Strong Startup Strategy: Importance and 7 Basic Steps to Build One
Young companies and entrepreneurs ignore startup strategy, making a big mistake. Find out why it is crucial for business success and how to create one.
Gone are the days when boundless energy, enthusiasm, and hard work were enough to deliver some initial success. Today's cutthroat, oversaturated market calls for drastic measures that, first, involve thinking about strategy and developing a formal action plan.
According to recent studies, successful business owners have a set of financial targets they strive to achieve. They are perfectly aware of the risks they might be facing and understand the means needed to minimize them and move toward their goals. They do not rely on the spur of the moment or whim; they do not go off the beaten track. Every step is smart and fact-based, thanks to a well-thought-out, well-discussed, elaborate plan of action.
Indeed strategy and brand design for startup have become crucial for businesses. Regardless of the budget, target audience, niche, and competition, it is one of those precious assets that help the company avoid degradation and stagnation and ensure its growth and evolvement. Let's consider some good reasons why startup strategy is essential and then move to the guide on creating one.
Importance of Well-Thought-Out Startup Strategy
Many startups tend to believe that strategic management is hard work that distracts from the urgency of running the day-to-day business. At some point, they are right. Following and implementing a plan of action requires business owners' commitment, devotion, and readiness to give precious time, effort, and resources. However, these needs to be done because strategy sets the company on a trajectory to success and does numerous things that are vital for the company's survival these days. For instance,
- It creates a higher awareness of the company's current performance, determining its weaknesses and strengths. It demonstrates how the company performs internally and against the competition.
- It puts everyone on the same page and focuses more on activities that will make the teamwork more effective and the organization more successful.
- It creates a clear picture of what the company wants the future to look like to make teamwork reactive rather than proactive.
- It establishes principles that influence a business's priorities, decisions, and actions.
- It gives a much better idea of the capabilities the company will need, hinting at what talents to hunt and hire.
- It tracks key performance indicators.
- It ensures limited resources are being deployed to provide the greatest return.
- It grabs the most promising opportunities.
- It prepares the company for potential shifts and takes action before they happen.
- It navigates through obstacles.
- It aligns all organizational activities and saves precious time and money.
- It prioritizes and aligns activities with allocating resources to strategic initiatives.
- It encourages business owners to go to market strategy in the decision-making process.
- It gets the company back on track.
Benefits of a Strong Startup Strategy
There are many benefits to having and working on a strategy in organizations. The most crucial ones are:
- It fosters commitment at all levels across all verticals and aligns the company and its shareholders, increasing a sense of responsibility throughout the organization.
- It creates one vision that unites internal departments and teams and helps them avoid decisions that counteract general efforts.
- It builds a strong brand identity.
- It creates a healthy working culture that attracts and retains talents.
- It combats cognitive biases like the recency effect, Occam's razor bias, inertia bias, and confirmation bias.
- It tracks progress toward the goal more accurately and efficiently.
- It provides lasting value for the organization.
- It escalates performance and operational efficiency.
- It increases market share and profitability.
Startups and solopreneurs who recognize the value of having a strong entrepreneurial strategy and commit time and resources to manage its execution consistently see a vast improvement in their performance, positioning in the market, and revenue.
Elements of a Great Startup Growth Strategy
What Is a Startup Strategy?
Startup strategy merges the idealism of a mission statement and the company's philosophy with the decision-making realities of everyday operations. In simple terms, it is a business plan of action that explains how an organization sets out to achieve its goals. It covers basic principles and guidelines that help the departments across all verticals to take proper actions in numerous situations.
When well done, the business strategy has the potential to pursue multiple targets crucial for a successful company's existence. For instance,
- It remedies the weaknesses of the organization.
- It plans tactics to improve the company's position in the target market.
- It focuses companies on their goals.
- It determines accountability and timelines.
- It minifies the impact and consequences of failures.
- It highlights future risks and determines solutions to mitigate and avoid them.
- It defines growth opportunities.
- It identifies trends and approaches that should be used to benefit the company.
- It examines the broader changes in the market to keep up with the rest of the World.
