Planning, Startups, Stories

Tim Berry on business planning, starting and growing your business, and having a life in the meantime.

Good Strategy Goes Unnoticed. Bad Strategy Goes Under. A 3-Question Strategy Test.

Another thing I like about small business and entrepreneurship is that you live the strategy without the elaborate frameworks and detailed analysis. As companies get bigger, strategy gets harder. SWOT It’s much more likely to take teams of experts tons of detail work.

Big companies are like big ships. They change course slowly. There are lots of moving parts involved.

For you and me and small business in general, strategy is always happening, whether you like it or not. And if you screw it up, changing it too frequently, failing to focus, trying to do everything, then it hurts.

Strategy for us? It’s really about focus. You can’t do everything, so you do the right thing.

Here’s a quick test: do a SWOT analysis, as in the illustration here. List your strengths, your weaknesses, your opportunities, and threats. Then think about your strategy. Does it pass the SWOT test, or not? Does SWOT bring up something you’re doing wrong?

And another quick test: the principal of displacement, which means everything you do rules out something else that you won’t do. Think about it: are you doing the right things? Or are you trying to do everything?

And finally, a third quick test: do you ever say no to anything? When? Why not?

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  • I’d add three more critical strategy tasks for a new venture:

    1. Size your target market. Remember, saying “it’s infinite, because everyone will be interested in my product” is not an acceptable answer.
    2. Complete realistic sales projections. Realistic is the key word here.
    3. Get a good idea of your unit costs and your margins. Can you actually make a profit?

    Of course, if you want to make sure you’ve covered all the key aspects of strategy, you’re best off doing a simple business plan. Potential investors, potential lenders, even your partners (business and life!) will have more confidence if they see you’ve taken the time to think it through.