A business strategy shouldn’t be carved in stone. By contrast it should be flexible enough to react to certain circumstances and be regularly reviewed to fit the inevitable changes. Your business will go through a life cycle, from startup to development and on to scale and growth, so your business strategy should go through the same cycle.
To enable you to reach that landmark second year anniversary you need to be able to convince your stakeholders (and yourself) that you can continue to generate sufficient profit from your business model.
So let’s make your second-year business strategy just that – profitable…
How to create a business strategy that delivers sufficient profit in the second year
With some previous goal setting, analytics and a certain amount of ambitious thinking, you have a forecast in place that proves you can generate a profit if you execute xyz. You know your Key Performance Indicators (KPIs) and have a dashboard of some form that records evidence of success.
Your initial business strategy got you through launch and won you your first clients. Now you need a further strategic plan that moves you through the business life cycle to the development stage…
Let me caveat the considerations that follow, by saying that if you have a high growth model, you may not have the time to reflect on your business strategy to fit your rapid growth, so your startup strategy should begin by encompassing that expectation of rapid growth. Otherwise, building in time to reflect on and adjust your startup business strategy is extremely valuable to ensure you keep moving forward.
Goals to move you from startup to development
Look at your initial goal planning from when you first wrote what you wanted your business to achieve in its first year. Have you achieved those goals, are the others still relevant?
Your first anniversary is the ideal time to go through goal planning and maybe re-set your sights. You might be able to think bigger now you have gained confidence in your business. You may be able to diversify, employ staff or learn new skills.
Your goals can now focus on growth and expansion.
Risk mitigation
It is crucial in the early days of business to be able to avoid and react to the common risks, for example unexpected financial impact, competitor emergence and political or economic changes.
A strategic business plan includes looking ahead to try to predict what may come up for you that could set you back or have a negative impact on you and your business.
Things to look out for include:
- Business expenses and cashflow challenges – If you grow very fast, can you cover your expenses – as you grow your sales there is more product or service to fund in the interim before you get paid (hopefully on time!)? If you don’t grow as expected, can you identify which costs can be reduced?
- Personal lifestyle or health changes – Education expenses, property, marriage and a growing family are just some of things that can have an impact on your business
- Operational challenges – can you keep up with demand? Are your processes covering all your operations?
- Market competition – How will your business react if a competitor brings the same service or product to market at lower cost, with better promises?
- Regulatory changes – does your sector have to comply with regulations? What cybersecurity and insurances do you have in place?
- Customer relationships – Can you maintain exceptional customer satisfaction while you grow?
- Supply chain challenges – can your suppliers keep up with you? Are they pressuring you to do more?
- Keeping your finger on the pulse – is your business taking you away from what you really want to do? Are you caught up in HR and accounting tasks instead of focusing on the service or driving the business?
Processes
Quick question – What if you triple the number of clients you have, can you scale your systems processes to allow you to cater for that volume?
In your first year, your business strategy potentially didn’t look at systems processes very deeply. In your second or third year, you need to be able to quickly call up your processes and ensure they meet the needs of the operations.
Your second-year business strategy should include refining and optimising your processes:
- Identify areas for improvement within your customer journey
- Streamline workflows by eliminating unnecessary steps
- Adopt more automation to manage repetitive tasks and add in more customer touchpoints
- Outsource more tasks you don’t love doing
- Review data analysis and ensure your KPIs are still relevant
- Review your Customer Relationship Management tools (CRM)
- Review your staffing processes for recruitment, onboarding, performance and employee development.
Turn your second anniversary celebrations into a foundation for sustained growth
Your second year in business is now less about surviving, and more about laying foundations for sustainable growth. By reviewing your goals, anticipating risks and strengthening your processes you can position your business to confidently move from startup to development.
A viable second-year strategy is one that encompasses ambition and realism – it should inspire you to reach, drive, push whilst protecting you against the inevitable challenges.
My final word on a viable second-year business strategy is this: remain flexible and if you learn from failure, you’ll never fail.
I hope these considerations have been useful for you, and that your second year is not just an anniversary, but a strong foundation for future growth and success.