The importance of business strategy
In order to best determine the future direction of your business, it helps to understand where you are positioned in the market. Strengths Weaknesses Opportunities and Threats and in particular the main causes therein - are key learnings all businesses can use to evolve. A critical assessment of the current and historical performance of your business and factors impacting it may assist with gaining a better understanding and help shape direction.
Important steps in understanding past performance and formulating and monitoring strategy may include:
- Historical analysis to determine key drivers of business and set key performance indicators (KPI’s);
- Implementation of management information systems to facilitate the extraction of KPI’s and other important information; and
- Monitoring KPI’s to track performance.
Sometimes taking the leap of faith to move away from doing things the way they have always been done and implementing change is a difficult hurdle for management or business owners to overcome. In these instances obtaining external assistance may assist. An independent review, undertaken in conjunction with management that summarises the relevant factors impacting performance can be the catalyst for driving strategy going forward.
Gaining an analytical understanding of where your business is positioned in the market, aids you in determining the direction in which your business should head in order to achieve desired objectives. This is where a detailed business strategy document may assist. A business strategy outlines the tactics, methods and pathways employed by a business to achieve future goals.
So what are the options and alternatives to consider for your business? Doing nothing should never be an option. The framework outlined below summarises some of the key business strategy options:
PKF Business Strategy Framework
An effective business strategy should clearly identify where your business is headed and create cohesion within an organisation to achieve the target goals. It should not only define the destination but also set out the best route and provide the tools with which to measure progress along the way. It is critical to continually assess progress and if warranted, realign your strategy and your business.
Over the course of the coming weeks we will elaborate on the respective components of the framework depicted above and explore issues and considerations that arise during the process.
If you need help identifying, planning and implementing a business strategy, contact our Melbourne office or alternatively any of our corporate finance specialists around the country.