The 4 Elements of an Effective Business Strategy

The 4 Elements of an Effective Business Strategy

Business Strategy Creates Value

A business strategy is the winning formula that will make your business successful.  The successful execution of the strategy creates a valuable product or service and the means to deliver it.  It is the most fundamental element of business success and is often overlooked by small business owners in the rush to get their business up and running. Once you have a business strategy, you use it to align the resources to execute the strategy in a business or strategic plan.  There are four elements of a successful business strategy.  You can explore them by answering the following questions.

# 1 Value

To be valuable to a customer, a product or service must deliver benefits that exceed the price paid to acquire it.  The more valuable the benefits are, the more a customer will pay and the more you can charge.  So the first question to answer is what is there about your product or service that is valuable.  How much is it going to be worth to a customer?

# 2 Cost of Production/Delivery

The second question to answer is how much is it going to cost to produce or deliver your product.  You need to include all your costs.  These must include the direct cost of the product or service (material, labor, equipment use, etc), a share of the overhead (space, administrative staff, insurance, etc.) and a reasonable profit.

# 3 Competition

The third question to answer is will you be able to deliver more net benefits (price minus benefits) for the price you are expecting to charge compared to your competition.

# 4 Long Term Competitive Advantage

The last question to answer is what is it about what you are planning to do that will be hard to replicate by competitors.  If you have a great idea that will create great value for the customer, allow you to make a good profit and blow away the competition, will it be easy to copy once the formula is revealed?  What can you do to make it difficult to replicate?

Once you can answer the above questions, you will have identified a winning formula for your business’s success.


Bryan Mason

Apollo Consulting Group, Newport, RI

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