You've worked the long hours and done all the right things and you are ready to go to the next level. Then it hits you:

* What should I do?
* How should I do it?

These are strategy questions. Business strategy has been reserved for large companies with big planning and development budgets. That was then, this is now. Strategy is just as important for a small business as it is for a big business, if not more so. They can afford numerous mistakes, you can afford very few.

What Should I Do?

In most businesses you want to grow. Grow revenue, grow profits, grow market share, etc... In some businesses, growth can kill you. This may be due to market conditions, economic changes, or an industry shift.

In some businesses you want to shrink. This may be because your profit is higher at less revenue. You only have so many trusted leaders that can supervise and manage. Once you go beyond the capacity of your leaders to pay attention to detail - profits slip. This is a proven business "catch-22". It seems that the bigger you are the better leaders you can attract. However if you don't attract the right leaders, you won't get bigger.

This depends on your business, your vision, and your risk tolerance. One business may choose a strategy to grow at all costs, while another may be quite content only accepting projects that pay very high profit margins. Both are right for their respective situation.

I have actually seen both at different stages in the same company. At one point we decided to grow so that we could get cash and build a solid infrastructure. Once that infrastructure was in place, we focused on certain types of business to help us grow. This reduced our top line revenues but significantly increased our bottom line profits. It wasn't easy, but it was very, very effective.

How Should I Do It?

Once you pick the course that you will guide your business on, you must figure out how to make it happen. How do you make your small business strategy a reality?

Before we answer that, let's ask a few more questions. Can you make the strategy a reality on your own or do you need help? Will you need help in sales and marketing or in operations?

The answer to these questions will determine whether or not you need a partner. There are many types of partner relationships including licensing, affiliations, strategic alliances, and joint ventures. Make sure that you select the right one for what you are trying to achieve.

As you compete in your market space you will find that there are a number of choices that you have to make. One is price. Not cost, but price. Another is quality. Yet another is service.

Sure, both you and your competitors say you are the best at all of these, but which one is really the best - based on the customers' opinions. Being the low price guy when price doesn't matter is not just a bad strategy - it is just plain dumb. Offering outstanding quality for a significantly higher price when the customer will only pay for ok quality is just as dumb.

The key is to pick a strategy that works for your business goals. Picking the wrong strategy can be fatal; not picking a strategy will be fatal.
About the Author
Art Espey is a serial entrepreneur who has grown several businesses in both good and bad economic times. His e-book 4Steps2 Develop A Successful Business Strategy can help you grow your business. Art can be reached at www.4steps2.com.
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