Business strategy is the conscience you need for effective decision-making as you wade through the ambiguous waters of entrepreneurship. You face a lot of uncertainty as a decorative concrete business owner, and having a coherent business strategy is fundamental to minimizing that uncertainty.
But strategy is more than simply stating that you intend to move your decorative business from point A to point B. It must involve specific elements that clearly define your company’s goals and the direction you will take to achieve them.
A coherent strategy should include four separate and distinct components: long-term goals, a defined scope, a description of your competitive advantage and, finally, the logic by which you plan to achieve your goals.
Let’s first define each component and then put some meat on the bones with specific examples.
A lot has been written about goals. It is not my intent to redefine the significance of a goal — rather, I wish to emphasize specific aspects of goals within the context of developing a strategy for your decorative concrete business.
Of course, your goal must be measurable. It must be realistic. It should challenge you.
And it needs to be a long-term goal. By “long-term” I mean something like becoming the dominant decorative concrete contractor in your market, not something like hitting your third-quarter sales target. A long-term goal is not a target you can just hit and then check off a list. Nope. It will take time to accomplish, and it must be vigorously preserved when achieved.
Your long-term goal must give you direction. Think of it as the “where” that guides your managerial decision-making: Where do you want your decorative concrete business to be? For example, dominating a specific market implies a plan of action you and your team will need to follow.
Also, having a shared direction gives your team a sense of purpose when they work together to achieve a common goal.
The scope of your decorative concrete business is defined by the actions you will take and what you will pursue. Think of scope as the “what” of your business strategy. What markets, products, technologies, processes and geographies will your decorative business be involved in?
Your scope should also describe the services you will provide your customers. A decorative concrete contractor, for example, might state his scope as advice and concrete polishing services for commercial retail customers in the Southern California market. Or perhaps his market research might indicate this scope is too broad and it should be narrowed down to commercial retail customers with properties in excess of 100,000 square feet in the Southern California market. He may also describe in his scope the operations processes he intends to do in-house and which processes he intends to outsource. Will reducing concrete dye inventory help him maximize profits or will increasing inventory ensure his customer service is unmatched?
One of the challenges entrepreneurs (like you and me) face is managing all the opportunities they are presented with. So it is not uncommon for a scope to also define the opportunities you should not pursue. Suppose that while you are staining a customer’s restaurant floor, the owner asks if you would also stain the wood pool deck at his house. Is that within your scope? Should you break from your strategic focus just to take advantage of an income-producing opportunity? Having a well-defined scope will help reduce confusion about whether or not you should take advantage of new opportunities. It will allow you to remain focused on accomplishing your long-term goals.
There are a variety of competitive advantages you may develop. The list of possibilities includes (but is not limited to) lower installation costs than your competition, the ability to respond faster when customers change their mind, higher quality and fewer installation errors, stronger customer loyalty, a more conveniently located showroom location, secured exclusivity of resources, greater access to resources, more relationships with key members of the supply chain, or a more efficient inventory management system.
Essentially speaking, a competitive advantage means you’re able to provide better service than your competition or provide it at a lower cost. In fact, cost and quality are generally the two dimensions in which a competitive advantage is summarized.
Your competitive advantage is the “how” of a business strategy. It defines how you will achieve your long-term goals within the context of your scope. Consider the polishing contractor mentioned earlier. One way he could become the dominant concrete polishing contractor (the “where”) within Orange County’s commercial retail market (the “what”) is by investing in equipment with higher efficiency ratings than what his competition has (the “how”).
The most important component of a well-developed business strategy is its rationality — the logic. This is the part where you articulate the “why” of your strategy. Why exactly will your scope and competitive advantage result in the accomplishment of your long-term goal? The logic is the centerpiece of your argument, the rock-hard foundation upon which your successful decorative concrete business strategy will be built.
Consider the following simplified example of a business strategy:
Our strategy is to dominate the Arizona market for decorative concrete restoration by being the premium-quality concrete maintenance service provider.
The goal here is to dominate a defined market — Arizona. The scope is to provide premium concrete restoration services. And the competitive advantage is the premium quality and exclusive nature of the service.
But this example is way too simplistic. It fails to articulate the logic — why the strategy will work. So let’s look at the following expanded strategy to better understand how logic ties it all together.
Our strategy is to become the dominant player (goal) in Arizona’s upper-class residential market for concrete driveway restoration by providing unique and premium concrete maintenance services (scope). Our exclusive rights and protected access to NewLook’s Original Solid Color Stain (competitive advantage) will allow us to charge a premium price for needed driveway restoration that is typically paid for by property owners with discretionary income (logic).
There. Now you see how adding a little specificity and reasoning can turn an incomplete statement of elements into a more coherent business strategy.
Of course, even this expanded example is oversimplified. Successful companies spend considerable time composing more sophisticated strategies with detail that provides needed clarity and managerial focus.