- It develops a vision and sets the direction for the whole organization.
- It sets new business priorities.
- It outlines growth plans.
To make the planning work for your company, it is vital to establish a strong framework that requires nailing the essential elements of a great startup growth strategy. Let us consider them.
Vision Statement and Mission Statement
These brand identity elements are vital aspects of startup strategy. Where should the company go? What should it look like in five and ten years? Answers to these questions are the basis for all future steps. On top of that, it is a foundation for all team endeavors: it unites everyone and channels efforts in the right direction.
It is important to note that this duet is not a never-changing iconic relic. It can and should change as the organization grows and the market evolves.
Short- and Long-term Goals and Objectives
Both these types of goals are central components of good strategy. Short-term objectives are crucial for instant gratification and immediate success, whereas long-term objectives make a real difference in a company's performance, existence, and positioning. They provide a solid foundation to move forward, shape the plausible strategy and adapt to ever-changing markets and competition. When done right, they support each other: short-term objectives push the company to reach milestones and celebrate achievements, and long-term goals keep the company on track.
Therefore, it is vital to follow time-proven approaches with these two, like focusing on objectives and key results, prioritizing management by objective, or setting S.M.A.R.T. goals.
Financial and Operational Goals
While the two previous types of goals are intangible assets to support the vision and mission of the company, these two are visible and tangible, standing behind the real action. They are specific and, most importantly, measurable. Thus, financial aims represent such sectors as capital, revenue, or conversions, whereas operational objectives cover facilities, labor, and processes.
Coming from the banking sector, SWOT analysis has carved a specific niche in business development, becoming an integral part of the viable strategic plan. It allows companies to assess where they stand and what internal and external factors might affect a profitable business. It includes four popular and time-proven analyzed subareas: strengths, weaknesses, opportunities, and threats.
Depending on goals and SWOT analysis, the company defines a list of explicit activities for the individual targets in the year. This element can be broken into three subcategories:
1. Operational plan. It maps out department goals, capabilities, budgets, and actions on how to achieve goals.
2. Management plan. It covers administrative duties, project management, milestones, and deadlines.
3. Contingency assumptions, also known as Plan B. It is a part of risk management and includes alternative solutions in case of an unexpected outcome.w to achieve goals.
Human Capital Management
There is a lot of displacement in the labor market these days. Therefore, human capital management has become an essential element of startup strategy. It includes guides, tactics, H.R. processes, and technologies to attract the right talent, retain specialists and keep employees motivated.
7 Steps to Build a Strong Startup Strategy
Although implementing a startup strategy requires commitment and devotion, designing one for your company is not that hard. The routine is straightforward and includes seven basic steps:
- Set your brand identity straight.
- Clearly define your company.
- Determine the position in the market.
- Set strategic objectives.
- Lay out a roadmap.
- Adjust company to strategy.
- Manage the strategy.
Let us dive into each stage to understand its importance and get hints on what actions to take to finish it successfully.
Set Your Brand Identity Straight
Before developing a business strategy, it is crucial to define who you are. For this, companies should hit all the essentials of brand identity. This means determining aspirations and values, developing the vision and mission statements, and describing the organization's purpose. Start by asking yourself these questions
- What do we do?
- Who is our ideal customer?
- What value do we bring?
- Where do we want to be in one, five, and ten years?
Be honest with yourself. Give sensible answers. At the end of this stage, you should thoroughly understand your company as a brand with clearly stated core values, mission, and vision statements.
Clearly Define Company
The first thing to do in creating tactics for short-and long-term goals is to understand where you are right now. Before looking ahead, thoroughly analyze the current situation and review the past performance. Inspect each area to define:
- What ideas worked the best?
- What approaches resonate with the target audience the best?
- What needs to be improved?
- What opportunities were missed?
- What capabilities does your company have?
On top of this, it is crucial to do these steps:
- Clearly state your company's values, mission, statement, and aspirations.
- Do a SWOT analysis to determine strengths and weaknesses.
- Look at external factors to define threats. Include all crucial areas from Economic to Technological to Legal.
- Specify what potential opportunities could arise.
