Over the past decade, you’ve channeled your passion for music into a thriving e-commerce business. Your unique collection of apparel and accessories supports the growing community of festival-goers and music-enthusiasts — centered around the shared experience of collective listening.
It’s early 2020, and you’ve planned a business strategy based on the year’s scheduled events. Then, the coronavirus pandemic hits.
Social distancing and self-quarantine measures across the globe are preventing many from going to the grocery store, let alone a music festival. In this new normal, your business plans need to be flexible.
This is the challenge that Brian Lim, CEO and founder of iHeartRaves, found himself facing as COVID-19 spread.
His festival apparel business was crushed, but his team took this opportunity to pivot — rather than festival fashion, they built a new strategy with new goals for activewear and loungewear.
Their reactive approach paid off: “Luckily, we’ve been successful with the pivot,” Lim said. “We’ve learned that necessity is the mother of change.”
Other small businesses have found themselves in a position similar to Lim. Many owners have had to revisit their business strategy to adjust to the changing social and economic environments.
Now is a great time to revisit the basics of strategy development. Whether you’re revising your previous plan or starting from scratch, it’s a daunting task.
Clutch surveyed 502 small business owners to learn about their strategic planning process. This guide provides several tips for developing, documenting, and executing an effective business plan.
- Nearly 65% of small business owners reported meeting more than half of their objectives in the past twelve months, but only 5% actually achieved all of their goals.
- Despite operating in a variety of industries, there were three business areas that more than one-third of small business owners created a strategy in — sales (46%), marketing and advertising (41%), and customer service (36%).
- Generational and gender differences have no clear impact on level of confidence in executing on strategy, frequency of strategy review, or percent of annual goals met.
- Formal strategy documentation is not as common as you’d think. Only 15% of small business owners have recorded their full plans in the past year, while 27% failed to document any of their business strategy.
- 77% of small business owners are somewhat or very confident in their ability to execute their strategy, but 95% still fall short of meeting all of their goals.
5 Strategy Development Tips for Small Businesses
- Set actionable and clear business goals.
- Focus your efforts on the business areas that matter most.
- Find a mentor to help guide your business strategy.
- Draft a formal, documented business strategy.
- Follow your business plan, but revise it regularly.
1. Set Actionable and Clear Business Goals
Every small business is going to have a unique mission and different approach to goal-setting. We found that across all industries, however, the majority of these companies don’t meet all of their goals.
While about 65% of small business owners reported meeting more than half of their objectives in the past year, only 5% actually achieved all of their goals.
Before trying to understand why these businesses fell short, let’s start with the basics — the goal, itself.
There are varied opinions on what makes a good goal. Should you aim high, setting goals that are out of reach but push you to work hard? Or, should you set realistic goals that you’ll likely achieve to keep your team motivated?
Dan Bailey, president of WikiLawn Lawn Care, an extensive database for lawn care tips and services, takes the more ambitious route: “[Setting stretch goals] helps push you out of your comfort zone and ensures you achieve more than you otherwise would have,” he said.
Reuben Yonatan, CEO of VoIP research database GetVoIP, feels differently, preferring to set short-term, achievable goals: “It’s easier to develop strategies for smaller goals as opposed to lofty ones,” Yonatan said.
Other small business owners land in the middle — like Malte Scholz, CEO and co-founder of a product management tool called airfocus: “I think the best goals are realistic but slightly optimistic,” he said. “If you don’t aim high enough, you risk setting unambitious goals, but if you aim too high, you may never hit your goals and feel discouraged.”
Whether you err on the side of ambitious or attainable, there’s no arguing that all goals need to be clear and actionable because they are the foundation of your business strategy.
For example, the SMART goal framework helps business owners ensure their goals are specific, measurable, attainable, relevant, and have a deadline.
Set aside some time for goal setting. Once you have a set of solid short- and long-term goals, you can begin to outline the necessary steps to meet each one.
2. Focus Your Strategic Planning Efforts on the Business Areas That Matter Most
Whether you’re starting a business from scratch or looking to redirect your business, the first question that comes to mind is, “Well, where do I start?”
No matter the industry or market, any small business needs customers to buy and use its product. There are three core departments that accomplish this goal:
- Marketing or advertising
- Customer service.
