A business strategy is a document that provides objectives and direction for a company. At the heart of any business strategy is the aim of achieving financial security, competitive advantage, and often growth too.

If you have staff or stakeholders, your business strategy helps everyone understand the direction of travel and pull together for a common goal.

But don’t think strategy is just for bigger businesses. Even if you’re the only person who works in your company, having a business strategy can give you a competitive advantage.

Usually written by the managers of a business, a business strategy:

• describes your business and its purpose

• explores the environment you operate in

• defines your goals for the next three- to five-years

• outlines what you’ll do to achieve them

• allocates and prioritises the necessary resources

• explains what success will look like and how it will be measured

Like anything, by breaking things down into easy-to-manage chunks, it seems much more manageable.

If there’s one thing that’s guaranteed to increase your chances of business success, it’s writing an effective business strategy.

As a small business owner, you’ve got plenty on your plate, so finding the time for business planning and admin can be difficult.

But think of writing your business strategy as short-term pain for long-term gain. Investing the time to research and write an effective business strategy now can save you time in the future.

More likely to succeed

It’s obvious really, but if you know where you’re going, it is much easier to get there. Writing a business strategy is like planning a road trip. You need to understand where you’re going and why, the terrain you’ll have to navigate, what you’ll use to make the trip, and how you’ll know when you’ve arrived. Without that prior preparation, you could easily get lost or stuck somewhere unexpected.

Improved focus and clarity

Without a business strategy, there’s a risk that you’ll flip-flop between different ideas, investing time and money on activities you hope will help your business. You can end up feeling overwhelmed and overstretched but seeing little return on investment. A business strategy puts an end to this unproductive back-and-forth by providing focus and clarity about what you need to do.

Simplify decision making

A business strategy can make decision-making much easier by providing a framework to assess the benefits of different options. If something doesn’t fit into the strategy, you can jettison it and move on, saving you time and mental energy.

Increases self-awareness

Understanding your strengths and confronting your weaknesses head-on can be beneficial. No business succeeds by burying their head in the sand. A business strategy gives you the opportunity to surface areas for improvement that can benefit the long-term future of your business.

Forms the basis of work plans

Whilst a business strategy is a long-term document, the contents break down into smaller steps towards success. From your three- or five-year plan, you’ll derive an annual plan, then break it down into quarters, and even monthly work plans.

Although business plan and business strategy sound like they could be interchangeable, they are actually two different documents, with very different roles.

A business plan

If you’ve started your own business, you’ll probably have already written a business plan. This is a document that outlines your business and plans activity for the first year.

It is written mostly for your benefit, to explore the feasibility of your proposed business and put some goals in place. If you are going to look for funding, you’ll share your business plan with the lender to demonstrate your suitability.

A business strategy

A business strategy, on the other hand, is for more established businesses. It explores the objectives and opportunities available to businesses. It provides strategic direction to your business activities and, if you have them, your staff. It will help you grow and succeed.

(Not sure whether you're ready for growth? Ask yourself these questions to discover whether your business is ready to grow...)

There are four stages to researching and writing a business strategy. Actually writing the strategy is a small part of the overall process. Before you get to that point, you need to put in a lot of brain work: brainstorming, considering about your options and deciding which to pursue.

1. Establish where you are now

A business strategy starts with an understanding of what your company does and why. This will help you write your mission and vision, which is a summary of your purpose and proposed future direction. Think about why you started the business, who you serve, what you offer, and the value you add to your customers.

It is also helpful to take a snapshot of your current performance and structure. This will help you plan the resources you need to achieve your objectives. It also provides a way to measure your progress towards those goals.

If you have trading / financial information, include it here. Check out this guide on how to get your accounting house in order.

2. Think about where you want to be

A business strategy is your plan for the next three to five years. So this is your opportunity to look ahead and think what you’d like to achieve. It’s an exciting and energising prospect. But where do you start?

• Think about your personal aspirations – Do you want to maintain or grow your business? Do you enjoy working in a microbusiness or do you want to start an empire? Are you excited about taking on staff and becoming a manager? Or do you want to stay in your current role?

• Look at how the competition has developed over the years – Do you want to follow in their footsteps or forge a new path?

• Think specifically about your business goals – Do you want to increase sales? Win more customers? Develop more products? Make more profit? Gain market share? Improve customer satisfaction?

• Think about what’s realistic in the timeframe – There’s nothing wrong with dreaming big but a strategy should be achievable

• Take a look at our guide - How To Start Your Own Business and consider how much of this you still need to do

3. Identify opportunities, barriers and tactics

This is where the real thinking happens. It’s ok to feel stretched and challenged by this part of the process. The saying ‘nothing worthwhile is easy’ definitely applies to writing a business strategy. Luckily, there are lots of tools you can use to help you tackle this stage.

SWOT and PEST: You need to look at the internal and external factors that could help – or hinder – your progress. You do this through SWOT and PEST analysis. They help you think about the strengths and opportunities that can help you achieve your goals.

They also highlight the weaknesses and threats that could hold you back. What works well and what doesn’t? What resources can you draw on and what do you lack? Having a realistic overview of factors like these helps you plan accordingly.

Customer knowledge: Refreshing or refining your understanding of your target market is important. People, needs and trends change. Consider conducting new market research and reviewing your customer personas.

