Article by Jedd Harris, Chief Strategy Officer at Sourcefin
Starting a business is exciting – but without a plan, that excitement can quickly overwhelm you. Many new ventures struggle or fail because they lack a clear start-up strategy to guide their decisions. In this easy-to-follow guide, we’ll demystify what strategy means for a start-up or SMME (Small, Medium and Micro Enterprise) and how you can craft a simple, effective business strategy.
What is a start-up strategy (and why it matters)?
In plain terms, a business strategy is your company’s game plan for achieving long-term success. It’s where you choose to focus and how you plan to win. For a start-up, strategy answers questions like:
- What is our goal?
- Who are our customers?
- How will we beat the competition (or avoid it)?
- What should we do now (and not do) to succeed later?
Think of strategy as a map for your entrepreneurial journey. Without a map, a start-up can drift aimlessly, waste precious resources or chase opportunities that don’t pay off. When you know your destination and path, you’re less likely to make random detours that burn through time and money.
Strategies help with prioritisation and alignment. Start-ups usually operate with limited resources – small teams and tight budgets. You can’t do everything at once, and strategy guides you to channel your energy into the most impactful tasks. It also aligns your team: it’s easier to work together towards the same goals when everyone knows what the goal is.
Investors and partners care about strategy. A start-up that can clearly articulate “This is what we’re doing and how we’ll win” instils confidence. It shows you’ve done your homework and increases your credibility, whether you’re seeking funding or trying to secure your first customers.
Defining your strategy: mission, vision, goals, and competitive edge
So, how do you create a simple start-up strategy? Begin with the fundamentals: your mission, vision, strategic goals, and competitive advantage. These elements act as building blocks of your plan.
Mission – start with a captivating why
This is the purpose of your business – the reason you exist beyond just making money. It answers, “Why does your start-up exist, and what problem are you solving?” For example, your mission could be to make healthy eating affordable in your community. A strong mission is concise and motivating, both for you and anyone who works with you.
Vision – define an inspiring future
If mission is your purpose, vision is your aspirational future. It paints a picture of what success looks like in 5 or 10 years. Your vision should answer “What do we ultimately want to achieve?” For instance, we want to become South Africa’s leading marketplace for artisans or to see our eco-friendly products in homes nationwide. A clear vision guides long-term thinking and inspires you to aim high.
Goals – realise your vision through simple steps
Think of strategic goals as the milestones that bridge your mission or vision to reality. These are specific, measurable objectives you want to hit. Good goals are SMART (Specific, Measurable, Achievable, Relevant, Time-bound). For example, acquire 1,000 customers in the first 12 months or expand to 3 new cities by next year. Goals convert your vision into actionable targets. You might have a mix of short-term and long-term goals, but each should move you closer to your vision.
Competitive edge – define what will help you win
Why will customers choose you over other options? Perhaps you offer a unique product feature, a better price, superior quality, or a hyper-local service tailored to your community. Identifying your competitive advantage is crucial; it defines your strategy to win. For example, you might decide to compete on cost (being the most affordable) or on differentiation (offering something unique that customers are willing to pay more for). You can’t be everything to everyone – so clarify what you’ll do differently and do best.
Action plan
Once you’ve defined these elements, you can distil them into a simple strategy statement or one-page plan. For example:
- Our mission is X.
- Our vision is Y.
- To get there, our goal this year is Z, and we will win by leveraging our competitive advantage.
- Our key actions will be A, B, and C.
This simple summary can be a north star for your start-up.
Implementing your strategy on a constrained budget
Remember, a strategy without execution is just wishful thinking. Start-ups often have to execute their plans with very limited financial, technological and human resources. Here are some tips to implement your strategy when you are constrained by your budget.
When you think you’re done prioritising, prioritise some more
Focus on the activities that have the highest impact on your goals. Given limited resources, you can’t afford to do everything at once. Use your strategy to decide what not to do right now. Think carefully about your constraints – budget, employees, equipment – and ensure these are considered when defining your goals. If you don’t, you may be setting yourself up for failure.
Fail fast, learn faster and deploy value fastest
Implement your strategy through small steps or pilot projects. Develop a Minimum Viable Product (MVP) – the simplest version of your offering that delivers your core value. This lets you test your strategy assumptions without a huge spend. With an MVP, you gather feedback and can iterate, ensuring you invest resources in the right direction.
You don’t need to spend heavily on a TV ad or billboard to be seen
Be creative and efficient in execution. For instance, use social media and content marketing to promote your business (which can be very cost-effective, or even free) instead of pricey ad campaigns. In South Africa, platforms like Facebook and WhatsApp can be powerful for reaching local customers on a budget. Remember to keep your target market front and centre of your campaigns to maximise the value of the money you spend. Consider things like where they spend their time, what they enjoy doing, how they think and what problem they need you to solve. This way, the right people will see your ad and be likely to respond in a way you’d like them to.
Leverage someone else’s reach or network through strategic partnerships
Look for win-win collaborations that can help you execute without heavy spending. Maybe you can partner with a non-competing business to cross-promote each other’s services, share distribution channels, or bundle products. Partnerships can amplify your reach and capabilities at a low cost.
Harness the gig economy and outsource to experts
In a resource-constrained environment, every team member is destined to wear multiple hats. That said, identify which tasks are core to your business and which aren’t. Focus your small team on core activities and consider outsourcing or using freelancers for specialised tasks (like graphic design, accounting, etc.) on an as-needed basis. This way, you get expert help without the cost of full-time hires.
Continuously and aggressively measure what matters
Implementing strategy isn’t “set and forget.” Continuously track your progress toward your goals. If something isn’t working, be agile and willing to tweak your approach. Being small can be an advantage – you can iterate faster than big corporations. Just ensure that any pivot still aligns with your overall mission. Think of your strategy as a compass: you might adjust the route, but you keep heading north.
Remember, consistency is key. Small daily actions build momentum. Stick to your strategic priorities and don’t be discouraged if progress feels slow at times. It’s better to move steadily in the right direction than to sprint full speed in the wrong one.
Get support for your start-up strategy
Crafting and implementing a start-up strategy may sound daunting, but you don’t have to go it alone. Engaging with mentors, advisors, or financial partners can provide not just funding but also strategic guidance. Remember, YouTube is a treasure trove of invaluable information from experts. Plus, it’s free.
Happy strategising.