There are a bunch of topics that, when I deal with different businesses, seem to come up pretty often. And when I think about it, it actually comes up in the sense that when I look at big businesses vs. small businesses.
When I do consulting, big companies are spending a lot of time working through and planning a broad strategy plan. And it comes from a place of – what is the objective? They are trying to figure out where they’re trying to go and what they’re trying to accomplish.
And a lot of times we will use different tactics to implement the strategy. But when I deal with smaller businesses, especially in the sub $3 million dollar businesses, they get very very stuck in the tactics.
Today, I want to break down tactics vs strategy. How they’re different and the mistakes I see a lot of small businesses making.
In this episode you’ll discover:
- Tactics vs strategy – how they’re different and the mistakes I see a lot of small businesses making
- When there is not strategy in place, there is just random tactics taking place and wondering why they’re not getting the long term benefits they’re trying to achieve
- Breaking down the Trojan horse story into Objective, Strategy and Tactic
The 80-20 rule – 80% of our profits come from 20% of our customers. And 80% of our headaches come from 20% of our products or customers.
Let’s take a look at our business mix and which of those less profitable products we have or our less profitable or more time consuming customers that we have. We may have customers or clients that you’re serving and they are pains. They are not really the ideal client. But you have them because you wanted their revenue. But the reality is, if we start to look at the profitability of that client, you may find it’s time to dump the clients that are really not profitable.
And they may be the client that not just causes more time suck, but they’re less profitable, but they also may cause bigger headaches in general.
The same thing happens with our products. One of the mistakes I see all the time in the physical product business, especially in the e-commerce space, is that people have this infinity of rolling out new products. They’re always this idea that I want to have more and new. That’s great. But no one gets rid of the losers. That’s because people are afraid to loose that revenue.
But if we have the strategy to make more money, we have more cash in the bank for our business to be more profitable. Wouldn’t it make sense to implement the strategy of looking for the less profitable business, the less profitable customers, the less profitable products that we have – and actually starting to retire them, phase them out, or eliminate them entirely. And if that is our strategy, then we need tactics to do that.
Let’s break it down:
Objective: What is it I’m trying to accomplish? Make more profits, have more cash.
Strategy: Plan of action to achieve an overall objective. Look for less profitable products, services, customers – and remove them.
Tactics: Smaller specific goals we use to get to that strategy or objective. How we would go about doing that.
LINKS MENTIONED DURING THE EPISODE:
Listen to last weeks episode with Amy – YouTube strategy and tactics