Professor QuickBooks understands that most successful owners and managers of businesses are focused on one main goal and that is sales. Sales usually mean two things – getting and keeping more customers and selling them more products and services.
Of course for a business to be sustainable, though, it has to be selling something customers want and at a price they want to pay. This is where strategy comes in – strategy helps you to create a unique market niche, which you can exploit without lots of “me-too” competition.
In this article, Professor QuickBooks explores the question – how do you implement a strategy for your business? Well, according to leading authority Professor Michael Porter, successful strategy is about three things:
• Differentiation – how can you make your product different in some way? It doesn’t need to be complicated. It can be as simple as doubling up on manpower to achieve the same work for customers in a shorter time frame thereby lessening the time that they are inconvenienced while their service is carried out.
• Focus – be a specialist in what you do for a particular group of customers.
• Being the cheapest – but this is rarely enough on its own, and it’s hard to sustain.
Business strategy checklist
The list below covers your business strategy essentials and you’ll want to review these regularly:
1. Do you have a business plan and have you reviewed it recently? This acts like a roadmap to help your decision-making and priorities.
2. Have you spent quality time checking the competition? Apart from Google, do you go to trade shows? Have you mystery-shopped the competition? Also, when was the last time you mystery-shopped your own business?
3. Are you over-reliant on one or two customers? If one of them leaves you or goes bust, it could have a major impact, accounting software such as QuickBooks will show you your sales by customer, as well as your most profitable customers.
4. Do you know the lifetime value of your customers? This is the profit generated by one customer before they change supplier and determines how much you can afford to spend acquiring the customer. You can use previous averages to calculate this or if you’re not sure, assume roughly 4-5 years, although this will depend on your industry.
5. Have you calculated your break-even point? This is the point where sales cover costs and will have a big impact on your business strategy.
6. Have you reviewed your pricing recently? Most early-stage and smaller businesses don’t charge enough – there is a rule of thumb that if you are successful in more than 60% of your pitches, you are not charging enough!
7. Is your trading structure still appropriate? For example, if you are a sole proprietor should you incorporate the business? This can have an impact on everything from how much tax you pay to whether you can pitch to big businesses.
8. What else could you sell to your existing customers? Acquiring a customer is one of the biggest costs of any business so you need to get the most from each existing customer opportunity. Try preparing an Ansoff Matrix- this has customers down one side and products across the top – put a cross next to each customer for products they are currently buying. Every blank is then a potential new sale!
Keep your business strategy current
In today’s competitive business world, regularly taking time out to review your business strategy is essential. Why not set aside some time in your diary every three months or so:
• Choose one area of your business to reflect on and review
• Consider getting a customer, colleague or mentor to join in
• Produce a document recording any decisions with milestones, which you can refer back to at your next meeting.
At EasyBiz QuickBooks we understand the complexities of starting and running your own business and that some of the keys to your success include a great business strategy combined with the tools, software and reporting measures to keep that strategy on track. We have the tools to keep that strategy on track and to ensure that your business growth is as seamless and admin-free as possible – giving you the time to focus on the bigger picture.