Whether you dream of world domination or have smaller (and more controllable) plans for growth, it’s important to remember that success won’t just fall into your lap.
You need to work towards your goals, not assume you’ll get there eventually. This takes time, energy and commitment from you and the rest of your leadership team – and with many plates to spin and plenty of other tasks on your to-do list, it can be difficult to find enough hours in the day to focus on working on your business, not in it.
Thankfully, there are plenty of tried-and-tested frameworks that can help you make smarter decisions, prioritise the areas that matter the most within your business, and bring together a solid strategy that will set you up for a profitable and sustainable future. Here are eight of our favourites.
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SWOT analysis (strengths, weaknesses, opportunities, threats)
One of the first things you’ll be taught in business school, this is a simple but powerful tool to assess your business’s internal strengths and weaknesses, as well as external opportunities and threats.
It will help you understand where you stand in the market, how to leverage the things you’re good at, and how to find and improve on the things that are holding you back.
The easiest way to use a SWOT model is to create a 2×2 SWOT that lists your internal strengths and weaknesses, then matches them against external opportunities and threats. You’ll find a comprehensive SWOT template, and plenty of useful examples, here.
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PEST analysis (political, economic, social, technological)
This helps you analyse the external macro-environmental factors that can impact your business.
Essentially, a PEST analysis involves reviewing how political, economic, social and technological factors might affect your industry in the longer term, before deciding how to adjust your strategy to leverage or mitigate them. Sometimes, this exercise is extended to include legal and environmental concerns, lengthening the acronym to PESTLE.
Here’s a 3-step guide to carrying out a PEST or PESTLE analysis.
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Balanced scorecard (BSC)
This can help you track organisational performance across four key perspectives: financial, customer, internal processes, and learning and growth. It involves developing specific objectives and KPIs for each perspective and regularly tracking your performance against these metrics.
The Harvard Business School provides more information on balanced scorecards and their uses.
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The VRIO framework
This is a tool for assessing your business’s internal resources and capabilities to determine if you offer a sustainable competitive advantage based on the resources you have to hand (which are usually grouped into categories like brand, technology, and human capital).
You’ll need to evaluate what you have against the VRIO criteria: value, rarity, imitability, and organisation. Here’s a handy article if you’d like to learn more.
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OKRs
If you’re struggling to set and achieve measurable goals for your business – or have done in the past – try the OKR framework, which enables you to define what you want to achieve (your objectives) against specific, quantifiable outcomes (your key results).
To keep things manageable, define 3-5 key objectives and 3-5 measurable key results for each objective, then review them regularly to assess progress.
Asana recently published an interesting guide to OKRs with plenty of advice on how to write effective objectives and key results, and lots of examples to help you along the way.
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The Ansoff Matrix
The Ansoff Matrix is a strategic tool used to identify growth opportunities by analysing market penetration, product development, market development, and diversification. It will support you in making decisions about how to grow your market presence, whether this is by expanding on your existing offerings or exploring new ones.
Use it to identify which growth strategy is most suitable for your business, given current market conditions and capabilities. You’ll find easy-to-follow instructions and more context in this piece from MindTools.com.
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The Growth Share Matrix (BCG Matrix)
The Growth Share Matrix, also known as the BCG Matrix, was developed by the Boston Consulting Group (BCG) to help businesses like yours better allocate their resources and prioritise products or business units based on market growth and market share. It categorises products or services into four quadrants:
- Stars: Products/services with high growth and high market share, that have the potential to turn into cash cows
- Cash cows: Products/services with low growth and high market share; normally mature offerings in stable markets that generate strong cash flow with minimal investment
- Question marks: Products/services with high growth and low market share. These products operate in growing markets but have weak market positions, so will likely need substantial investment
- Dogs: Products/services with low growth and low market share. These products have limited prospects and will typically drain your resources
This piece from Investopedia will help you understand the value of creating a growth share matrix and teach you how to use it effectively.
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Blue Ocean strategy
This framework will encourage you to create uncontested market space (aka a “blue ocean”) by offering a unique value proposition, instead of competing in overcrowded markets (aka a “red ocean”).
It’s great for identifying innovative ways to differentiate and reduce competition by exploring unmet customer needs or untapped markets. Use it to identify areas where your business can offer something unique and valuable that your competitors are not currently addressing.
A more in-depth look at the Blue Ocean strategy can be found here.
These eight business strategy frameworks are the tip of the iceberg when it comes to all the tools and approaches that are widely available to entrepreneurs. With so many options to choose from, it can be difficult to know which is going to be the most beneficial to you.
Alongside sharing expert financial insights and expertise, the team of outsourced finance directors here at Dartcell can help you and the rest of your board choose and explore the frameworks that will make lighter work of steering your company towards a more profitable horizon. Contact us directly to learn more about how we work and the value we can bring in various areas of your business outside of your finance function.