business position-ThoughtfulMinds

How To Strategically Manage Your Small Business!

A common problem that most small business owners face is one in which they have not actually written down as to what they would like to achieve with their businesses. Nevertheless, if you own a small business and you need a loan for expanding it further, the bank always asks for a written plan of where you expect your business to go in the next five years. Whatever be the requirement now, it is vital for any business owner to know what strategic business management is and how it can help sustain and drive your business profitably into the future.

strategic business management-ThoughtfulMinds

Strategic management can be thought of as answers to three questions:

  • What is the current position of your business?
  • Where do you want it to reach?
  • What is your plan to reach the position?

What is the current position of your business

The answer to this question helps to assess the current situation that the business is in. The closet answer is obtained by doing the SWOT and PEST analyses. These two tests help the business owner to gain powerful insight into the current status of the business and serve to guide and develop the thought process in the right direction. SWOT analysis helps you pick up the strengths of your business and why you can get ahead of your competitors. It also identifies where your business is not up to the mark (its weaknesses) and which are the areas that it can improve. Opportunities and threats refer to external marketplace factors such as new entrants and other opportunities that exist for the business.

PEST Analysis-ThoughtfulMinds

Other analyses include STEP, STEEPLE, PEST etc., which constitute a whole range of external factors that impact the business (Political, Social, Economic, Technological, etc.). These help to paint a macro picture that help you to identify the right opportunity from the wider environment. They also help to identify how the business needs to change or evolve for it to become successful in the future.

Where do you want it to reach

The answer to this question is all about identifying achievable goals for the business and not about going after a blind increase in turnover year after year. This will set the stage to work out strategic objectives for the business that will help to achieve the goals. The only difference is that while a large corporate business would have many goals that cascade down various departments, a small business would have only a few goals. An easy rule to follow for any business is to set SMART goals meaning the goals set should be specific in nature, they should be measurable, should be achievable or realistic and should be time bound. As an example, the goal for an organization could be ‘A 10 percent increase of sales in the next 6 calendar months’. Such goals are a measure of the effectiveness of the business.

current business position-ThoughtfulMinds

What is your plan to reach the position

The tactics and strategy decide how the goals will be reached, the strategy being the larger perspective and tactics form the smaller actions to achieve the whole. Another important point to be taken care of is to regularly determine how far away the goal is and whether it is being achieved at all. This will determine the effectiveness of the strategy and tactics that have been adopted.