Our survey found that more than a third of small businesses documented a formal strategy in each of these areas in the past year: 46% for sales, 41% for marketing and advertising, and 36% for customer service.
“They’re the three fundamental pillars of any small business,” Bailey said.
Your sales strategy needs to place your products in front of your target customers in a way that sets your business apart.
Your advertising and marketing strategy needs to reach those customers and persuade them to buy or use your product.
Lastly, your customer service strategy should ensure your customers are happy, build loyalty, and keep them coming back.
Yonatan agrees, claiming that these areas form the pillars of any successful business.
“Also, keep in mind that these three departments must work together,” Yonatan said. “If the marketing department is failing, so will the sales department, and so will customer service.”
You’ll have a business plan with a good product, a channel to reach your customers, and a plan to keep them happy by investing time in these three core areas and creating actionable goals and measurable strategies that work together.
Once you have this base, you can start to specialize based on your company’s unique needs.
3. Find a Mentor to Help Guide Your Business Strategy
It’s okay to ask for help, and there are plenty of insightful professionals out there to learn from.
Business Mentors From a Different Generation
Our current workforce spans the Silent Generation through Generation Z. This age gap has led to discussions about how each generation operates in the workplace — who works harder and who is most effective?
Harvard Business Review, however, found that there are no real consistencies between these common myths and professionals from different generations.
“So what might really matter at work are not actual differences between generations but people’s beliefs that these differences exist,” Eden King, Lisa Finkelstein, Courtney Thomas, and Abby Corrington write in HBR.
“So what might really matter at work are not actual differences between generations but people’s beliefs that these differences exist.”
In giving weight to assumptions about how generations act in the workforce, we’re influencing how we interact, collaborate, and communicate in a professional setting.
Our data supports the idea that small business owners of each working generation share similarities. They review their strategy with similar frequency, approach planning with comparable levels of confidence, and achieve nearly the same percentage of their total goals.
Take Devin Miller as an example. Now the founder and CEO of his own patent and trademark law firm, Miller IP Law, he maintains that his greatest professional mentor is his father.
“Growing up, he was heavily involved in multiple startups,” Miller said. “I grew up watching him experience the joy of success and the downside of failure.”
Miller credits this cross-generational relationship with fostering his passion to build his own business and help others like his father with their own intellectual property.
Business Mentors of a Different Gender
While there is a common belief that men and women approach business in different ways, another study from Harvard Business Reviews finds, “on average the sexes are far more similar in their inclinations, attitudes, and skills than popular opinion would have us believe.”
Our data backs these commonalities between genders in the work place — showing similarities in approach to strategic planning and review, confidence in execution, and percent of goals achieved.
Rather than trying to find a mentor that aligns with your experience and approach, use your network to find someone you can trust to help you make strategic decisions and support you in growing your business.
There’s plenty more to learn from someone with not only a different background and perspective but also the same passion for running a successful business.
4. Draft a Formal, Documented Business Strategy
If I asked you for an outline of your company’s strategy for the next 12 months, would you have a document readily available?
Our survey found that most small businesses don’t actually create an official, formally documented business strategy that includes specific actions needed to meet a goal.
Only 15% of small business owners report fully documenting a strategy within the past year, while 27% admit to not planning at all.
Although it’s possible to align on a business direction through informal communication channels like team meetings, check-ins, or emails, small businesses can benefit from a documented strategy.
Include Tangible Action Items
The first benefit is simply tangible action items that you can refer to as necessary. Julie Bee, president of social media management company BeeSmart Social Media detailed her process for us.
“We document strategies in Word, Excel, and Google Drive,” she said. “We use Asana to make the strategy actionable, then use Slack to communicate about the implementation.”
Like Bee, businesses of all sizes use external tools to document, share, and track their progress against their strategy. Other examples are Basecamp, Trello, and Notion, but there are plenty more available on the market as well.
Project management tools like Trello allow users to create project boards to visualize their goals from start to finish.
Motivate Your Team With Business Goals
In addition to the practical benefit of a documented strategy, there is a culture-building aspect, too.
Flynn Zaiger, CEO of Online Optimism, a digital marketing and design agency, uses Google Slides to document his business strategy and share goals with his team, motivating them and keeping them connected to their greater vision.