- Inspect success stories of similar brands to borrow the most effective strategies and approaches and avoid banal and popular mistakes.
- Determine the company's position in the market.
There is more. This stage is quite extensive. Inspection and self-assessment continue. Once you have figured out who you are, where you want to be, and what motivation you have, it is time to determine some crucial aspects of the company's existence, including:
- A segment of the market that you want to tap.
- Ideal customers and their preferences, needs, standards, and expectations.
- Competitive advantage in the current economic climate. Determine how you will beat the competition. What unique value will you deliver to your customers to differentiate your product from the rest of the crowd and avoid drowning in a sea of sameness?
Set Strategic Objectives
When you have completed self-assessment and research around your brand and its position in the market, the time has come to talk business. The conversation will start with setting goals.
Do you know that poor targeting is one of the most popular reasons why businesses fail? Knowing your objectives and setting KPIs are crucial for success. Therefore, take your time and polish this stage. Generally, it involves taking these actions:
- Clarify what you want to accomplish in a year, five, and ten years. Note short-term goals should be based on current strengths and weaknesses, whereas long-term goals should be revised to ensure they are still in line with the brand's mission, vision, and current state of the company's capabilities.
- Consider all areas of the business to set and highlight the priorities.
- Include KPIs, resource allocation, budget requirements, and time deadlines.
- Create goals for the whole organization, individual teams or departments, and single employees.
- Ensure all stakeholders are on the same page.
Lay Out a Roadmap
In other words, create a plan. After getting all data about your company, market, target audience, competition, and team and deciding on objectives, you are ready to take action. First comes the development of strategic planning. As a rule, this involves these steps:
- Declare business strategy goals.
- Translate the strategic objectives into more detailed short-term plans.
- Space them out at realistic intervals and set deadlines.
- Communicate to stakeholders and put everyone on the same page.
- List basic actions for departments.
- Break tactical plans into short sprints to understand what it takes to start marketing strategy in practice.
- Regularly check in with a plan to ensure everything is still on track. Make adjustments as the business grows and evolves or as the market changes.
- Focus on measurable results.
Adjust Company to Strategy
All the planning is already done. The data from self-assessment should provide business owners with the current state of the employee pool. It is time to ensure the company's current capabilities align with its goals.
At this point, the company must decide whether it requires more talents or specialists in specific departments to achieve its first objectives. What experts and skills do they need to beat the competition and sustain success? It is crucial to define roles for teams and employees as well: create a hierarchy and establish guides and standards to measure the success of endeavors effectively.
This stage also involves equipping the company with all the tools necessary to implement strategy and deciding on partners to assist them during their lifetime.
Last but not least. It is also highly recommended to invest in technologies and applications that streamline and simplify processes, refine teams' skills, enforce discipline, and work towards healthy working culture.
Management of the Strategy
So, you are ready for action: run social media ads, address concerns through chats, promote products, and run nurturing and retention campaigns. It is here where the implementation of the strategy begins. And it will be an ongoing process. As a business owner, you need to keep a close eye on its performance and the course of the event. Even if you have a perfect plan, things will not work out on their own. Therefore, be ready to take these actions:
- Check your plan regularly to ensure it stays aligned with the brand's identity, mission, vision, and goal.
- Evaluate long-term external forces, and adjust strategy according to new information. Hold a meeting every week to keep it front and center.
- Stay faithful to the strategy and focus on achieving goals and solutions.
- Measure the performance by evaluating metrics and analyzing progress towards KPIs. Use professional instruments and platforms. Do not ignore traditional methods like conducting surveys or creating focus groups.
- Take measures and devise solutions if the company has gone off the beaten track. Adopt alternative methods of handling strategies.
Best Practices for Building Strong Startup Strategy
Long-term strategy with smartly set short-term objectives is key to success - sounds simple. However, it cannot be casually ideated in a few hours. Startup strategy is an ongoing process that calls for sacrifices, devotion, and commitment. It is also a process that should constantly change since the market evolves and business grows. The company must be flexible enough to meet standards and expectations to blend into the new realms.
