Do I need a strategy?
In this series of 19 short articles, StratPad’s founder discusses the fundamentals of starting and running a small business.
Today he talks about the importance of strategy for small business:
Q: What is strategy? Is it really that important?
A: Strategy is absolutely the most important thing for small businesses. Unfortunately, strategy has come to the table weighted down with big business nomenclature. It grew up in a world 50 years ago when things were massively different, but these days it’s no less important.
If you boil strategy down, it asks businesses three questions: What makes you unique? How are you going to defend that uniqueness? And, how are you going to turn that uniqueness to your advantage? In other words, how are you going to make money from it? If you’re not unique, it causes all kinds of bad things to happen, like downward price pressure.
Uniqueness allows you, first of all, to be found easier. If you’re a red blade of grass in a sea of green blades of grass, you’ll be found easier. Then, of course, it reduces the price pressure so you can increase your margins.
Just being unique by itself isn’t sufficient by itself, however. You need to be able to defend it from your competitors. As soon as you have something that’s unique and that is making money, your competitors are going to rush into that field like sharks when they smell blood. You need to be able to defend it. Again, uniqueness by itself isn’t any good if you’re not able to turn that into some kind of a profit. It’s great to be the only person on the block who’s selling purple bungee cords, but if no one wants to buy purple bungee cords, then uniqueness doesn’t matter.
You need to make sure that you’ve found not only something unique, but also something that people will buy. That’s the first step.