What Is a Business Strategy and Why It Is Important to Have One

What Is a Business Strategy and Why It Is Important to Have One

If you know where you want to go and where you want to be in the business in a year's time, it's easier to plan tasks, deadlines and resources accordingly. This makes it more likely that you will actually reach your goal. A business strategy can help you with all of this.

What is a business strategy

A business strategy is a tool that helps businesses function, evolve and grow. It is a set of plans and actions that defines a company's business goals and the steps it needs to take to achieve them.

Its components are therefore:

  • Vision and business objectives so that the firm knows where they are going and what they wants to achieve,
  • core values, which set out what the company's employees should and should not do,
  • a SWOT analysis identifying the strengths, weaknesses, opportunities and threats the firm needs to face,
  • tactics or procedures, what must be done by whom in the firm to achieve the intended goals,
  • a plan for reallocating and using resources to accomplish each step,
  • the metrics by which the firm evaluates how it is doing in meeting its tasks and goals.

Why business strategy is important

Every company needs a business strategy because through it:

  • plan better and is in control - know which steps will help achieve goals and can evaluate whether is meeting goals,
  • increase efficiency - makes better use of resources, plans work roles and tasks, puts effort in the right direction,
  • Recognises strengths and weaknesses - assesses strengths, seizes opportunities, balances weaknesses and better faces challenges and potential threats,
  • secures a favourable position in the market - by developing a strategy that capitalizes on strengths, gain a competitive advantage.

How to develop a business strategy

For a business strategy to work well, it must be based on current data. It is therefore necessary to first analyse the company's situation and find out how the company is doing, how many products it has, how many orders it has, what its profits are and so on. Based on the analysis, plans, wishes and possibilities of the company, the goals it wants to achieve are set. In the last step, the steps that everyone in the company must complete to achieve the goals are defined.

Once the company has a business strategy in place, it is necessary to continuously monitor the tasks and whether they are really leading the company to the goal. If somewhere the strategy is failing, the firm must adjust the strategy. In the same way, the firm responds to changes in the market or in the overall business.

With our RAYNET CRM, you can have an overview of how well you are achieving your goals. You'll immediately see how your business is performing, who is working on what, and get a better idea of what results you can expect.

How business strategy and business plan and process differ

A business plan is created by entrepreneurs before they set up their business, and it is the blueprint they follow when setting up their business. It includes the business idea, financial costs for starting the business, expected sales and profits, and customer and market analysis.

The business strategy is used by existing companies that want to improve their business process and meet the company's goals. Strategies may already be outlined in the business plan, but as the business continues to progress and grow, the strategy is updated and modified.

A business process is an outline of specific tasks and activities leading to profit. The process is repeatable, flexible, structured and measurable. To learn how to set up a business process, read our SalesDriver chapter.