Small Business Strategy Development Alternative
Develop Strategy for Small Business through a Complete Business Plan
Jan 25, 2009
Big corporations can engage in multiple businesses. They can hire staff with specific industry experience for each business unit. Small businesses are more "hands-on" and have to focus on one business. A separate article, Business Strategy Development, looked at how big businesses develop their strategies. The small business scenario calls for a different approach.
SWOT Analysis Requires Specific Expertise
In the Business Strategy article, it was suggested that small businesses can start with a SWOT analysis to identify their strong points and weak points, going on to pinpoint market opportunities, and major threats the business might have to face.
SWOT analysis requires specialized skill to do it in a meaningful manner. Not all new entrepreneurs might be equipped to do it. One alternative in such a situation is to seek the help of an experienced and successful business consultant.
Another alternative for a new entrepreneur is to proceed as follows:
- Look at the market and identify a product or service that has good demand but inadequate supply
- Select a few products or services tentatively for further examination.
- Learn more about the selected choices to find one that:
- Involves doing things that the entrepreneur is strong at (or can become strong at because the person likes doing these things)
- Requires only feasible levels of resources like know-how, finance and skilled people that the person can organize
- The product or service can be sold in sufficient volumes and at profitable prices to recover business overheads (as revealed by a breakeven analysis)
- On finding a business that meets the above criteria, commit to it and develop a business plan that explains in detail how the entrepreneur will
- Market the business
- Raise needed finance
- Organize technical know-how and production facilities
- Locate and hire any skilled people required
- Achieve profitable volumes
- Carry on the business, i.e. as a proprietorship, partnership or company, and
- Comply with all government regulations applicable to the business
The Business Plan as Small Business Strategy
The exercise of developing a business plan as above has two major consequences:
- The entrepreneur becomes aware of key issues involved in running a business, and how these issues are typically handled, and
- Establishes a set of specific targets to be achieved in such areas as sales, costs and overhead expenses
The small business now has a roadmap indicating where it wants to go, and how to get there. That in essence is what business strategy is about.
Some expert outside assistance might be necessary to prepare a feasible business plan. That is okay so long as the businessperson gets involved in the exercise.
Be very clear about one thing at this stage. The business plan is still only a route map, and not a forecast of how things will actually turn out. In practically all cases, things will happen very differently. A separate article on "bottleneck-oriented" Small Business Management looks at how to handle changing scenarios.
Small businesses will not typically be able to afford the kind of business strategy development practices adopted by big businesses. Instead, they can seek to answer key strategy-related questions by developing a detailed small business plan. The business plan will chart out a feasible strategy roadmap to follow.
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