A business strategy involves decisions about how an organization will compete in the marketplace, what products or services it will provide, and how to run the company on a day-to-day basis. These decisions directly affect an organization’s business model, which describes the way that money flows through the company.
Therefore, it’s crucial for entrepreneurs to understand both the business strategy and the business model of any company they work with. The following are five business strategies every entrepreneur should know about so that you can use them in your own business endeavors.
Finding A Mentor
The business landscape is very different than it was 10 or 20 years ago.
You can bootstrap your way to success and learn how to do marketing without spending a dime on advertising, but you’ll need help.
Most businesses are founded by entrepreneurs looking for funding—that means bringing on partners with money and connections; more often than not, those individuals become mentors for business ideas.
So make sure you find someone who has at least some experience in your industry (and preferably someone who is successful) to support your company.
Get your finances in order as an Entrepreneur
The most basic piece of advice any entrepreneur will give you is Know your numbers. While each business is different, and your financial goals will be unique to you, there are some universal truths.
Regardless of whether you want to start a business-to-business (B2B) company or a business-to-consumer (B2C) company, work out what it will cost to start up and run your new venture. If you don’t have enough money in savings to cover those costs, then bootstrap.
There are plenty of ways to raise funds without giving away equity—crowdfunding sites like Kickstarter and Indiegogo are great for small businesses with limited capital requirements.
If you need more cash than that, angel investors can help fill in funding gaps; they’re not as interested in equity as VCs but they still want some sort of return on their investment.
And if you need large amounts of capital to get started, corporate investors might be an option.
However, if at all possible, try to keep control over your business by raising seed funding from friends and family before seeking outside investments. You’ll likely get better terms that way.
Stay patient, but plan ahead
When you’re a co-founder, you don’t want to feel like every decision made is being forced down your throat.
It’s crucial to be open to other people’s opinions and advice, but it’s also smart to make sure there are some things that will be non-negotiable. Figure out those few things ahead of time so that when you have an opinion on something, there won’t be any doubt that you’re right.
If you can’t agree on something, then you should probably talk about it until one of you comes around or find someone else who can fill in for that role. Hiring is hard enough without having to deal with office politics at the same time.
Your business plan should take into account how you’ll split up responsibilities and how often each person will report back to the group. That way, everyone has a clear idea of what they need to do their part while still contributing to progress as a whole.
Don’t be afraid to pivot as an entrepreneur
Some entrepreneurs spend a lot of time trying to identify their idea and get it right before they start, but there’s no one way to succeed. As many bootstrapping entrepreneurs will tell you, your business plan is likely to change along with your customer demographics and investment opportunities.
Don’t be afraid to re-evaluate where you are going and what you need to do next. Some of today’s most successful startups have been through several iterations.
Even if you hit on an amazing idea early on, that doesn’t mean it won’t require significant changes down the road.
If you’re open to changing course when necessary, you may find yourself in a better position than if you had stuck to your original vision.
You can also invest in other people’s businesses or even become Angel Investors. It’s not uncommon for people who want to launch their own companies to take advantage of other opportunities as well. Angel investing provides a great opportunity for new entrepreneurs looking for alternative ways to gain experience and funding.
By investing small amounts into startups, angel investors gain insight into how businesses operate while also earning potential returns on their investments.
Angels often choose to make smaller investments because they don’t have enough capital to fund a startup themselves.
However, some angels make larger investments in businesses run by friends or family members
. No matter how much money you put into another business as an entrepreneur, it will still give you valuable insights into entrepreneurship that could prove useful later on.
Don’t sweat the small stuff
The rule of thumb is that if you can’t afford it, don’t buy it. In short, save money by not buying products and services you don’t need. Take stock of all your bills and prioritize accordingly;
you might even want to hire a business coach or read a book on personal finance to take things up a notch. For example, it may be worth paying for business-related courses or workshops to better position yourself in your industry.
If you have employees, consider hiring an HR Consultant to help with payroll taxes and other human resources issues.
Most importantly, remember that while bootstrapping means being thrifty with expenses, it doesn’t mean being cheap—because at some point (and probably sooner than later), clients will begin to notice how your service quality compares with others in your field.
And as every entrepreneur knows, word of mouth is one of your most powerful marketing tools. So do what you can to keep costs down without sacrificing client satisfaction.
For example, instead of renting office space in an expensive downtown building, consider coworking facilities where rent tends to be cheaper but where you also get access to meeting rooms and conference space when needed. Bottom line: if you’re going out of your way to offer top-notch customer service and high-quality workmanship, make sure people know about it!
That said, there are ways to trim corners that won’t detract from your reputation. Don’t pay for premium packages on accounting software or web design software unless you really need them.
Skip pricey networking events unless they promise concrete opportunities to network and learn new skills (or just attend them online). Similarly, avoid splurging on a full-page ad in your local newspaper or website unless you have significant revenue streams already. Instead, use social media and search engine optimization to reach potential customers. Finally, resist the urge to hire more staff than you need—especially during slow periods.
It may seem counterintuitive, but sometimes cutting back on staff actually helps businesses grow faster in terms of productivity because everyone works harder knowing their jobs are on the line.
This strategy is known as lean staffing or lean management and has been used by companies like Toyota Motor Corporation for decades to increase efficiency across their operations.
As an entrepreneur, you’ll want to apply it to your own business. At its core, lean staffing means keeping only those employees who are essential to achieving your company’s goals and letting go of anyone else.
Of course, it takes courage to let someone go, especially if you worked hard to recruit and train him or her. But if you’ve done your homework and have a good reason for making an exception to your no layoffs policy, it could be a great business decision.
For example, say you’ve hired a few salespeople and set aggressive targets for each of them.
But then two months into your fiscal year, it becomes clear that no one is going to hit his or her quota. In that case, it’s time to have a candid conversation with your employees and give them a chance to explain why they’re underperforming.