7 Types of Business Strategies for Business Owners

What is a business strategy?

Business strategy is the collective term for all the steps a business takes to reach its goals and achieve its mission and vision. It involves understanding what the business does, what it needs to have, and what it needs to do in order to reach those goals.

That information helps business owners make decisions about resource allocation and helps set priorities. When everyone within the organization understands the strategy, it creates a framework to keep the team working in the same direction.

Questions to consider before choosing a strategy

Strategy decisions will guide your business in the direction you’re working towards. With so many ways to go, it’s important to keep your vision top of mind. Here are some guiding questions to ask yourself and your team along the way:

1. Who are we?
2. How do we stand out?
3. Where do we want to go in the future?

Once you have an overall picture of your business objectives, narrow down your questions to focus on the more immediate goals that will help you get there. Make sure to stay realistic: keep your plan of action within the resources that you have available, your user base, and your specific market needs.

Here are business strategies to consider.

1. Structuralist

By adopting a structuralist strategy, you’ll be building your business operations around the current market conditions and using the industry structure to your advantage. That might mean that you order products or supplies using your vendors’ established processes, or you take barriers to entry into consideration.

2. Growth

If you’re choosing a growth strategy, it means you’re focused on introducing new products or features or expanding into new markets. Looking for a competitive edge by offering a unique experience your potential customers won’t find anywhere else? Found a new customer base through market research or professional networking? That’s when to consider a growth strategy for your business.

3. Cost Leadership

Becoming a cost leader is a way to set your business apart by offering a competitive price for your product or service. If you have a unique strategy to lower costs without sacrificing quality, use that to set yourself apart in your industry. There are many benefits to being a cost leader including:

• Cost leaders can charge the lowest amount for a product while remaining profitable
• Cost leaders can withstand recessions better than competitors because they are experienced in appealing to consumers with budgets in mind
• Cost leaders can be more flexible. Since their costs are low, they can discount prices more often to attract a larger customer base.

Note that a cost leadership strategy comes with a certain amount of risk. If a competitor can reduce costs more frequently, it could take away your customers.