“The more visually appealing tool can help us craft strategy documents that fit our brand and spur a little more motivation than a spreadsheet with some bar graphs,” he said.
Having a creative visual to represent how your team’s strategy and goals align with your company’s greater mission can help ensure that your plan resonates with each of your teammates.
Lastly, a documented business strategy helps companies as they look to the future. With growth comes more variables to consider — departments shift, competition builds, and your market will continue to evolve.
With all this change, it becomes more important than ever to have a plan to refer to when making decisions about your company’s direction.
Lim has established a concrete method for strategic planning with his iHeartRaves team.
“Annual planning for all departments is broken down into quarterly goals at the individual level,” Lim said. “That way, everyone understands how their work matters in the bigger picture.”
In short, having a formal document to align your company on shared goals and the strategy to get there provides you with a:
- Tangible map to help make decisions
- Motivated team who can reach broader goals
- Efficiently operating business that’s prepared for growth
5. Follow Your Business Plan, but Revise Regularly
The challenge isn’t over once you document your business strategy — you still need to execute.
Our survey found that more than 70% of small business owners are at least somewhat confident in their ability to both draft and execute on a documented business strategy.
About 71% report being somewhat or very confident in their ability to draft and document a formal strategy to meet their business goals.
Additionally, 77% of small business owners are somewhat or very confident in their ability to put that plan into action.
With this confidence, why are 95% of small business still falling short of meeting all of their goals?
If we’ve learned anything in the first quarter of 2020, it’s that change is inevitable.
Adjust Business Approach in Favor of Customer Service
Your business plan needs to be not only clear, actionable, and measurable but also flexible enough to adapt to changes in the market or unforeseen circumstances — like COVID-19.
In the midst of the pandemic, Reuben Kats, co-founder and COO of web design agency GrabResults LLC and its sister company, Falcon Marketing, LLC, began to feel overwhelmed balancing his workload while supporting his clients. Although he fell behind on production, he still asked a client for payment, which cost him the deal.
“I learned my lesson,” he said. “I should’ve caught up on my end, then showed the customer we were on track before collecting payment.”
Because Kats wasn’t able to adjust his approach to customer service to account for the changing environment, he lost a client.
Revisit Your Business Priorities and Strategy
It’s also important to revisit your strategy to make sure your priorities are still in the right place.
Miller and his team at Miller IP Law failed to build out their CRM and marketing strategy because they put most of their time into serving their clients.
“We knew these things were important,” he said. “However, we kept pushing them to the back burner until they piled up.”
Once Miller took the time to revise his approach to their marketing function, they could make the call to hire an expert to manage the CRM initiative. “It’s already having a positive impact on our business and making for a better customer experience,” he said.
"It’s already having a positive impact on our business and making for a better customer experience."
Revisit Plans as Your Business Evolves
Revisiting your strategy as your company evolves can help you highlight gaps you may have missed during initial planning.
Bee admits that her team at BeeSmart Social Media has fallen short of several goals in the past year, but she identified two key takeaways in her experience:
- She was setting unrealistic goals.
- She was following an unrealistic implementation plan given the resources available.
“Either I didn’t have enough hours myself, or enough money, or my team didn’t have enough hours,” she said. “Now, I start with the resources I currently have to build out a strategy.”
You can have clear and actionable goals guiding the core of your business with a measurable action plan for each, but the ability to adjust based on outside factors is what sets the 5% of small businesses that meet all of their goals apart from the rest.
Strategy Development Is Important for Business Success
As the coronavirus pandemic spreads, many small business owners are revisiting and revising their strategy to accommodate the changing social and economic environment — and many probably aren’t sure how to begin.
Based on our survey data from small business owners, we’ve created this guide to help overcome that obstacle. Using similarities and trends in survey responses, we identified 5 key steps that all small businesses should take to have an effective strategy.
- Make sure all your goals are clear and actionable so you have a solid direction to take your business.
- Start with the core departments — sales, marketing or advertising, and customer service. Solid plans in these areas will ensure that your target customers see your product and start building brand loyalty.
- Run your strategy by a professional mentor to get some additional insight from an outside perspective.
- Document your strategy using an intuitive and sharable tool that fits your team’s needs and approach.
- Revise your strategy as needed.
Change will happen, and small businesses that are prepared and willing to adjust their strategy will be in a better position to continue operating successfully.