1 June 2018
Five steps to a successful business strategy
Most people can write a business strategy, but how do know when the formula you’ve come up with is a winning one? Usually, this involves employing an expensive business consultant to do the work for you, which can often leave you none the wiser as you try to implement it. The good news is, it doesn’t need to be complicated and getting your business to where you want it to be shouldn’t cost you a fortune.
Your accountant can (and should) be a good source of business advice and guidance. Here’s some tips from our business advice team to help you along the way.
So, why do you need a strategy? Every business owner needs to plan ahead and formulating a business strategy will help you get your company from where it is today to where you want it to be in, for example, five years’ time.
Here are five simple steps to creating an effective strategy for your business:
1. Manage business risk
Business risk is a fact of life. Some risks can be mitigated against, some can’t. Of those risks that cannot be mitigated, you need to ensure that the opportunity for your business outweighs the potential down side. Don’t try to sweep risk under the carpet. Instead, create a risk register and list all the major risks to your business. Beside each line on your risk register, describe what you are doing to mitigate each risk. Creating and maintaining a risk register will ensure that you don’t miss anything and minimise business risk where possible.
2. Safeguard against cyber attacks
Every day there are stories about the latest business to suffer from a cyber attack. Installing high quality security software and password protected servers guard against cyber threats and protect precious data. However, the weakest link in your IT security could be your employees’ passwords .
With an increase in companies moving towards cloud based software for business operations and accounting, more systems require a login and password. As a result, many firms provide IT security training to their staff, encouraging the use of more complex passwords. Great, unless team members start writing their passwords down and leaving them on their desks.
You can encourage people to use complex, more secure passwords that they can easily remember by using a password manager and generator, to keep you extra safe in the cloud or encourage two step authentication.
3. Digitise your accounting process
Businesses can save lots of time through using intelligent software to take on the administrative burden. Time is at a premium and therefore the more time you have to focus on the core business, the better.
For example, Xero is fast-becoming the essential online tool for business owners who want to keep on top of their incomings, outgoing and general accounts and lets you work seamlessly with your bookkeeper or accountant. Direct bank feeds ensure your accounts are always up to date, whilst software such as Receipt Bank uses optical character recognition to take all your invoice information and put it into your accounts, literally with the click of a button.
For businesses over the VAT threshold, HMRC’s Making Tax Digital (MTD) scheme is due to go live early in 2019. It might seem like a long way off, but it'll be here before you realise and that's why you should start implementing systems now which will stand you in good stead for when the deadline for MTD affects your business.
4. Understand your market
To develop a successful strategy, you need to understand the market in which you operate. How big is the market sector that you are targeting? Is it growing and if so, how fast? Who are your competitors and how do you intend to compete with them for market share? If you understand the key drivers in your market, you can spot new opportunities, harness the forces that are driving change and create a product or service offering that is competitive.
5. Create competitive advantage
Every business has strengths and weaknesses. Your business strategy should take this into account. Take time to analyse your main competitors and identify their weaknesses. Consider how your product or service offering can exploit competitor weaknesses to give your business a competitive advantage. For example, if your competitors are expensive, perhaps you could gain an advantage by offering a lower price alternative or focusing on a particular niche sector.
How can Xero help?
Online accounting software will help you to do all this by freeing up your time. With Xero, having bank information imported automatically reduces data entry time. Client information is recorded in a centralised place so there is no need to re-enter data to create POs or invoices and other manual entry tasks are reduced. This gives you the necessary extra time to spend on developing a robust strategy for your business.
RWB’s experienced team can put your business on the path to success. We’re here to ensure your business not only reaches its goals, but smashes through its targets. Contact us on 0115 964 8888 or email email@example.com to chat through your options.
The views provided in this article are for general information purposes only. Nothing in this article represents advice of any nature whatsoever. Accordingly, RWB CA Limited does not accept any liability or responsibility for the information contained in this article or any decision or other action that may be taken in reliance upon the information contained within it. RWB CA Limited accepts no responsibility for any errors of fact or opinion and assumes no obligation to provide you with any changes to its assumptions.