7 Strategy Tools Useful to Entrepreneurs

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At the heart of every entrepreneur, there should be passion for their business so they always remember why they started and strategy so they can clearly identify where they are headed. In this blog, we put together seven strategy tools that you will find helpful as an entrepreneur to take your goal planning and execution to a whole new level.

1. SWOT Analysis

A SWOT analysis is an exercise that focuses on four main areas – strengths, weaknesses, opportunities and threats. Through this exercise, you will be able to identify objectives, set goals for yourself and your company, and ensure your company is prepared for any challenges that may come your way. 

For more information on analyzing your target market using a SWOT analysis, you can read this.

 

2. Start, Stop, Continue

This fairly simple exercise allows you to analyze what your company should start doing, stop doing and continue doing. This activity allows you (and your team!) to share your intuitive sense of what is and is not working within your business.

 

3. BCG Matrix

The BCG Matrix was created by the Boston Consulting Group and provides a strategy for analyzing products relative to their growth and market share. This Matrix will give you insight on where to invest, discontinue investments or develop products.

The Matrix includes four quadrants: 

  1. Stars (upper left): Here you will list the products with the best market share that generate the most cash. These products require large amounts of cash; therefore, they result in the same amount of money coming in that is going out.  
  2. Cash Cows (lower left): Here you will list market leaders that generate more profit than they consume. Although these units have high market share, their growth prospects are low. It is advised for companies to invest in cash cows to maintain level of productivity.  
  3. Dogs (lower right): Units with both low market share and a low growth rate fit into this quadrant. These units frequently break even. These are often considered “cash traps” since businesses invest in them, but they bring no profit in return.  
  4. Question Marks (upper right): These units contain high growth prospects but low market share. They consume large amounts of cash but bring minimal return. They lose the business money. However, due to the rapid growth of these business units, they may turn into stars in a high growth market.  

In order to apply this tool, you will need to gather data on the relative market share and growth rate of your products and services. 

After assigning each product unit to a matrix, it is important to evaluate them based on overall results. In an article on Marketing91, Hitesh Bhasin outlines strategies to follow based on the results of the BCG Matrix.  

  • To increase market share of a product, increase its investment. This allows for pushing a question mark to a star, and finally a cow.  
  • If you can’t invest into a product, leave it in the quadrant and let it be.  
  • To increase overall profitability of a product, reduce investments and try to take out the maximum cash flow from the product (suitable for cash cows). 
  • For products in the dog quadrant, release the amount of money already consumed in the business.  

 

4. PESTLE Analysis

Another way to analyze your business or potential business idea, is to run a PESTLE analysis. This analysis focuses on the factors that affect your business in each of the following categories:

  1. Political
  2. Economic
  3. Social
  4. Technical
  5. Legal 
  6. Environmental

Using this tool allows you to develop a stronger business strategy as its goal is to prioritize current and future impact on your business.

A variation to the PESTLE analysis is the STEEPLE analysis which focuses on socio-cultural, technological, economic, environmental, political, legal and ethical. No matter which one you choose, you will have a stronger idea of where you stand and what threats may come your way.

 

5. Why Analysis

The “why” analysis helps you identify the core problems that lay below the surface level problems you are facing. In order to apply this analysis, make a list of all the problems you currently have. From there, take each problem and ask yourself a question about that problem up to five times. Here’s an example:

Problem: Slowing sales. 

  • Why are sales slowing? Due to lack of quality staff. 
  • Why is the quality of sales staff lacking? Due to inadequate training.
  • Why is the training inadequate? The sales manager is overworked.
  • Why is the sales manager overworked? There are too many outstanding customer issues.
  • Why are there too many issues outstanding? There is no after-sales process.

Running through this exercise will allow you to get to the root of each problem and make strong, strategic decisions that will positively impact your business.

 

6. Strategy Canvas

The strategy canvas is focused on customer value and identifies and rates the main factors in your products/services that offer value to your customers. 

Make a list of all of the factors (ie. pricing, quality, ease of use etc) that pertain to your product or service and then rate each one from 1 to 10. Then, you will do the same for your competitors to see how they rank in comparison. This will give you a clear picture of where your product or service sits in relation to your competitors while also identifying which factors you need to improve on to remain competitive in the marketplace.

 

7. The Balanced Scorecard

The balanced scorecard tool is a set of measures that give business owners a quick and comprehensive view of the business through four basic perspectives, according to Harvard Business Review. The four perspectives are:

  1. Customer: How do customers see us? Four main customer concerns:
    1. Time
    2. Quality
    3. Performance & Service
    4. Cost
  2. Internal Business: What must we excel at?
  3. Innovation and Learning: Can we continue to improve and create value?
  4. Financial: How do we look to shareholders?

 

These seven strategy tools are helpful when it comes to outlining what you are doing well, what you need to work on, things you should look out for and things you need to stop doing. When you are in a strategic growth phase, take a few of these tools and do an analysis of where you stand today compared to where you would like to be three months from now, six months from now, a year from now and even five years from now.

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