By John Courtney
When you’ve begun using a new business strategy, you can’t help but wonder if it’s actually working. You might fixate only on the sales and profits or the number of new clients you have. Unfortunately, it’s not that simple.
There should be a process when you evaluate the effectiveness of your business strategy. Insights and decisions must have a basis — whether it’s research or actual data. This will allow you to sustain growth for a long time, which is especially crucial when you’re in the process of scaling up.
Here’s a quick guide that business owners can use when assessing their strategies.
Go back to your objectives
Effective strategies have a clear strategic direction. It’s easy to get caught up in the flow of the business and just implement tactics and methods as you go. However, a better practice is planning strategies that are founded on your main business goal.
Conducting a strategy analysis ensures that you’re purposeful with your actions. It involves going back to your mission and objectives so that all your tactics are aligned with them. This also gives you a chance to see if every member of your organisation has been given clear targets to further grow the business.
Implement regular reviews
Aside from checking on your objectives, doing regular, thorough strategic reviews of your business plan is important. You’ll understand the positive outcomes of your business strategy as well as the challenges you’re still facing. Doing it over consistent intervals also gives you a chance to nip problems in the bud before they get bigger.
It’s important to give some time to actually implement your strategy before a review. Maybe after a quarter of the year, you can assess your performance and collect significant data from all the departments of your business. From there, set another checkpoint until it becomes a normal part of your business.
Don’t forget to record the information you gather in your strategic reviews. Document everything so that you can go back to it when it’s time to compare future data or take corrective actions. This will also let you see internal trends that you can eventually use to your advantage.
Use the right tools
When evaluating your business plan, there are different business strategy analysis tools you can use like MOST Analysis, SWOT Analysis, and Ansoff’s Box. These help you ask the right questions in order to determine the factors that most need your attention. They can also provide suggestions on other ways to grow your business.
To identify which tools will be most helpful to your business, simply check your strategic direction. If you’re using marketing strategies to grow, then Ansoff’s Box could be a valuable tool as it looks at both products and markets.
If you’re focused on creating an organised and seamless business operation, consider using MOST Analysis because you’re tasked to provide a detailed mission, objectives, strategies, and tactics for every key player.
Compare metrics and performance
What does your review say? You’ll be able to answer this question comprehensively if you compare your metrics and performance. It’ll tell you if you’re meeting your objectives or falling behind on your expected outputs.
As a first step, you should extract benchmarks from your objectives. How many sales were you aiming for? Or how much profit were you targeting? List those down as a guide on what numbers you should be looking at.
After that, plot your benchmarks against the actual performance of your business then analyse. If you met your goal, how were you able to do it? On the other hand, if you didn’t meet your goal, what hindered you in achieving it, and how can you avoid this from happening again in the future?
You could also benefit from comparing your benchmark and actual performance to the industry standard. You’ll see how you’re faring against similar businesses. It can even give you an idea if you should adjust your own benchmarks or aim for higher goals.
Take corrective action
When you are faced with pressing issues, it’s a good idea to take corrective action immediately. However, you should do this even when you’re not dealing with any major problems. Doing this can help avoid crisis situations too.
Corrective actions are best done after doing a thorough evaluation of your business strategy. Once you’ve reviewed your business plan and analysed the gaps and challenges, it’ll be obvious what changes need to happen. You can decide between continuing with your operations as they are, improving your processes, or even going back to the drawing board with your strategy.
Whatever action you choose to take, make sure you still create a detailed plan. Consider your strategic direction and the information you have at hand. After some time, evaluate your business strategy again and continue the cycle, so that your business is constantly improving.
Need assurance that you’re making the right decisions? Get an expert’s opinion. Boardroom Advisors have various Fractional Directors with experience in various different facets of the business including strategy, finance, and marketing.
John Courtney is Founder and Chief Executive of BoardroomAdvisors.co which provides part-time Executive Directors (Commercial/Operations/Managing Directors), Non-Executive Directors and paid Mentors to SMEs without either a recruitment fee or a long term contract.
John is a serial entrepreneur, having founded 7 different businesses over a 40 year period, including a digital marketing agency, corporate finance and management consultancy. He has trained and worked as a strategy consultant, raised funding through Angels, VCs and crowd funding, and exited businesses via MBO, MBI and trade sale. He has been ranked #30 in CityAM’s list of UK Entrepreneurs.