Identify Your Strategy

It doesn’t matter if you start a dry cleaning business, a pizza franchise, or a construction business, you need to understand what strategy will make you successful.  But you also need to know how to implement your strategy.  Your team needs to know how and why and why it works.  Any ambiguity will undermine your success.

So what do you do to identify a crystal clear strategy that drives your entire business plan?  Well, it starts with asking the right questions.  For example: What business is McDonald’s in?

No!  They aren’t in the hamburger business!  McDonald’s is in the real estate business!  Rule number one in real estate is location, location, location!  Isn’t that the same rule number one in fast food franchising, dry cleaning, or movie rental?

Speaking of movie rental, look at Red Box.  Movie rental is about HIGH traffic and convenience.  If someone is walking in and out of Walmart or McDonald’s and sees a movie they are interested in, BOOM, they just made a sale.

And speaking of McDonald’s and Walmart, near my old home in Texas a McDonald’s moved across the street when Walmart came in so they would be in the same parking lot and be more convenient to the massive Walmart traffic.  You KNOW that was a great decision that paid for itself many times over!

So if you have a business in some other sphere where location just doesn’t matter, what are the principles you do compete on?

You need to understand barriers to entry to your industry and how competition within your industry invites or discourages new entrants.  Do one or two firms dominate your industry like Coke and Pepsi do soft drinks?  Or are there hundreds of small competitors, none of whom leave a very big wake behind them?

What about suppliers and buyers?  Do you dominate them or is it the other way around?  What about substitutes?  Can people just go without your service and not notice the difference?

When you know how these things affect you, your decisions will put you ahead of everyone else.

Tags: Business Plan, Entrepreneur, Knowledge, Leadership, Strategy

This entry was posted on March 2, 2010 at 3:40 pm and is filed under Strategy. You can follow any responses to this entry through the RSS 2.0 feed.