The word “strategy” strikes fear into many SME business owners. It is thought to be something which corporates do and is not required for a small business. Yet the meaning of the word is straightforward: it is simply “a plan of action designed to achieve a long-term or overall aim”.
Numerous business models have been developed for making strategic plans, but they are simply a starting point. Very often what happens is completely different, and unexpected opportunities arise. SMEs are sufficiently nimble that they can take advantage of these opportunities — and a new emergent strategy happens, advancing the business owner towards their long-term goal.
Step 1: Where Do We Want to Get To?
Setting a long-term goal starts with deciding the approximate size of the financial pot you will need when you exit the business. The form that income will take will influence the business strategy. It might be simply taking money out of the business and investing it. It might be building a business to sell or acquiring property. Each broad approach has a different optimum model which sets the general direction. For example, a long-term maintenance contractor is a lot more attractive to a business buyer compared to a general building contractor.
Step 2: Where Are We Now?
Broadly speaking, all businesses go through the same stages of growth. Knowing which stage you are at — from survival and start-up through to lifestyle, scalable growth, and exit — is important because the amount of time available to prepare for exit can vary considerably, and thus the scope to impact the outcome varies too.
Step 3: How Do We Get There?
The next step requires identifying the gaps that need addressing to achieve the goal. A common analysis tool for this is the SWOT analysis, which examines internal Strengths and Weaknesses, and external Opportunities and Threats. For construction businesses, which are project-based, the analysis breaks down into two elements: business elements and project elements.
Business elements include people, financial management, existing customers, new customers, suppliers, business sustainability, organisation structure, service replication, IT systems, and leadership. Project elements include health and safety, estimating, planning, quantity surveying, risk management, site records, snagging, document controls, and post-contract management.
Depending on where you are starting from and where you want to get to, any number of actions may be required. Every business is different — which is why bespoke advice or mentoring for business owners is so valuable. If you would like to cut through the noise and develop a clear plan over a few months that you own and understand, get in touch for a no-obligation discussion.
