Understanding business strategy and and roadmapping your small business
Key takeaways
- A clear strategy can help your business set priorities, measure progress and make informed decisions.
- The most important business tactics are strategies for growth, competition, innovation and sustainability.
- To implement an effective business strategy, you’ll need a clear roadmap, measurable goals and a plan to track your progress and adapt as needed.
Most small businesses begin with a great idea. But, to translate that into market success, you need a solid strategy and a detailed roadmap.
These business strategy guidelines will help you bring your vision to life. When you plan clearly and roadmap your small business plans, you’re not just running a company — you’re steering it with intent and purpose.
Why you need a strategy for your small business
A business strategy is your company’s plan to achieve its long-term goals. A viable strategy sets targets, identifies the steps to reach them, and allocates the necessary resources to get the job done. An effective strategy addresses key questions such as how the business can create value for its key stakeholders — customers, employees and suppliers.
Four common business strategies
Businesses can develop a number of different strategies, but none should be seen as static or set in stone. Successful businesses regularly review and adapt their strategic direction, adopting different approaches at different stages of their lifecycle.
Here are four common strategies small businesses can use to achieve their goals.
1. Growth strategy
A growth strategy can help a small business expand its customer base, boost revenue and secure a strong market position.
Growth-oriented strategies focus on increasing sales, launching new products and entering new markets. Opening a second location or building an e-commerce platform are examples of growth strategies.
For instance, local businesses can increase sales by ensuring they appear in local search results. According to the SOCi Consumer Behavior Index compiled in 2024, 80 percent of consumers search online for local businesses at least once a week, and 32 percent do so daily or multiple times a day.
You can tap into that local demand for free through Google Business Profiles. Setting up and maintaining your profile is the fastest way to boost your visibility in local search results.
Social media is another cost-effective growth tool. In a recent survey, 73 percent of marketers said social media increased their sales, while 65 percent confirmed it generated leads for them.
2. Competitive strategy
New business owners often think they can be the best in all things — offering the highest quality and best service at the lowest prices. Since quality and service both cost money to provide, this strategy doesn’t work out well for most businesses. You wouldn’t survive long if you tried to sell Rolls-Royce cars at Hyundai prices.
In reality, it’s wiser to position yourself strategically in the market. Rolls-Royce and Hyundai are both successful brands that know exactly who their customers are.
Hyundai follows a cost leadership strategy, focusing on being the most affordable option in the market. This approach is based on lowering operational costs by streamlining processes, optimizing supply chains and leveraging bulk purchasing. A cost leadership strategy helps businesses drive growth by attracting budget-conscious customers.
In contrast, Rolls Royce uses a differentiation strategy, which is all about standing out. Instead of aiming to be the cheapest, a business pursuing differentiation seeks to be unique in ways its target audience will value — criteria like luxury, quality, aesthetics, customer service or innovation.
A business that pursues this strategy positions itself to command a premium price. Loyal customers are less price-sensitive, often viewing these unique attributes as worth the extra cost, which protects the business from competitive pricing pressures.
A differentiated business doesn’t have to rely on discounts to stay competitive. It can focus on nurturing customer loyalty because the company’s unique value proposition is difficult for competitors to replicate.
The key question for developing your competitive strategy is: Which kind of company are you?
3. Innovation strategy
An innovation strategy is about staying ahead by introducing new products, features or services that can enhance your competitive position — whether through cost efficiency or unique offerings. Apple is a good example of a brand that has built a loyal following through its reputation for innovating.
For small businesses, innovation doesn’t have to mean sweeping changes. Sometimes, small adjustments, such as adopting AI technology, can make a significant impact. The U.S. Small Business Administration (SBA) reports that 91 percent of small businesses currently using AI for marketing, operations and other functions say it has made their business more successful.
By investing in fresh, forward-thinking solutions, small businesses can attract customers seeking novelty, helping establish a lasting competitive advantage in a crowded market.
4. Sustainability strategy
A sustainability strategy focuses on minimizing your environmental impact while appealing to the growing demographic of eco-conscious consumers.
A NielsenIQ study found that 78 percent of consumers consider a sustainable lifestyle important and prefer to support “green” businesses. Adopting eco-friendly practices can help small businesses build a loyal customer base and differentiate themselves in a competitive market.
Focusing your business strategy on sustainable practices also offers ethical benefits and leads to cost savings through resource conservation and improved efficiency. Small businesses can embrace sustainability by sourcing materials locally, using biodegradable packaging and reducing waste. The SBA offers tips for small businesses on reducing their carbon footprint.
How to create your roadmap and measure success
Choosing a strategy isn’t enough. You’ll need a detailed roadmap to enact your plan, measure your progress and stay on course. Think of a roadmap as the bridge between your current state and your future goals. Its purpose is to turn your business strategy into actionable steps and concrete goals.
Here’s a step-by-step guide to developing a small business strategy roadmap.
1. Define clear, measurable goals
Start by setting clear and realistic objectives that align with your overall strategy. Follow the SMART framework, ensuring each goal is Specific, Measurable, Achievable, Relevant and Time-bound.
To do this, you’ll need to translate each objective — whether focused on sales growth, customer acquisition or product adoption — into relevant key performance indicators (KPIs).
Here are some examples of SMART goals vs. goals that are too vague to track:
Vague: We’re going to work on increasing sales this year.
SMART: We’re going to increase sales by 4 percent each month, so we will hit $1 million in revenue by November 1.
Vague: We’re going to position ourselves as a luxury brand so we can charge higher prices.
SMART: We’re going to upscale our product with higher quality materials and packaging and revised marketing materials so we can raise the price by 25 percent by the second quarter.
2. Break goals into milestones
After setting your goals, break them down into smaller, more manageable milestones. These interim goals will act as checkpoints to track your progress and allow for adjustments along the way. They also help prevent overwhelm by keeping your focus on specific, achievable steps at each stage.
For example, to reach your annual revenue growth target, you might aim to increase your profit margin by 5 percent each quarter.
3. Allocate resources
Identify the resources — time, money and personnel — required to reach each milestone. With limited resources, small businesses should prioritize spending in the areas with the highest impact.
To identify those high-impact areas, think about the ways your customers interact with your business.
For example, in a service business, the customer’s entire experience with your company might exist in their relationship with just one of your employees. High salaries and good benefits will help you attract the best candidates, so you can offer the best customer experience.
If you have an e-commerce business, investing in fast servers, clean code and beautiful images for your site will have the biggest impact on your customers.
4. Implement and stay flexible
Once the roadmap is in place, start executing the plan. However, remain flexible so you can adapt as needed to changes in the market. Flexibility allows you to adjust without losing sight of your overall objectives.
For example, suppose your SMART goal is to achieve sales growth of 20 percent this year by increasing your social media presence. If you notice midway through the year that your social media strategy isn’t working, you don’t need to scrap the goal. Instead, do some research to determine a more effective strategy.
5. Track progress and refine your strategy
Monitor your KPIs continually, evaluate your progress and identify areas for improvement at the end of each period. Regular evaluation keeps your strategy on track and allows you to make data-driven decisions.
Next steps
To craft a well-designed strategy for your business, start by comparing its performance to the averages for your industry. This comparison can help you identify areas for improvement and set reasonable goals.
Once your goals are set, research different strategies to help you achieve them. Then create a roadmap by breaking your goals down into manageable steps so you can track your progress and adjust as necessary.
Frequently asked questions
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