If you’ve been following Tradie Coach for a while either on social media or out in the marketplace you would have heard me talk about the Bureau of Statistics research that shows that 4 out of every 5 businesses fail within the first 3 years of being in business. Of those 4 businesses, 46% failed due to poor strategic management, so in other words 2 out of every 5 businesses failed because of poor strategic management.
Read on if you’d like some guidance on how to become one of the surviving businesses. We’ll cover:
What you need to know about strategic management
The areas of your business that benefit most from a strategic-management approach
How you can bullet-proof your business and stay ahead of the competition
I love this definition from Linda Trucci on https://searchcio.techtarget.com
“Strategic management is the continuous planning, monitoring, analysis and assessment of all that is necessary for an organisation to meet its goals and objectives.”
Strategic management is a continuous process that involves the planning, monitoring, analysis, and assessment necessary to meet an organisation's goals and objectives. It's a comprehensive approach that not only involves setting objectives but also systematically working towards them. This process is vital for adapting to changes in business environments and assessing strategies for success.
For small business owners in the trades, strategic management is crucial because it guides decision-making on resource allocation, operational efficiency, and long-term planning. It helps trades businesses adapt to market changes, understand competitive landscapes, and respond proactively to customer needs. Strategic management also provides a framework for evaluating the effectiveness of business strategies and making necessary adjustments.
Effective strategic management can lead to increased operational efficiency, improved market share, and enhanced profitability. It sets a clear direction for the organisation and its employees, ensuring that everyone works towards common goals. Unlike static plans, strategic management is a dynamic process that continuously adapts to the organisation's changing needs.
The Meta Dynamics™ Critical Alignment Model™, developed by Remi Pearson (Founder of The Coaching Institute), is a comprehensive framework that aligns with the broader strategic management concepts. This model is structured around four core pillars: Environment, Structure, Implementation, and People, which are essential for effective business planning in trades.
Environment: This pillar focuses on defining the desired outcome and its purpose. It involves understanding your market, your customers, and what sets your trade business apart. The environment pillar answers the 'why' of your business, guiding the overall strategy.
Structure: Structure involves the systems and processes necessary to achieve your outcomes. This includes aspects like your business model, operational processes, and how you organise your resources.
Implementation: This is where plans are actioned. It involves not only carrying out tasks but also ensuring that your team understands and commits to these actions.
People: The final pillar involves the individuals responsible for achieving the outcomes. This includes not only your employees but also your suppliers, partners, and customers.
In applying the Meta Dynamics™ model, trades businesses can systematically approach their strategic planning. By focusing on each pillar, they can ensure that all aspects of their business are aligned with their strategic goals. This model also aids in identifying areas of improvement and opportunities for growth.
One of the significant challenges for tradie business owners is balancing the demands of daily tasks with long-term strategic objectives. Effective strategic management involves setting clear priorities and developing a roadmap that aligns daily operations with these broader goals. This means regularly reviewing and adjusting operational processes to ensure they contribute to long-term objectives.
Effective resource management is crucial. This includes not only financial resources but also time, manpower, and materials. Strategic management helps in optimising the use of these resources, ensuring that they are employed efficiently and effectively towards achieving business goals.
Strategic management is not a one-time activity but a continuous process. It requires regular monitoring and evaluation of business practices, encouraging a culture of continuous improvement. This approach ensures that the business remains agile and responsive to market changes and customer needs.
For tradie businesses, staying attuned to market changes is crucial. This involves understanding emerging trends, customer preferences, and industry shifts. Strategic management enables tradie businesses to anticipate and adapt to these changes, ensuring they remain relevant and competitive.
The integration of new technologies can significantly enhance operational efficiency and customer service. Tradie businesses should explore and adopt relevant technological solutions, like job management software, online customer engagement tools, or modern payment systems, as part of their strategic planning.
Being proactive in adopting new practices and technologies helps tradie businesses to not only keep pace with competitors but also to set new industry standards. Strategic management supports this proactive approach, allowing businesses to identify and leverage new opportunities.
Every business faces risks, and for tradies, these can range from operational risks to financial uncertainties. Strategic management involves identifying these risks and developing plans to mitigate them.
Having contingency plans in place is essential for business resilience. This includes preparing for unexpected events such as economic downturns, supply chain disruptions, or changes in regulations.
Effective risk management and contingency planning ensure that the business can continue operating smoothly under various scenarios, protecting the business's long-term interests and sustainability.
Strong leadership is pivotal in strategic management. Leaders in tradie businesses should not only guide the business towards its goals but also inspire and motivate their teams.
Developing a team that understands and aligns with the business's strategic objectives is crucial. This involves training, team-building, and effective communication.
A positive culture that encourages innovation, teamwork, and a shared vision can significantly enhance a business’s ability to implement strategic plans successfully.
Strategic management is vital for the success and sustainability of tradie businesses. By understanding and applying the principles of strategic management, tradies can navigate the complexities of the business world, adapt to changing market conditions, and achieve long-term success and profitability.
For more detailed strategies and personalised coaching, contact Tradie Coach. We are here to support tradies in every step of their business journey, helping them to transform challenges into opportunities and aspirations into realities.
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