The Importance Of Strategic Management To Startups

Strategies today define whether a business will prove to be successful or not.

Your startup needs to build (or have) strong business management with proven expertise and experience. But that is hard to do for a startup, isn’t it? 

That is why business plans for startups today choose strategic management suggested by professional business coaches such as the Online Profit Project to guide their business towards smooth performance and growth. With the rapidly changing business landscape and ongoing management, the importance of strategic management to startups has only grown deeper.

Every organization, whether small, medium, or big enterprise, or a startup, needs a definite business strategy to realize its goals and objectives. Business managements always assume the future to have crystal clear goals and objectives of an organization.

And with the speed of changes and advancements in technology, organizations shall become more concerned with managing, and adapting to changes, and strategic management is the key to this.

Some Key Definitions

• Strategy: Plan of action or policy designed to achieve a major or overall aim.

• Strategic Management: The ongoing planning, monitoring, analysis, and assessment of all necessities an organization needs to meet its goals and objectives in a more action-oriented and result-oriented manner.

• Business Strategy: The course of action or set of decisions that assist business management/entrepreneurs in achieving specific business objectives. 

• Marketing Strategy: Business’s overall plan for reaching prospective consumers and turning, maintaining, and growing them as customers. 

The Focus and Approach Of Strategic Management

Managing a business is a complex task. Management of business activities involves planning, organizing, staffing, directing, and controlling.

Business management is always expected to be robust and dynamic in its approach with its focus on growth and expansion. Whereas strategic management, as defined above, consists of all the activities for managing a business, but the focus and approach are more action-oriented and result-oriented.

Strategic management is an overall change in approach that increases the activeness in management and employees while also motivating the team to have a well-focused and directed approach. 

Strategic management takes care of the financial and non-financial aspects of the business. It covers the present and future aspects of the business. It provides senior management with tactics that support decision-making and clears the perspective and path to be taken for business survival, growth, and expansion.

Its approach believes in continuous and consistent planning, monitoring, and testing of an organization’s activities for having greater operational efficiency, market share, and profitability. 

Important Concepts Of Strategic Management Benefits For Startups

As strategic management is not only based around the organization’s goals and objectives, it also ensures that there is a clear understanding of the mission statement and what it needs to achieve. It aligns the mission, vision, and goals of the organization at every step that management takes.

This helps a startup, which often has less experienced senior management to continually and consistently keep their actions in check to meet the organizational goals in the period they have decided. 

Now, as it is clear by now, strategic management emphasizes strategizing all fronts of business departments. While forming a business plan for a startup company if strategic planning is taken into consideration then it becomes easier for them to be on growth track even before inception.

Every startup boasts a large degree of potential; when strategic management is applied from the inception of the business plan itself, startups are projected to grow and expand exponentially. 

Strategic management lays focus on short-term goals as well, which play heavy importance in a startup’s survival and growth. They further result in better resource allocation and increased operational efficiency, with this the startups, who already have to work on limited funding, can grow themselves significantly.

Every aspect of the business is taken into consideration and well-strategized under strategic management, and that ensures that every decision is taken with respect to critical analysis and brainstorming. Now this increases the confidence and pace in decision making by senior management and provides clarity to lower levels of management.

These various and diverse important concepts of strategic management prove to be beneficial for startups and result in developing a competitive advantage, improved market share, and well-planned future activities.

Stages Of Strategic Management Process Important For Startup Growth

Any and every MBA graduate will know the correct process of strategic management. But for a startup company at every stage of the process, there is increased importance and benefits.

The senior management of startups just needs to be conscious and informed regarding it to exploit it in the best form. The stages of the strategic management process are:

1. Assessing Organization’s Direction

This we have talked about above as well, strategic management is a continuous activity. Once in a while, for every business, it is essential to assess the organization’s direction to be aware of its current status. For startups, it is more important as they have limited resources. 

2. Identifying and Analyzing Strengths And Weaknesses

This stage is about just internal and external strength.

The business landscape is ever-changing, and currently, it is in a very uncertain environment. This helps startups to be alert to changing dynamics and their effect on internal and external strengths and weaknesses. 

3. Formulating Action Plans

There are overall plans which illustrate where an organization is moving and what it is aiming at, while the action plans are detailed result-oriented sops that mainly describe how a long-term or short-term goal will be achieved.

For startups, maintaining clarity and order is important to grow, and the stage helps with that.

4. Executing action plans

In every management stage or type, planning and executing will always be two different stages.

In strategic management, executing action plans requires the same degree of strategizing and brainstorming as in the formulation of these plans. Startups need to take extra care while even executing a plan as they might face some unforeseen choices, expenses, or ways. 

5. Checking Deviations and Contingency Plans

It is always important to check the formed and executed plans for deviations, there always be some.

Strategies usually don’t form a whole new contingency plan, but they have the next best choice ready for the worst-case scenario. Strategic management allows the startup to follow the habit of always reassessing themselves and coming as a better version of themselves. 

These stages of the strategic management process are important for startup growth as they even pave the way for effective communication, data collection, and sustainable organizational culture.

As a startup company grows into a large company, these aspects are very much important. Other than this, the lack of communication and negative organizational culture is more likely in the absence of active and robust management.

Overall, the strategic management process results in the alignment of the management plan with the overall organizational goals. 

Broader Benefits Of Strategic Management To Startups

So far through the important concepts, focus, approach, and process, you might have got the idea of the importance of strategic management to startups. Below we have listed quite a few broad benefits to startups from strategic management. 

i). Competitive Advantage

Through strategic management, you make sure that you plan regarding the competition as well. The market has got as competitive as it could get.

Being a startup, you need to take a well-calculated risk to sharpen your competitive edge, upon that good competitive research also helps in understanding what a competitor is capable of. 

ii). Achieving goals

Mission and vision are too broad to be realized by a firm in a short time. They are broken down into goals and objectives as long-term (one year or more) destinations.

Further for clarity and lessened deviation, these goals are broken down to simpler short-term goals which can be achieved by management in months, and such achievements motivate the staff and management in the long run. 

iii). Sustainable growth

Growth can make you lousy, or it can be superficial. For keeping your management and staff in focus, and considering the longevity or the nature of growth management needs to be strategic in its approach.

Superficial growth is like an increase in sales of essentials just because of a rumor of re-lockdown, though it won’t happen for a long-time. But the company needs to be prepared for such times. 

iv). Cohesive Organization

Strategic management emphasizes communication and goal implementation.

Startups need this unity and collaboration, their competitors (mature firms) will indeed have cohesive management which will lay an upper hand on startups. Also, an organization that works in unison always likes to achieve what it is aiming for and under the deadline.

v). Increased Managerial Awareness

Business management is always looking towards the future, whether it is a marketing strategy, growth strategy, or general business strategy.

Realizing the future and preparing for it is one of the core duties of management. Strategic management allows the company not only to take care of current issues but also work on the future as well.

Further, the importance of strategic management can’t be laid out individually, as it is not a specific or an add-on department or service for the business.

It is the type of approach business management shall have in this uncertain and changing era. Upon that, startups come with limited experience and expertise in the business world, so the importance of strategic management is deepened for them.