As a small business owner, the things you want to achieve with your company are not always written. Advisors will say “you need a business plan,” bank managers will insist on one before approving that vital loan you need to finance your expansion. Whether or not you codify what you want for your business, you need to understand what strategic management is all about so you can drive your business forward, ensuring you can achieve/maintain a sustainable competitive advantage.

Strategic management in business boils down to 3 simple questions:

  1. Where are we now?

  2. Where we want to be?

  3. How are we going to get there?

Where are we now?

The first question looks at the situation the business is in, this situational analysis can take many forms, but as a general guide, consider doing a SWOT and PEST analysis of your current position. Don’t be scared by these acronyms, they are very easy to understand and can give you amazing information about your business and develop your mindset. You could brainstorm with other members of your team, or with your family/friends if you are a lone wolf.

SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Strengths and weaknesses are internal aspects of your business: What are you good at? What makes you better than your competitors? What don’t you do so well? Where could you improve? Opportunities and threats are generally external, so what opportunities are there in the market? Threats could come from new competitors entering your market.

Next, it’s vital that you look at the broader external environment, there are many acronyms for this type of analysis (STEP, PEST, STEEPLE, STEEPLED, to name a few), but they all equate to much the same thing: political/legal. , Economic, Social and Technological Factors. I won’t go into much detail on these as they are self explanatory, for example the advent of the (Technological) Internet has had and continues to have a massive impact on the way businesses operate. Analysis of the broader environment can help you spot opportunities for growth or highlight the need for change.

Where we want to be?

So you’ve analyzed where you are now, the process itself will usually yield some interesting suggestions, next you need to think about where you’d like to be. The answer to this question forms the basis of your strategic business objectives, they can be very varied and do not necessarily have to be focused only on billing. In a large organization, there will be corporate objectives that underpin the overall direction of the business, these are then cascaded through the different departments, each of which will have its own set of objectives, ensuring a coordinated and synchronous approach to managing the business. business where you want. be. In a small business, you may only have a handful of objectives, but try to think outside the box here, as the saying goes, “turnover is vanity, profit is sanity, cash is reality.” Don’t chase revenue increases for the sake of it, your underlying profitability is what really matters, and your goals should be realistic and achievable (more on that below).

When setting your goals, it’s not enough to just say, ‘To increase sales’ or some other cool statement, your goals need to be SMART, another acronym, sorry, but useful nonetheless. Check that your objectives meet this criteria, they must be: specific, measurable, achievable, relevant and related to time. An example of the above vague goal made SMART might be: ‘Increase sales by 10% in the next 6 months’. These SMART objectives ensure that you can measure the effectiveness of your strategy and tactics.

How did we get there?

Now you know where you are right now and where you want your business to be, but how are you going to get there? How will you achieve your goals? This is where strategy and tactics come in, your strategy is the broad overall plan, while tactics are the building blocks of what you will actually do to achieve your goals.

So there you have it, ask yourself: where are we now? Where we want to be? How did we get there? These questions are the fundamentals of strategic management. Finally, don’t forget about the feedforward loop as well, this is the whole point of creating SMART goals so you can measure if they’ve been achieved. Once you have carried out your plan, you need to check how effective your chosen strategy and tactics have been by asking yourself: Are we there? Have we achieved our objectives? If not, why not? These answers then feed into your next planning cycle and the process starts all over again, rinse and repeat…