A recession, as defined by Investor Words.com, is a period of economic decline in the gross domestic product for two or more quarters. Since a quarter comprises three months, a recession has at least six months of negative impact on small businesses.
Economic recession calls for measures not just to make your business survive but make you come out stronger. Sound strategies are what will separate men from boys.
Business leaders creating and harmonizing their strategies to fit the economic future will leap more after an economic recession is over.
A strategy will help your business fit in the global economy once economic depression is over. But how do you create a strategy?
Many times people confuse a planning activity with a strategy. There is a clear difference between strategy and planning. A plan is part of a strategy.
A plan is tactical as it can be for only one course of action, it could be on sales, marketing, innovation but a business strategy is holistic and inclusive of all arms of the business.
It is a vital tool in any business development and more so during an economic recession.
How do you create a strategy?
First and foremost a strategy is holistic. Just to give you an example, a business plan that you came up with during your initial business development stage was a strategy. A strategy is concerned with the entire scope of the business.
It is meant to create a synergy between the planned activities micro and macro. Take charge of business opportunities and threats.
The role of a strategy:
- A strategy puts into perspective the past, the present, and the future. The strategy matches your business plans and other activities with the available resources and other resources that the business can acquire in the future.
- A strategy has a huge impact on business resources. A strategy is put in place to grow the business with the future in mind thus requiring sound judgment and forecasting coupled with business understanding on both micro and macro environment.
- A strategy must give your business options that surpass your business current needs and postures and provide opportunities to guide your business general course of actions.
Basically, a business strategy must offer your business opportunities relative to your business’s strengths and weaknesses. Strategy formulates ways and means of seizing opportunities while tackling the existing and oncoming weaknesses.
The creation of a business strategy:
The creation of strategy follows three clear stages, they include:
- Strategic analysis;
- Strategic formulation and implementation; and
- Strategic evaluation.
#1. Strategic Analysis:
To come up with a strategy, first, there is a need for strategic analysis. This is the understanding of the organization’s strategic position in terms of:
- Understanding the businesses environment today and the future.
- Understanding, forecasting and predicting changes and the impact on business in totality.
- Understanding the required investment and other resources to take advantage of the prevailing and future opportunities.
- Understanding ways of mitigating threats.
#2. Strategic formulation and Implementation:
The second level of strategy creation is the implementation; this brings about the translation of the analysis stage to execution. It’s here strategy and planning merge.
At this stage, there is a need for planning on how to execute the strategy. Here the resources and investment required are availed and distributed. To execute one needs to know; how much, who does what, where and when.
It is important to note that this is the part many businesses fail to realize. At the second stage, time frames are put in place and the right personnel is deployed, recruited and trained. The system is developed and integrated into the business systems.
#3. Strategic evaluation
The final part is the evaluation. This is checking and monitoring the way the strategy is working.
By understanding the three phases of creating a strategy, business managers and other business leaders looking beyond the economic depression will capitalize on emerging opportunities in the global economy.
Strategy creation will assist the business in tackling threats as well as understanding the strengths and weaknesses of their business development.
Creating a strategy is not a matter of choice for businesses but a vital part of any business development if it must survive and succeed.
You can discuss with us on how to help your business survive during a recession @ JSC Global Accounting Services for FREE NOW!
We are looking forward to been of help to your business.