Do Startups Need Business Strategy?
Yes, even startups need a business strategy.
A properly planned strategy will help a startup not only successfully launch its venture but also stay afloat in the market in the face of competition.
Strategy is important…
It is a given fact that without a proper business strategy, organizations have been either forced to shut down their doors completely or slash down their stores.
Cause – they couldn’t foresee the changing trends and lost to the emerging players with better and effective strategies. Players who were not averse to take risks.
If you closely examine the journey of established organizations like Kodak, Nokia, Motorola, Hitachi or even Yahoo – from being successful to being out of business – you would immediately know why these organizations failed to scale up.
Their successful journey came to an abrupt halt because they –
• Had aversion to take risks
• Continued with the same strategy every year without envisioning the changing times
• Were unable to foresee the future that was more tech-oriented
• Failed to collaborate
• Ventured outside their comfort area without proper planning
To put it simply, they were not good business strategists thus couldn’t envision the winds of change that blew everything in its wake – rigid practices and standards. A strong statement to make but truth can’t be changed!
Reigning in their respective fields, these organizations had a gradual drop in their business, yet they were not able to decode it and thus failed to stay afloat in the changing market scenario.
Misjudgment and Miscalculation…
The major blunder they committed was to stick to the age-old and outgoing strategies to lure customers
and that backfired…
So yes, strategy is important.
If the established organizations can go down the drain without a proper strategy – imagine the state of startups! Where any wrong decision can lead to the loss of investors' precious money!
You now understand the importance of strategy; however, do you know what is strategy? And why it’s necessary to keep reviewing it and what role does it play in startups?
Starting with ‘what is strategy?’
Strategy is defined as the art and science of planning and marshalling resources for the most efficient and effective use.
Business Strategy … In Layman Terms
Business strategy is defined as a long term plan of action designed to achieve a particular goal or set of goals and objectives. In other words, strategy is a management’s game plan for strengthening the performance of an enterprise. It affirms how businesses should be conducted to achieve the desired goals.
It is important to keep revisiting and reshuffling the strategy because only with a right strategy in place organizations would be ready to take risks and embrace the changing trends just so as to stay ahead of the competition.
We have seen how important strategy is for an enterprise to stay in business and keep growing and evolving.
Similarly, a startup must enter the market with proper business strategy. Now let’s understand why a business strategy is important for startups.
Startups’ Strategies – The Questions You Need to Ask?
Before you venture into the market, it is imperative that you study it thoroughly and then ask yourself these questions – do you want to collaborate or compete? Should you storm a hill or build a moat?
Joshua Gans, a professor at the University of Toronto’s Rotman School of Management, revealed that every new venture must answer the above two mentioned questions, because only then they will be able to choose any of the four generic strategies (Intellectual Property Strategy, Architectural strategy, Value chain and Disruption strategy) depicted in the Entrepreneurial Strategy Compass.
Once you have selected your strategy you can surge ahead with your business plan.
A word of advice here… keep evaluating your business strategies as your business grows, else you would be left behind in the competition!
In addition, I am sharing nine must-have strategies for startups – seeking to enter the market, staying afloat and also scaling up in the future.
- Leverage free or inexpensive marketing and advertising strategies or tools
- Relevancy is the key here
- Don’t ever comprise on your customer service
- Be ready to embrace technology
- Be a calculative risk-taker
- Remember failures are the stepping stones to success
- Pick your team with utmost care
- Repeat the practice that seems to be working, but do tweak it a bit
- Identify and stop the practice that has not been yielding results
But before you go on the floor with your new business plan ensure to think through all the key aspects. You can also hire business strategists to help you with these aspects.
- right customer segment i.e. the target audience,
- what would you offer that is unique?
- how would you build a relationship with your customers?
- How would you approach your clients initially?
… Along with other important areas required to succeed as a startup.
In a nutshell…
Startups, too need to understand the importance of a right strategy to not only enter the market, to sustain a business in the rapidly changing market, but also as your business grows you need to rework on your strategy to stay cash positive and keep growing.