Apart from following the basic routine featured above, it is crucial to introduce time-proven practices and tips since they can drastically improve strategy and the company's performance and allow the business to adapt to the current state of the market effectively.
We have compiled a list of best practices and tips from successful business owners and professional consultants. Take a closer look at them since they might make a massive difference for your company.
- Clearly outline the purpose of your company and its overall reason for being. Print it and stick it to the wall so everyone can see it daily.
- Look and listen to the changes that are happening in your industry. Keep an eye on shifts in the market's preferences. Carve out time for following the strategic plan and revising and improving it.
- Do regular environmental scans. Ask various departments to dig deep to understand how things might change shortly.
- Be ready to evolve with the challenges and opportunities the company encounters. Do not be afraid to shift goals, communicate the reasons for change to stakeholders and adjust the strategy accordingly.
- Improve strategic skills through seminars, tutorials, and conferences.
- Include staff in your strategic plan. This instills a feeling of responsibility that increases productivity.
- Choose one business idea and try to bring it to life.
- Make strategic plans realistic and applicable to long-term goals.
- Carefully evaluate opportunities open to you. Choose one that aligns with strategy and helps the company evolve.
- Include all risks and possible approaches to mitigate them.
- Extend the employee pool with skilled folks and talents. Improve all departments from H.R. to technical support to managers.
- Do not be afraid to limit your ambitions to what you know you are the best at.
- Introduce cascading goals that reach every department. Establish a performance management cycle.
- Design living, breathing plans of action that can be expanded to handle high-level growth and capacity.
On top of that, it is crucial to consider tips from business and management niches:
- Find the balance between ambition and fulfillment.
- Define clear, realistic, and measurable short- and long-term objectives. Follow the principle of S.M.A.R.T. (specific, measurable, achievable, relevant, and time-bound) goals.
- Hit branding essentials: do competition analysis, know your target audience's needs, and deliver consistent brand messages.
- When innovating or improving products or services, use approaches and solutions approved by the business strategy plan.
- Ensure your business strategy stays competitive and up-to-date. Test your strategy to ensure it is viable and aligned with goals and market needs. Allow your team to make mistakes since failures are precious insights that help companies improve and succeed.
- Take time and explain to stakeholders how your strategy relates to their work within the company.
Advice for Young Companies How to Build Effective Strategy
- Be realistic and honest with yourself. Whatever positive attitude towards the life you have, understanding your business, products, and market realities in cold, objective, unbiased terms is crucial to move forward. So, no dreamy delusions – only bare facts and numbers.
- Make fact-based decisions. Avoid biases and stick to your strategy, principles, and standards.
- Choose a market that is little or not at all served yet. In that case, competition will be healthy, and you will get a real opportunity to grow and establish yourself.
- Consider whether tips and tricks shared by companies and experts can apply to your specific situation.
- Avoid overly complex strategies and putting a ton of tactics together.
- Take one step at a time. Break complex and potentially confusing tactics into small, simple, and easily understandable ones.
- Embrace the power of simplicity.
- Avoid work that does not produce the result.
- Prioritize sustainability.
- Do not execute your tactic blindly. Evaluate its potential and possible outcomes and consequences.
Finally, consider hiring a professional brand agency and business strategy consultant. Do not ignore outside help. Sometimes the strategic plan can be overwhelming for young teams and entrepreneurs. Other times companies focus on their products and customer support and do not have much time to dig deep into this process. In these cases, the expert provides guidance, gives fresh insights, and trains the team to achieve business goals.
Recent studies show that business planning has become a luxury many startups cannot afford. Oversaturated markets, cutthroat competition, and ever-changing audience preferences distract business owners from their strategic planning, compelling them to make rash decisions. Therefore, the majority of startups fail.
As practice shows, a strategic approach to planning is the difference between failure and success, staying mediocre and becoming a regional leader in the niche. It is crucial to have a daily plan to get things done and an overarching strategy to progress toward long-term goals.
The good thing is it is not so hard to develop. You can always hire consultants if you do not have time to follow the basic 7-step routine. Just remember to design a strategy tailored to your company's and audience's needs and commit to it by implementing it daily.
Updated: Jan 10, 2023