Continuing to deliver your value better than any/all of your competitors can be one of the hardest ongoing challenges any business owner can face.
That’s competitive advantage and it’s one of my favorite parts of strategy. It’s one of my favorite because it forces you to consciously decide what you’re going to do in your business and more importantly what you are NOT going to do. If you think about strategy in terms of a set of boundaries for your company it will help you focus all of your business planning and business actions to make sure you are doing your best to keep your business growing.
I know what you’re thinking (some of you anyway): “I’m too small to think about strategy.” “Strategy is too broad a topic and it’s not worth thinking about.” “I’m too busy to think about changing my business plan.” “My business is running fine.” And my favorite, “I have a strategy in my head that I’m working on”.
If you thought or are thinking of anything along those lines I’m going to just straight up tell you; you're wrong. Wrong and probably wasting time, money, and burning yourself out.
I want to outline three big questions that you can use in your business planning process to help you fight off the temptation to do “everything” just because you think it’ll bring in some extra revenue. These aren’t questions that you just answer once and then your done either. It’s important to check in every once and a while to make sure that you are keeping up with the tastes and expectations of your customers as well as what your competitive environment looks like. Remember, competitive advantage has to be actively worked for because the your market will constantly be evolving.
1. Where are you competing?
This question is tackling what market opportunity or opportunities are worth working towards. Another way to think about it is to think about the pain that your business is offering a solution for. It’s important to ground your thinking around how you can better serve that market over your competitors. To do that you need to make sure you have the appropriate resources and abilities. You might have the best and most profitable market opportunity in your head but if you can’t get it to market effectively then you need to keep distilling that idea down to a scale or scope that makes sense for you.
2. How do you compete?
After you have identified a pain you are going to solve better than anyone else (market opportunity) you need to work on how you are going to compete. Are you going to offer the best customer service, the cheapest price, or just crush-it with value. I hope it’s the value part. To engage your customers they are also going to need to like and trust you, at least enough to give you a shot in the first place. How and what you communicate is just as important to the customer as the solution they are buying from you. You are looking for capabilities and resources (also read: knowledge or specialization) that will give you an advantage in serving your very specific market opportunity better than anyone else.
PRO-TIP: Better doesn’t mean cheaper necessarily - working for a cost/price advantage is a very specific way to build a business. If you aren’t sure of the best way to price I wrote an epic pricing post here to help you through specific pricing strategies.
Ok, so the first two questions are centered around Strategy Formulation. You flushed out the pain you are attempting to solve along with how you are going to do it better than anyone else. Strategy Formulation is not all there is to strategy and this is where most people stop or get stuck. It’s why strategies don’t work out or business plans start to become more of a burden to maintain instead of an actual resource to help you keep building your business.
3. How are you going to execute?
This is how you are going to organize your time, money, people, and resources to take the strategy you’ve developed and bring it to life. The business buzzword here is - implementation. Here is where you try to map out and identify your motivations, incentives, how you are going to organize your business (processes) and even what leadership in your business looks like. This applies for big businesses and probably applies best to the solo entrepreneur because it’s this implementation that will keep you accountable to your customers and yourself. This is the nitty-gritty. You are going to be working on the processes that will push you business forward. The best advice I can give here is to keep it as simple as possible. Take a look at your business and build the action plans or lists for all the functions of your business. This even includes something like an editorial calendar for your content marketing. A simple editorial calendar is a brilliant system that will help you manage your time and stress so that you don’t have to worry about what to produce next.
Now that you have an idea of the three fundamental questions let’s cover a few traps that businesses can fall in when they are working on strategy.
Bad Strategy + Good Implementation = Doing the wrong thing really well. = Wasting Time and Money
Good Strategy + Bad Implementation = Doing the right thing poorly. = No to Slow Growth
Good Strategy + Good Implementation = Doing the right thing really well. = Sustainable Growth and Profitability
It doesn’t matter if you’ve been in business for years or are just starting out. Taking the time to really think about strategy is important. You need to work out how you are going to take what you have access right now and use it to deliver more value than anyone else. Here’s the kicker: It will all change. Understanding your customers motivations and pains will help you to keep your strategy growing as your consumers are growing. Business plans and strategic plans are living breathing resources - not just stuffy documents voted on at board meeting. Get specific on how you allocate your resources and how you are serving your market.
Oh and for the love of Mike you should be writing this all down! Think of these processes and action plans like a recipe to your most favorite meal. You want to make sure that every time you step into the kitchen you are making your favorite dish just the way you like it - every time. Consistency matters when you are trying to get an audience to know, like and trust you. More on that later.
Then, rinse and repeat.
If you are still feeling like you don’t know where to start you can download my Disruptive Decision Framework free! It’s a resource to help you visualize your strategy and give the strategic part of your brain a little jumpstart. You’ll also get access to the Strategy School Newsletter that’s full of extra strategy action nuggets every week.