Your Small Business Needs a Business Strategy to be Profitable

Running a business requires a strategy to be profitable and make a return of investment. Not having a strategy is a strategy itself and can cost you and your business. A report by WYLDE International has shown that small businesses that have a business strategy are more profitable.

According to WYLDE International’s 2021 Strategy Pulse report, organizations with greater annual sales have a business strategy plan, with 67 percent of high revenue enterprises depending heavily on their strategic plans for day-to-day decision making. 

The survey included 126 SMEs from 15 different industries, with business life cycles ranging from less than a year to more than ten years. A total of 34% of the SMEs polled had been in business for less than two years, while 13% had been in business for more than ten years. The majority of the enterprises, 65 percent, had annual revenues of less than Sh2 million.

SMEs being pushed to examine their strategies 

Because of the shifting market dynamics, SMEs are being pushed to examine their strategies more frequently and utilize strategy to influence their day-to-day decision-making.

“The lack of strategy is itself a strategy. Is your strategy working for you? Lack of clarity will cost you and drag you down.” Take advantage of external strategy experts who have experience and objectivity to help you develop and effectively execute your strategy,” the Director of Strategy at WYLDE International Kiriinya Kithinji. 

Mike Muthengi, Country Manager of Business Partners International, compares running a company without a strategy to driving a car without a dashboard.

 “You have no signals; it can go off any moment and you won’t know what is wrong. Therefore, write down a one-page strategy that you can refer to often, not just when your business gets into trouble. Having a good business strategy is not a threat to your finances but a growth plan that is a must-have when seeking funding.”Muthengi.

According to the findings of the study, over 30% of organizations do not have a strategic plan, and of those that do, over 70% involve team members in the process.

At a frequency of 11% of all respondents questioned, achieving company and sales growth remained a key area of concentration during and before the Covid-19 pandemic. 

“The biggest takeout from the study, however, was that most businesses that had an existing strategic plan reported that their plans were very useful in helping them to remain resilient in the face of the Covid-19 pandemic.” Sharon Mbugua, Founding Director at Amethyst Consulting. 

This demonstrates that having a well-crafted strategic plan not only provides clear roadmaps for SMEs to accomplish business growth, but it also aids SMEs who use their strategic plans to guide their day-to-day decisions in remaining resilient during times of crisis.