Know Where to Sail — Developing an Effective Startup Strategy

“If one doesn’t know to which port one is sailing, no wind is favorable”

Seneca

Strategic planning plays an important role in the establishment of any venture, which is not always evident for startuppers. It’s a pity that many self-starting entrepreneurs do not pay due attention to their business strategies, which has long-term negative effects on their business. Today, we’d like to elaborate on how to accomplish this step effectively.

In a nutshell, a business strategy is a plan, according to which you are going to meet your business goals. It serves a variety of important aims: to help you understand your strong and weak points, to cushion the falls, to help you make reasonable solutions and allocate resources effectively, to earn the attention of investors, to motivate you and your team to go further as you see a clear way, to become more knowledgeable in your field, and more.

The Lean Startup methodology operates the concept of Business Model Canvas, which was suggested by Alexander Osterwalder back in 2010, and which is still a highly relevant tool used for the aims of business planning. You can use it as a ready solution that will help you build your strategy without overthinking and needless improvising.

Business Model Canvas consists of ten fundamental segments. We suggest you look through all the questions posed by every one of these segments and see how giving solutions to each of them helps you develop your unique business strategy brick by brick.

1. Customer segments

The key questions: What is your market/niche? Who are your customers? What do they do and what influences them? Which unmet need are you satisfying? Identify an exact problem. Prioritize the customers’ types, in case there are several of them.

2. Value Propositions

What is so special about your solution that your customers prefer to use your services instead of the ones offered by your competitors? The more reasons you find the better. Analyze your Unique Value Proposition(s) and prepare a prioritized list of them.

3. Channels

Channels are the means through which you sell a product or a service to your clients. For instance, a website through which you sell garments is your distribution channel, so is Google AdWords if you use it for advertising. Compile a list of your channels and link them with your customer types, defining which ones are effective for each type.

4. Customer Relationships

How do the customers interact with your company in the course of a product lifecycle and sales? Do they contact an assigned person or do not see you at all, communicating with you through the channels only? It should be noted that a marketing strategy is as important for a startup launch as a business strategy itself. So, understand whether this or that is an effective way to interact with a client and promote your product the way your clients want.

5. Revenue Streams

How are you going to get your profits? Pay a very close attention to identification of your revenue streams, because it is what will fuel your venture all the way through. Will you use subscription fees, advertising or go for email marketing? The relevant pieces of advice can be found in our articles Marketing for Startups: Promotion at the Early Stages and Choosing the Right Business Model for Your Marketplace

6. Key Activities

Which especial strategic steps do you make to deliver your unique proposition? Which activities are the most effective in attracting the customers? When launching a business, prepare to collect lots of different metrics. For example, tracking behaviors of app’s users will help you see where you need to make adjustments and engage the customers more. It is an essential part of pivoting practice, nurtured in the Agile methodology.

7. Key Resources

Which upscale strategic assets do you need to have in order to compete? Basically, these can be represented by the products, scopes, and infrastructures. Resources can have a form of physical facilities, talents, and skills, as well as financial assets. For example, it may well be that your one-of-a-kind competitive advantage is one or two extraordinarily talented team members. Little pigeons can carry great messages!

8. Key Partnerships

This is the question of “important minority”. That is, you need to decide which activities and resources have less importance and can be delegated in contrast to the essential activities defined in the point 6 above. Make a list of your partners with respectively assigned tasks.

9. Cost Structure

What are the key cost-driving factors and how they are connected with your revenues? You should have already understood how your key activities influence your propositions and, respectively, your revenues. Now it’s time to see how they drive costs. Define whether the costs correspond to your major Value Propositions, whether they are fixed or variable and how they depend on the business model you use.

10. Competitive Analysis

Do not underestimate the importance of conducting a thorough research on your competitors. It will provide you with more insights of your prospects and potential threats. You need to stay tuned to the competitive pool in order not to miss out and be eaten by a bigger fish. Know what makes your rivals successful. Always be aware of what is happening in the market and be ready to timely react is needed.

How can you know where your business will be tomorrow or in a year if you don’t know where you are going? If you want to rely on your forecasts and know what to expect from your business, make up a strategic plan for your startup. It is a pre-requisite for any venture’s survival and further development. This should be thought over and developed in advance to work as it is supposed to. Without a business plan, any venture is becoming an unpredictable and uncontrolled lottery, which is unacceptable if you are determined to succeed.