"Millions long for immortality who don't know what to do with themselves on a rainy Sunday afternoon."Susan Ertz
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How to Avoid the Legal Pitfalls when Setting up Your Own Business
How To Avoid The Legal Pitfalls when Setting up Your Own BusinessNo matter who you are you will make mistakes at some point in your business life and unfortunately the law is not very forgiving - ignorance is not a defence. Here are some of the common ...
How to Survive in Business Long Enough to Win
As a former human resources professional it has always intrigued me as to why people were more 'successful' than others. By 'successful' we are referring to an innate ability of some people to set and achieve worthwhile challenges for themselves. Here we ...
Stay in front of your business - if you don't your competitors will!
Which existing customer is your business about to lose? What potential customers will go to your competitors instead of you? What new threat will assault your business next week, next month or next quarter? When opportunity knocks is your business ready? ...
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Ultimately, you have to settle for one of three
business strategy
options. And it is important that you are clear on what one you are
going for.
Your business strategy choices are, at the end
of the day, very
simple. The big question is, how do you want to position yourself
in relation to your competition. Basically your options are :
1. To be the cheapest
2. To be the best
3. To dominate a market niche
Many small businesses go for the first option,
in the mistaken
belief that it is only way to survive. The problem is, there will
always be someone who can do what you do, more cheaply than you can.
A cost leadership strategy is only
really suitable for big
businesses. Businesses that have substantial economies of scale.
They are able to spread their overheads thinly over large volumes,
and charge low unit prices. So if you are running a small business,
this strategy probably won't work for you.
If, as a small business, you build your
business reputation on
being the cheapest, you are operating from a position of weakness.
Even if you can survive with your low prices, you will not be able
to withstand a price war with a bigger competitor. So why take the
risk?
The second strategy, being the best, can
be used to build a
powerful competitive advantage. It means, however, that you have to
have a unique product. Otherwise, you will have to spend a lot of
money on R&D to stay ahead of the competition.
You need deep pockets to win with this
strategy. Unless, of course,
your product is so specialised that no one else is producing it.
And big companies, for whatever reasons, don't want to produce it
either. That would give you dominance over a niche of your own.
Generally speaking, a product leadership
strategy is only for
the big boys. Like, Nokia, Sony and Mercedes Benz. While being the
best in a category, and staying that way, can be a powerful
strategy for highly specialised small businesses, it is just not
sustainable for most. Which brings us to our third option.
Dominating a market niche in your
industry. It is the most suitable
business strategy for most small businesses. By adding value in a
way that attracts a particular kind of customer, you can steadily
build your business success. You are able to charge a premium. And
you don't have to be the "best".
The trick, of course is to clearly identify
your niche market, and
convince your target market that you provide the best solution to
their problem. For nearly all businesses, finding a niche and
dominating it provides a solid foundation for building a business
on.
It is very important that you are absolutely
clear on what generic
strategy you are relying on. Your business strategy, by definition,
is supported by a number of strategic tactics. Whether you are
aware of using them or not.
If you aren't clear about your overall
strategic direction, you may
end up using conflicting strategies. For example, focusing
customers on your low prices at the same time as you introduce best
of class products. Doing this means that your profitability suffers
and you fail to attract the customers you want : not good!
Deciding on the generic strategy that will
create the business
success you are looking for, clarifies your thinking. And it helps
you see clearly what tactics you need to use.
About the Author
As a Business Strategy Coach, Mark helps business owners get stunning business results. Mark has developed the revolutionary StratPlan Wizard business building system. Learn more about it at www.stratplanwizard.com
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