Become a business strategy master

Successful businesses are constantly challenging their existing strategies and success factors. Spending time evaluating your company from the ground up can lead to new discovering new markets and avenues for growth.

There’s an old Mexican saying about family owned business.

It goes ‘padre noble, hijo rico, nieto pobre’, or in other words, ‘father noble, son rich, grandson poor’.

Which is a concise way of saying the first generation had the passion, skill and knowledge to build the business; the second generation was unenthused, underqualified and couldn’t manage or grow the business – yet enjoyed the wealth; while the third generation inherited an empty bank account.

From my perspective, the first generation didn’t align their strategic planning with the family’s planning, which should include a plan for the business, the leadership of the business, the ownership of the business and a financial plan for the next generation.

A strategic plan isn’t a vision, which is an imagined future; it’s defining where you want to be and how to get there. It’s about creating an environment that lets you think about your business while constantly challenging existing strategies.

Do you want to grow your business after a period of austerity?
Enter new markets?
Compete with competitors and manage governmental change?
Be resistant (or adaptable) to global trends, including rising fuel costs and climate change?
Enjoy longevity?
All of the above?

Then an effective strategic plan is critical.

But first, when it comes to family business, keep in mind there are two entities involved; the business and the family. And both must effectively work together because family affects the business while business affects the family.

Any strategic plan must consider this contradictory dynamic. Tackling business growth, but neglecting the culture you have nurtured, may cause conflict. However, concerns can be mitigated by addressing the factors that influence your business and that are critical to its success; providing logical reasons for what you are doing.

For example, Blue Ocean Strategy asks us to consider which can be eliminated that don’t deliver value? Which should be reduced well below and/or raised well above the industry standard? Should any be created that your industry hasn’t offered?

And what are your critical success factors?

– Are you balancing tradition versus innovation, equality versus merit?

– Are generational issues accounted for?

– Can your business deal with constant change?

– Is your business economically viable? Do you have access to funding, etc.?

– Is your governance (accountability, responsibilities, clarity around strategy, etc.) clearly defined and working?

– Is your business model optimal? Is your competitive advantage (your passion, purpose, passive capital, long-term vision) recognisable?

Naturally, no one strategic plan suits all businesses; however, with practical processes that define, challenge and execute your strategy, your business will be in a stronger market position.

A strategic plan should include:

1. A clear overview of:

– The purpose of your business and what it wants to achieve: from a business owner, client and market perspective.

– The market you are, and aren’t, servicing.

– Your customer segment(s) and a defined and unifying value proposition to them.

– Responsibilities.

– Time lines.

2. The flexibility you need to:

– Challenge your business model regarding the offers you can create or raise.

– Change if the unexpected happens.

– Reduce or eliminate processes and costs.

There’s no denying this is a big task; it requires thought, experience and, at times, an unbiased approach. You should never be shy of looking for outside help to define your strategy.

Once you clearly define yourself and prepare for whatever the future may bring, you can succeed where others, even eventual customers, saw no opportunity – as Casella Wines and their Yellow Tail brand discovered when they effectively redefined their market and how their product was perceived.

By creating a simple option of one red wine, and one white wine with straightforward labels, Casella Wines stopped competing against the bulk of the wine industry trying to outdo each other with sophistication. No longer was choosing a wine an intimidating task for American consumers, but an easy option, bringing in 6 million new wine drinkers.

A clearly planned, strategic success.

Dominic Pelligana is a KPMG Private Enterprise partner and leads KPMG’s Family Business Services.