Competitors: Conducting competitor analysis is key to developing a competitive advantage. Identify who competes for your ideal customers. Then look at what they offer and do – products, marketing, brand – and work out what that means for your business. Do you need to change your marketing, review your pricing, consider new products? See what our director, Damian, has to say about using competitor analysis to inform strategy.

Brainstorming / reverse brainstorming: Once you have an overview of your business objectives – and the opportunities and barriers facing your business – you can work out what to do about it.

Brainstorming is one way to generate ideas. And if you run out of steam, you can try reverse brainstorming. This is when you work out how to achieve the opposite of what you want.

For example, if you want to improve customer service, think about all the ways you could make it worse. Like reducing staff, removing help points, taking the FAQs off your website…then reverse it and see what ideas it sparks.

4. Assess and select your options

Now you’ve brainstormed, it’s time to get real. Which ideas are best for your business? How can you combine different options to achieve your goals? What is the best combination within the budget and resources you have? Think about the cost of each option and the value / benefit it can deliver to your business.

For example, if one of your goals is to acquire more customers, your brainstorm might have generated the following ideas:

• Redesign website

• Direct mail campaign

• Event sponsorship

• Social media content and advertising

• Referral scheme for existing customers

• Attend industry events

Ask yourself:

• Which can you afford?

• Which have you got time to do?

• Which works best for your target audience?

• Which delivers the best return on investment?

• What are the costs if you don’t do it?

You might decide that social media advertising to drive people to your redesigned website is your best option. Or you might decide your website is good enough and put all your efforts into industry events and referrals.

Now you’ve worked out your options, it is time to write up your business strategy.

1. Executive summary

This section is a brief summary of the document. It is an overview for people who want to know your plans but don’t know all of the details. Write this at the end, once the rest is complete.

2. Elevator pitch

Imagine you got in a lift with one of the Dragon’s Den investors. How would you describe your business to your captive audience before they got out?

More realistically, what do you say at a networking event when someone sidles up and asks: ‘So what do you do?’ This is your elevator pitch. The who, what and why of your business in under 60 seconds.

Once you’ve pinned this down, you – and any staff – will be able to maximise future opportunities to talk about your business.

3. Mission and vision

The mission statement defines the purpose and scope of your business. It is an important benchmark for future decision making, as all activity can be assessed on whether it helps the business deliver its mission. A mission statement is also useful for rallying staff and supported behind a shared aim. So make it motivational, memorable and meaningful.

Ask yourself:

• What do we do?

• Who do we do it for?

• How do we do it?

• What do we deliver for customers?

A vision statement is about where you want to be in the future, perhaps after implementing your strategy successfully. Consider:

• What do we want to be known for?

• What does success look like?

Here’s Amazon’s:

• Mission: Our mission is to continually raise the bar of the customer experience by using the internet and technology to help consumers find, discover and buy anything, and empower businesses and content creators to maximise their success.

• Vision: We aim to be Earth’s most customer-centric company.

4. Market analysis

Explain the insights that you’ve gained from your SWOT, PEST and competitor analysis. Summarise what it means for your business and what you plan to do about it. Include the actual completed documents as appendices in case people want more detail.

5. Goals

This is where you describe your goals for the company. They need to be SMART (which we all remember means specific, measurable, achievable, realistic and timely).

Set goals that cover the full length of the strategy, then break them down into more manageable chunks, such as annual or quarterly goals. Your quarterly goals can be used to set workplans for the business, so you know what you need to achieve each month to reach your long-term goals.

6. Tactical plans

These are the nuts and bolts of what you’re going to do to achieve your goals. You don’t need to describe every activity to the smallest details. But you do need to have an idea about what you need to do in the coming weeks and months.

Write out each of your SMART goals and, underneath it, write the key actions you need to take. If you have staff, allocate these to specific people, so they know it is their project to take forward. Make sure you attach dates for completion and build in review periods to check on progress.

For example, if your goal is to increase customer satisfaction by 50% this year, your tactical plan might look like this.

7. Budget

You’re going to need to allocate budget and other resources to achieve your business goals. It is important to be realistic about costs. If something is strategically valuable to your business, it deserves to be properly funded. Think about the cost of marketing, product development, staff, distribution etc.

Don't forget:  Start Up Loans are available up until your third year of trading. If you've been trading for under 36 months, see how much you could borrow with our Start Up Loan calculator.

You won’t just need money to implement your strategy. Think in terms of other resources such as staff time and expertise. You may need to hire people to help, especially if you need specialist skills to take you to the next level. For example, admin, IT support and managers.

8. Measurement / KPIs

Once you’ve set your goals and worked out how you’ll achieve them, think about how you’ll measure your progress. Think about any sources of data that you currently collect – or could put in place – to capture information that shows your success.

Record data at the start of the strategy – called benchmarking – and then compare the same data as you work through your tactics. Are things moving in the right direction? Is profit up? Are complaints down? Is the new website generating more leads? Set targets to work towards as part of your SMART goals.

9. Review

A business strategy is a living document, not something that’ll languish in the bottom of a filing cabinet. Schedule in time each month to review your progress against goals. And plan in a review each year to make any adjustments you need to keep things on track.

If you need more information, then take a look at our full collection of start up guides.

And there you have it. The Transmit Startups Guide to Writing a Business Strategy. Put in the research and commit all of this to paper, and you'll be en route to a brighter business future.