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One of the first decisions you will make as a new small business owner is to
determine your business strategy. Your business strategy will spell out your
choices of inventory, your approach towards your business, and how you will
steer the business. The success or failure of your start-up business will
greatly depend on the strategy that you have decided on. It should be noted, though, that the choice of your business strategy
would depend on a number of factors. First, the characteristics of your
particular industry will shape your strategy. One strategy may be acceptable
(and even prove to be a winner) in one industry while it may not work in
another industry. Second, your strategy will depend upon your own
organization’s competencies (or if you are a solo entrepreneur, then your
own), and how aligned they can be to a particular strategy.
Below are few strategies you can employ for your business:
Pioneer or Follower
You can choose to create your own products or simply offer products that
are already available in the market.
As a pioneer, your strategy will be based on innovation. Innovation,
however, can take on different meanings. It may mean adding more useful
features to existing products, or coming out with first time products, or
continually improving existing processes. Whatever your definition of
innovation may be, this strategy will work if you have the resources,
processes and values to support the creation of an innovative product.
As a follower, you will be venturing into a field where others have
already trod. You may be jumping on a bandwagon or trend set by the key
players of the field. As such, you will be perceived as a challenger. The
question you need to answer is: how best can you enter a market that may be
filled with more dominant players than you are? What is the level of
competition in your market? Your success as a follower will depend on your
level of resources, ability to innovate, and the dominant incumbent's
perceived product quality.
Broad or Niche Category
You can also choose to offer a little of everything or a lot of something
to your customers.
One strategy would be to offer a broad range of products or services in a
category, but limited items in a specific category. A business positioned as
an online store for baby gift items may include a limited number of infant
stimulation products, musical toys, clothing, baby care items, and baby
gifts. The goal is to offer the best possible item for each category.
Other business owners, on the other hand, prefer to focus on one category
and offer everything in that category. Instead of the more general baby gift
item store, you may concentrate on baby safety items and provide a wide
range of products under this very limited category. Niches have proven to be
an effective strategy for small business owners with limited capital.
High-end or Low-end Products
You can also set your strategy by determining the perceived quality and
brand of your items. You can choose to provide customers with a brand name
product or service, or offer low-priced generic product. You can be the
Wal-Mart of your industry or you can be a Neiman-Marcus. And how high or how
low you get will depend on your resources, skills and capabilities, as well
as the market that you want to reach.
Setting your business strategy requires a lot of thought and planning. It
entails knowing your own strengths, and more importantly, your weaknesses in
identifying what you can or cannot do.
-- George Rodriguez is a writer
for PowerHomeBiz.com.
November 4, 2003
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