Owning a small business often means making decisions in the face of ambiguity and being willing to adapt to unforeseen events. Yet periodically stress-testing your business strategy empowers you to be more proactive in how your business evolves—even when it reveals that your plans need to change.
4 Questions to Ask in Order to Assess Your Business Strategy
What customer segments drive most my revenue?
You identified a target audience in your business plan, but you may find that those predictions didn’t come to fruition when you analyze your actual customer base and see who accounts for the bulk of your revenue.
As you identify different customer segments, build specific profiles about who they and what makes them “tick”. What do they do for a living, what do they value, where else do they buy? Why do they like buying from you?
Compare the customer segments to your current business model and strategy. Do your marketing messages, fulfillment and distribution channels, and product/service mix align with the people most attracted to your business? If not, how might your existing strategy change to deepen the relationship with them?
Consider how willingness to change business strategy based on actual customer analysis made Lululemon a global brand. Its initial marketing strategy was a grassroots effort that used influential yoga teachers as ambassadors in the yoga community. The strategy was effective, but concentrated to a niche audience. Once the company’s recognized that its customers weren’t limited to yogis, its strategy shifted to become a lifestyle brand geared to men, women, and children with a range of health and wellness interests.
Can I leverage my brand values to grow?
Like your target audience, much of your initial brand identity rests on how you think the market will perceive you and how you think you compare to and differ from competitors. But once you’re in business for a few years, you may find that what makes you stand apart in the marketplace isn’t exactly what you imagined.
Make a list of your top five competitors and how you perceive their brand values, then make a list of yours. Consider these questions:
- Do your brand values still make you different in the competitive environment?
- Are there new brand attributes you’ve embraced that you haven’t incorporated into your strategy?
- What aspects of your brand are most important to your target audience?These questions can help you determine if you can adjust your business strategy to grow your brand, based on values. If you own a cleaning company and use only organic products as a brand value, for example, there may be opportunities to expand your strategy to develop a line of proprietary organic cleaning products.
Is the data I’m tracking still meaningful?
Technology has made it possible for small business owners to capture insights about customer behavior, product profitability, and revenue streams by distribution channels that were once only accessible to large corporate outfits. However, data is only as valuable as your ability to use the findings to refine your current business model and strategy.Check in with the metrics you track and whether they contribute to your ability to reach your current business goals. For example, if your goal is to deliver superior service compared to your competitors, you’ll learn more from tracking net promoter scores than you will marketing response. If your goal is to increase profitability, metrics about which products result in the highest profit margins will be more telling than average order value.
Do I have the right internal processes in place to reach my goals?
Your business strategy should include the internal controls you need to reach business goals. If your goal is to be the house cleaning service that simplifies the scheduling and payment processes for customers, for example, you need to leverage technology that allows customers to schedule and pay with the push of a button. If you own a coffee shop and want to open a second location, you’ll need internal processes that ensure a consistent experience regardless of location or employees. Opening your business initially begins with trial and error, but your strategy should include internal controls that eventually help you establish consistency (and potentially scalability) the longer you’re in business.