What Is A Business Strategy?

Business strategy, on one level is what is embedded or included in your strategic plan, which, of course, is a result of the analysis, thinking, and organization of the strategic planning process. But what, really is it?

It's basically the blueprint for how you intend for your business or company to succeed. The best way to illustrate the difference between having a business strategy, and not having one is through some simple examples. We'll use a small business example, but the principles apply to any sized business.

Joe has an interest collectable trading cards. He has great contacts, has gone to sport card and memorabillia shows, and decides he'd like to have a collectable sports card store. While Joe knows the product, and even a little about his potential customers, he's not much of a planner or business strategist. He knows enough to understand he has to have inventory, and he has to sell at a price higher than he buys at -- some basic nuts and bolts. But business strategy? No.

So, he rents a store and starts. Does a little advertising. After six months, he eats through his business capital, and closes up.

But Frank's a different kind of cat. He has about the same levels of interest in collecting cards and sports memorabillia, but he also understands the importance of having a good sound business strategy. So, before he does anything, he starts thinking about things like:

• Who will the customers be and what will they want? (age, demographics)
• Where are most of these customers situated?
• How do I advertise to those customers?
• How can I provide them with things that others (let's say Joe) can't
• What strengths do I have that will make me and my store standout?
• What pitfalls must I avoid? (i.e. insufficient capital)

and probably another hundred questions that are part of creating a sound business strategy.

So, Frank actually opens his doors after Joe, but using the information he's put together he's developed a business strategy. So, for example, he realizes the major demographic for the product is younger people, or people who like things associated with games, sports and technology. So, apart from his card inventory, he also has some videogames installed to pull in potential customers.

He creates a website, specifically designed to cater to people with sports interests, and sets up ways for people to buy the products online, from all over the world.

In effect, he separates himself from the competition, uses his strenghts, minimizes his weaknesses -- creating and implementing a business strategy based on a realistic understanding of the business realities of the particular industry. Result: He's still there, doing well.