In our previous article, we discussed strategy as one of the foundations of a successful business. We explained that it is what gives expression to the vision, through a plan of execution that aims to take the business to the desired destination.
But what goes into developing a good strategy?
SWOT
Our first recommendation to small businesses in Kenya is a detailed assessment of their internal and external environment. This involves analyzing:
- Strengths- What are you good at? What skills/experiences has your business accumulated?
- For instance, an entrepreneur with a strong social media following can easily leverage this for e-commerce, with its benefits explained here.
- We therefore advise businesses to identify their strengths and sharpen them so as to gain competitive advantage.
- Weaknesses- What do you find difficult? What do your customers regularly complain about?
- Upon identifying these, businesses should work to improve on them or better yet, find superior alternatives. For instance, entrepreneurs that struggle to keep accounts can adopt POS Software.
- Not only does POS Software conveniently and securely conduct electronic transactions, but it also enables effective financial accounting, inventory management, staff performance evaluation and customer relations.
- Opportunities- What resources do you have? What markets can you access?
- Various opportunities exist for small businesses in Kenya and they should be harnessed maximally.
- For instance, by applying for the Women Enterprise Fund, one can benefit from loans and capacity building. This government initiative also markets products by Kenyan women entrepreneurs, both locally and internationally.
- Threats- These are mostly external factors that could negatively affect your business.
- Businesses should identify potential threats and take proactive steps to try and avoid them.
- These steps include: following government regulations, buying insurance, finding new markets, adopting new technologies, rebranding for competitive advantage, etc.
SMART
After comprehensive SWOT analysis, one should develop goals and courses of action using the criterion below:
- Specific- A general goal of business growth is vague. What exactly should grow?
- For instance, I want to increase sales/profits/production. I want to minimize costs/customer complaints.
- This will efficiently focus energy and resources.
- Measurable- There should be a way of quantifying progress/failure. For example, I want to increase profits by 3%. I want to gain 50 new customers.
- Businesses can use their past numbers to set realistic goals. We welcome you to read our articles on financial reports and book-keeping.
- Attainable- There should exist a practical way of reaching set goals.
- For instance, I will gain 50 new customers by sponsoring ads on Facebook. I will half costs by selling older items first so that they do not expire.
- Otherwise, goals remain on paper with no realization.
- Relevant- Say your main objective is profit maximization. The focus should therefore be activities like cost cutting, effective marketing, etc.
- Goals like hiring more employees, unless extremely necessary, are contrary and therefore irrelevant.
- Time Bound- There must be a realization date for each goal. For example, I will increase sales by 2% by the end of the month.
- This will help keep the business accountable to its objectives.
Remaining consistent to a business strategy developed through SWOT analysis and with SMART goals guarantees business success. This however does not discount the importance of constant evaluation and re-evaluation.