You have decided to set up your own business, but all you have in mind so far is an idea. Let’s look at how to turn that idea into a programme of action.
A company strategy is a general, master plan. It answers the questions:
- What am I going to create? What will my business consist of?
- Who am I doing it for? How am I going to improve the lives of those people?
- What will make me stand out from the competition? What makes my offer unique?
- What is the potential of my business? What are the threats and opportunities? How will I act if the business environment changes significantly?
- What results do I want to achieve in a few years?
- Consider a company strategy using the example of an online chocolate shop. Suppose you decide to sell sweets online. The idea is doomed to success, because everyone in the world loves chocolate, you think. Is this true, and how exactly does a brilliant idea come to life?
Research the market
Before you start your business, you need to know if it has potential. Do your research on supply and demand.
If the product or service is in demand, there is a growing demand for it, it makes sense to enter that market.
On the other hand, if there is already a lot of supply in this market and it is getting bigger every day, it means there is a lot of competition. Everyone is working on the edge of profitability and it is difficult to make a profit.
Sales of chocolate and sweets in general are virtually unchanged from year to year. At the same time, more and more people are shopping online, and online sales are growing at a gigantic rate. The potential is there.
There are only five specialised online sweet shops in your city. This means that you can win back your share, and profitability is probably still acceptable.
But you have many more competitors: there are also confectioneries, gift shops, supermarkets, and private craftsmen making sweets to order. To take your place among them, you need to offer something new and unusual.
Choose your customers
Among the many potential customers, you need to choose your target audience and focus on it. Don’t try to reach everyone. Find those whose needs or wants your current salespeople haven’t yet met and focus on them.
Get a feel for your potential customer. What is his or her need that you can fulfil? How do these people think? Where do they shop? What are their personality and behavioural traits?
There are many chocolate-loving people – in fact, all people between the ages of 1 and 99. Among them, 40% are young and middle-aged people who are active users of the Internet: they value it for the speed and convenience of shopping. In addition, the Internet is usually also used for entertainment.
We can distinguish a separate group among all Internet audience. These are people who want to stand out and like to give non-standard gifts that they have put their energy and creativity into making. Let us assume that they account for 20% of Internet users. It is these people who will become your target audience.
Formulate your offer
To differentiate yourself from your competitors and maximize the needs of your target audience, formulate a unique selling proposition (USP).
Think about how you will implement it: by yourself or with the help of suppliers or business partners.
For example, you will make chocolate according to your grandmother’s unique recipes, using natural dyes to make it colourful and adding unusual ingredients: cloves, buckthorn, carrots, red peppers.
At the same time, you will offer your young customers who love creativity and entertainment not just to buy ready-made chocolate, but to become its co-author: choose the design, colour, taste and packaging. To do this, you will make a special constructor on your website.
At the first stage, suppose you can produce such chocolate yourself, and when the volume of orders grows, you will engage a small private factory.
Evaluate the potential
Assess the prospects for your development in the market. You can do this by using a SWOT analysis.
This method helps to identify the project’s internal strengths, internal weaknesses, potential external/market opportunities and potential external/market threats – risks that may affect the company’s development.
The same method can be used to study a single competitor or the market as a whole.
Once you have compiled such a table, draw conclusions: how to respond to threats, work on weaknesses and make the most of opportunities, building on the strengths of your product.
Competitors can also go online and offer the original chocolate. You need to prepare a response to this: say, create an even more customer-friendly mobile app and expand your range. Your weaknesses, such as working only online, can be strengthened over time by going offline. You can work with partners first, and then open your own point of sale – a chocolaterie.
Determine your promotion strategy
Assess how your competitors promote their products or services, what channels they use and how much money they spend on advertising.
A sound promotion strategy will allow you to use your budget as effectively as possible. For example, if there are a lot of competitors in the market and your budget is small, it is better not to spend a lot on advertising, but to expand your partnerships.
Since you sell online, the main advertising support should be concentrated on the internet. Your company’s participation in masterclasses, promotions and barter partnerships can give you a greater return for a smaller investment.
Formulate a business objective
Be bold, but remain realistic. Define specific numbers for sales volume, number of clients, territory. Set yourself an upper boundary that you’ll aim for.
Let’s say you set yourself the goal in a year to sell 2500 tiles per month in your city, half of the buyers to make their regular customers, offering 5 options for toppings and 3 options forms.
In three years you plan to expand the range to 10 toppings and 5 of the forms, to expand delivery to the entire area and bring customer loyalty to 80%. In this way, you expect to have a 35% share of the city’s online chocolate sales.
And in five years, you intend to open a chain of chocolate shops in the region, sell your franchise, send your product nationwide, and increase sales to 10,000 bars a day.
Once you have a business strategy, go on to write a detailed business plan.