The most common small business strategy mistakes. And how to avoid them.
20-years of working with—and on—small and midsize businesses (SMBs) to address growth related challenges has given me some insight into the most obstacles out there. In one way or another, the source of many of these problems I’ve seen can be traced to strategy.
The four most common strategy mistakes I’ve seen SMBs making are:
Putting tactics ahead of strategy.
Straddling strategies.
Underestimating the importance of resource allocation
Wasting time overplanning
There are others, to be sure, but these are mistakes I’ve come across time and time again. Outlined below I share some explanations of how this plays out in businesses as well as suggestions on how to address or prevent each.
Putting Tactics Ahead of Strategy
If you were coaching a sports team, would you rather head into a game against another coach who drew up plays after meticulously watching tapes of your team play, finding weaknesses, and creating specific ways to exploit them? Or a coach that drew up all the plays based on a hunch?
Why, then, do so many SMBs commit to sales and marketing tools, tactics, technology, and toys without creating a plan first?
“Tactics follow strategy,” are three of the most impactful words one of my mentors drilled into my head early in my career.
Which CRM should I use?
Is content marketing the best approach for me?
Should we continue cold calling?
Is this [sales - marketing - management] tool one we should try?
Should we offer more products to our marketing or more markets for our product?
It depends. What is the strategy? Understanding that helps determine whether these are the right tactics to use.
If you find yourself mired down in decisions about which tools to use, roles to hire for, vendors to hire, and so forth, pause and assess whether you are addressing a tactical issue or a strategic one.
If it’s a tactical issue, as most are, assess how it fits with the strategy you’ve articulated. If there isn’t a clear fit, no decision is quite often the right decision. If there’s no clearly defined strategy to reference, that’s the best place to start. You’ll be more competitive, improve the likelihood of success, and have a much easier decision making model for all the subsequent decisions related to what, how, and when.
Straddling Strategies
Sticking with the coaching analogy, would you rather compete against a team that spent all the time they had practicing their execution of the strategy they had in place? Or a team that practiced a little time on a dozen different strategies to hedge their bets?
Developing a strategic direction for your business requires placing calculated bets and commitment. Seeing as how you can’t possibly see the future, you may compensate for the uncertainty by committing to multiple strategies as a hedge. You may even believe the more strategies you have, the better chance you have of one of them being right.
The reality is that hedging with multiple strategies prohibits your ability to properly prepare and thus leads to shitty execution.
That’s not to say you can’t have contingencies. A well thought out strategy combined with effective leadership allows for plenty of flexibility when it comes time to put the plan in motion. But contingency planning is not the same thing as failure to commit.
The smartest companies on the planet today didn’t get that way with players running around on the court confused about what the game plan is. And businesses that find success this way are using luck as a strategy, which isn’t a reliable and repeatable approach to scaling your business.
Invest time thinking deeply about where your business is going, create a strategy to get there, and commit to that strategy. You can mitigate risk by planning for contingencies and building a badass team to help you execute, but not straddling multiple strategies.
Underestimating the Importance of Resource Allocation
Far too often, the leaders of businesses routinely miscalculate the real impact of allocating resources poorly, especially in small doses. What seems like a few hundred bucks here or a couple of hours there add up to dilute the efforts that would have been necessary to execute a great strategy well.
From my experience, the source of this problem is fear of saying no. No to calls that don’t move the agenda forward. No to incessant, new ideas that aren’t in alignment with the strategy and end up distracting the team from moving forward. No to a new tech toy that seems too easy to implement. No to a cheap service that promises surefire results right away. These are all shiny objects pulling us away from the core plan we’ve developed.
When I work with businesses that suffer from what I call “hemorrhaging of time, capital, and momentum,” I coach leadership to look at their resources as people they are sending into battle to fight a war. They are indispensable, irreplaceable, and exceptionally valuable, both in and of themselves as well as the role they play in the broader plan to secure victory.
If you were preparing for war, would you flippantly send soldiers into battles that didn’t advance the mission? Why, then, offer up the limited resources that you and your business have to support priorities that don’t lead to victory either?
It doesn’t matter if your business has $300 thousand in revenue or $300 million, your resources are precious and every one of them is essential to execution. Don’t discount their importance, make it harder on your team to succeed, and dilute the energy and focus on the plan you worked so hard to develop by undervaluing how they are allocated.
Wasting Time Over Planning
By now you know how I feel about the importance of taking the time to create a strategy and plan effectively. At some point, though, you need to get busy implementing and executing.
Progress breeds uncertainty precisely because it represents change and the outcome is far from guaranteed. Don’t let uncertainty keep you from getting started.
Another common strategy mistake I see in SMBs is overplanning and trying to have a response to every single variable that may change. How much time, though, have you wasted planning for problems that never occurred?
Being prepared is not the same as predicting the future. The strategy you developed will need to be amended. “Everyone has a plan until they get punched in the face,” as Mike Tyson said.
You will get punched in the face. The marketplace won’t respond the way you predicted. Your competitors may change their strategy in a way you didn’t expect. The economy may take an unexpected turn. Hell, a pandemic may occur and shut the entire world down. Shit happens. These are all realities you’ll likely need to adjust for and no amount of planning allows you to see around every corner.
You can’t start learning how your strategy will be received in the market without introducing it. Don’t let planning become a crutch or fall subject to paralysis by analysis.
These are undoubtedly the most common I’ve seen in working with dozens of SMBs to engineer or rekindle growth. Do these resonate with you? Are there others that resonate more?
