Have you ever played a game with someone who always makes the most aggressive move? In many games, the most aggressive player loses because they sacrifice strategy for tactics. In our second strategy post, we are going to look at the fundamentals of a business strategy for success.
If you want to have a successful business strategy, you cannot run your business like a game where you are always the most aggressive. Even though we often hold up businesses with aggressive growth plans (hello Inc. 500), you are more likely to flame out spectacularly if you pursue aggressive goals over the fundamentals of business.
I was watching Kevin O’Leary of SharkTank where he was asking why his women CEOs were making him more money than their male counterparts. One of the things he noticed was that the women CEOs tended to set business goals that were achievable. When they met these goals, they spent time celebrating their achievement and then reset their goals. Incrementally celebrating success, they were able to achieve faster and more established growth than their counterparts who lived by the “shoot for the stars and if you miss…” mentality.
This idea, that small steps and fundamentals actually leads to better growth, is the governing point of view for PDS’s real-time marketing. And, I think that these fundamentals are essential for all businesses to maintain consistent and predictable revenues.
The 3 Fundamentals of Creating a Business Strategy
There are so many principles that go into a business strategy, but I am pairing it down to the essentials that you need before you create your business strategy.
The First Fundamental Business Axiom is to Stay in Business
Yes, it is that simple. So many people want to set profit goals, increased revenue goals, market expansion goals, and on and on. How are you to determine whether goals are worth setting?
The first thing to notice is what will it take to stay in business this year. I had a tax return client who was wondering if she would be able to stay in business with the tax reform act sending many people to her larger competitors.
We set the goals for marketing last year to not be aggressive growth but to achieve parity with the year before. Why? Because if we achieved that, her business was secure and could focus on continued growth in the years to come.
In the same way, if you are facing a difficult time, setting goals that you will grow profits in the face of that difficult is liable to cause more problems than it solves. Especially if you actually achieve your growth.
Why do I say that achieving growth will hurt you?
Look at Boeing.
Their new 737 Max was the most profitable airplane in history. But, it came at the cost of Boeing’s commitment to quality, to innovative and well-designed aviation machines. Now, it is a cannonball tied to the feet of the company as Boeing scrambles to rebuild trust with the public and launch an airplane to compete with Airbus.
If Boeing had remained committed to their industry-leading slow growth of the last 100 years, this problem would not have happened.
The Second Fundamental Axiom is to Know Your Customers
For many people starting a business, this is difficult to do. If you don’t have customers, how can you know them? For that reason, I recommend that people who are starting a business go out and find a customer: sell your product, sign people up for your services, teach people. Whatever you do, go out and find people who will pay for it.
If you already have a business with customers, take a moment to think about the people you serve. Who are they? Are they other businesses or consumers? Do they stand out from the masses in any regular way?
Before you set goals, you have to have an understanding of the people you serve. Amazon was built on the realization that Americans really wanted to have a convenient way to shop from home (expanding on the books to nearly every aspect of life). Walmart was built on the realization that Americans wanted to have access to affordable products that were good enough to move on. On the other hand, Trader Joe’s was built by serving local communities of health-conscious but still price-savvy shoppers.
Know your customers.
The Third Fundamental Axiom for Business Strategy is to Create a Solution
There is the old proverb that if you build a better mousetrap, the world will beat a path down to your door to find it. In many ways, this proverb still holds true but it needs to be qualified. If you build a better mousetrap when the world has a mouse problem, the world will beat a path down to your door.
We buy from businesses when it solves a problem for us. My clients come to me because they have a problem learning and relearning marketing in this fractured marketing economy (Google, Facebook, TV, Radio, landing pages, websites, lead funnels, inbound, local packs, SEO, SEM, SMM, ROI, CPC, CAC, ETC.) But, a solution without a problem is not a solution. It is a nuisance.
If you are going to be in business, you need to create solutions for problems. When Walmart attempted to increase their organic and premium products but fell behind Amazon on online convenience and affordability, it slowed their tremendous growth from the 90’s down significantly. Walmart’s customers did not have a problem with getting premium and organic products, they were perfectly content without them.
In the same way, Amazon is having difficulty breaking into the Egyptian market, because customers in the cities (and Egypt’s population of 100 million people live primarily in cities) already have access to convenient ordering and delivery. If you don’t want to go out to the grocery store on the corner, call them and they will send someone to take your order and then deliver it to you (granted, you have to tip both order taker and delivery guy, but hey convenience!).
In order for you to create a solution, you have to listen to your customers and your market, and create products that they are interested in.
When you are committed to staying in business, know your customers, and create a solution for their needs, any strategy that meets these axioms will help you build a better business that will help more people tomorrow than it did today.