7 Keys to Profitable Strategic Business Decisions
It’s a bit of a stereotype. The entrepreneur who’s so overwhelmed by the day-to-day challenges of business that they rarely get a chance to look up and think strategically about the future. While there’s some truth to that—small business owners notoriously fall into the trap of working “in the business” rather than “on the business”—it’s also true that many, many business owners actually do have great ambition for where they want to take the business.
Unfortunately, the real challenge they face is connecting the current state of the business today to a vision for the business five years from now. It’s the proverbial question, “How do we get there from here?”
In fact, many small business owners work hard in the business because they don’t know how to establish strategic business objectives that will take them where they want to go. Important decisions are made in response to crises. Needless to say, this isn’t the way to lead a company to success.
These seven aspects of strategic decision-making are what has helped Infusionsoft grow to $100M and beyond.
1. State your mission
First and foremost, every strategic business decision you make should directly service your current mission. A mission should present a significant, but achievable, challenge (or set of challenges) that you can reach in the next 3 to 5 years. We often use the term BHAG (pronounced BEE- hag) or Big Hairy Audacious Goal (from the book “Built to Last” by Jim Collins). For every strategic business you make, you should be able to point to your mission and explain how your decision furthers it.
Want to create a BHAG for your business? We explain how in our ebook, “Harness Your Inner Genius: How to Dream Big and Grow Your Business.”
2. Keep the health of your organization top of mind
As Peter Drucker says, “Culture eats strategy for breakfast.” This phrase often gets misinterpreted to mean that culture is more important than strategy. Instead, it actually suggests that a company’s culture catalyzes strategy. In other words, culture—the shared beliefs and values within an organization—sets a powerful foundation for strategy, and in fact can become the strategy itself. If you neglect your culture—the stuff that makes your company truly unique—you run the risk of undermining your strategic objectives.
Patrick Lencioni, in his book “The Advantage,” puts it this way: “Any organization that really wants to maximize its success must come to embody two basic qualities: it must be smart and it must be healthy.” Smart refers to strategy (marketing, finance, technology, etc.) and health refers to the condition of the culture. Every strategic decision you make should promote the health of your business as much as it promotes profitability.
3. Make strategic planning routine
There’s no such thing as random acts of strategy. And strategic planning isn’t a one-time event, either. You’ve got to create a rhythm of success. This means planning for 3-to-5 years down the road, then establishing annual planning sessions to line up the year with your long-term goals. Use quarterly planning sessions to line up each individual’s priorities with the company priorities and review progress toward your objectives. In this way, you can be certain that everyone is in line with company goals, and you’ll be able to adapt quickly if unforeseen conditions demand it.
4. Narrow your focus
Focus on what you do well and where you excel. There are innumerable books and plenty of gurus who define strategy, and you should explore their ideas. But ultimately, you, the business owner, are the most qualified person to set the strategy for your business. This is because your strategy is unique to who you are.
This means you’ve got to understand what your brand does well and then turn all your resources and attention on those few things so you get maximum results. Don’t let yourself be distracted by all the things you could be doing. Keep focused on the things that will provide big results.
5. Involve your existing talent
Not all business decisions can be made collaboratively with your staff, but when you set your annual goals, mine your talent. Involving your entire team in the strategic planning process increases their personal investment, and it drives organizational alignment, ensuring a higher probability of success.
Check out 2017 Strategic Planning Kit: Grow Your Business with Purpose for details on how Infusionsoft involves the entire company in our SWOT+ exercise as part of our annual planning process.
Each year, as you set your goals, include your entire company. Take what you learn from that session to the final planning stages with your upper management and pay close attention to what you discover. Collaboration will not only reinforce your culture, you will discover powerful insights about your company that you would have missed otherwise.
6. Remember to measure your efforts
Tie your planning to metrics that will allow you to determine whether or not your effort truly achieves your goal. Having clear, measurable goals will allow you to establish milestones that you can tie to your annual and quarterly objectives. As you track your progress toward your milestones, you can adjust your tactics as necessary. Without clear milestones, it’s nearly impossible to know how well your tactics are really performing.
Celebrate your victories! Milestones have the added benefit of creating a reason to celebrate. If there’s a powerful cultural advantage to collaboratively setting the vision for your company, there’s an even more powerful cultural advantage to celebrating success.
7. Go offsite
Some decisions can be made in a board room over a box of pizza. But when you and your top advisors meet to chart the course for your small business, there’s good value in taking the decision off site. And this isn’t just for big companies; offsite strategy planning is important for every business, even solopreneurs.
When you step out of the demands of the business for planning and strategy, you remove those distractions that seem to keep your attention at bay: customer demands, management issues, finances, etc. This is one tangible way you can step away from working in your business and truly work on it: that’s the explicit purpose of the offsite. Leave your mobile device at home. By physically stepping out of the business, you’ll find an added level of clarity and focus that you can’t get any other way.
To make profitable strategic business decisions, you have to be deliberate in your approach. It can feel like an enormous risk, or major time sink, to step outside the business to work on it. But that up-front cost will be well worth the investment. You’ll see the health of your company improve, and you’ll be able to point to precisely how each individual contributes to the success of your business. Most importantly, you’ll be able to watch your business grow.
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