Business Strategic Management: Think Ahead or Fall Behind

🚨 The Number 2 Reason Why Businesses Fail

Poor strategic management doesn’t just sneak up overnight; it creeps in slowly through lack of planning, ignoring data, and reacting instead of preparing. It’s the second biggest reason businesses collapse, right after poor cash flow.

Strategic management is about seeing the bigger picture, not just what’s in front of you today. It’s having a plan, knowing your risks, staying flexible, and making informed decisions before trouble hits. When you manage strategically, you’re steering your business forward; when you don’t, you’re just along for the ride.

From my own experience running a manufacturing business, I learned that strategy is not a luxury. It’s survival.

⏱️ This article takes about 15 minutes to read.

Running a business without strategic direction is like flying blind.
In this guide, we’ll explore:

✅ How to plan your business and avoid costly blind spots
✅ Why KPIs matter (and which ones to track)
✅ The essentials of risk management using the TARA method
✅ How to diversify and protect your customer base
✅ The real difference between being efficient and effective
✅ SWOT analysis and how to apply it to your business
✅ The power of being proactive instead of reactive
✅ Why smart beats right; every single time
✅ Building a scalable business with an exit strategy in mind

Business Planning

Failing to create a business plan is one of the most common mistakes new business owner make.

Plan. Plan. Plan. What is your goal? What time frame and resources (including money) are needed to meet that goal? Do you have the time and resources to achieve this? Beware of creating a product based on your own personal tastes. Your customers needs must be at the forefront of your plan at all times.

Creating a winning business plan is one of the first things you will need.

Marketing Strategy

If you’re selling something, make sure you’re selling to the right people, at the right time. Ask yourself:

• Who is my ideal customer?
• Why would they buy from me?
• What makes my product different or better?

Be mindful of product cannibalisation. This is when a new version of your product eats into sales of your existing one. You’re not growing; you’re just moving money around.

Market Research & Barriers to Entry

Conduct thorough market research and ensure there are no barriers of entry that you cannot overcome. Barriers of entry are high start-up costs, skilled staff that is not available, and a need for specialised machinery to manufacture a product. This should form part of your due diligence.

If you are a reseller of a brand or a trademarked item, ensure you have permission to advertise on selling platforms. These are just a few examples.
If you can’t do this alone, call in the experts who can help. You should always have a sense of direction.

KPI’s (Key Performance Indicators)

You can’t manage what you don’t measure. KPIs keep you honest about your performance.

KPI’s are necessary so that you are able to measure your performance over time. Set targets and know what you are aiming for. These are simple tasks you can perform.
For example: Your revenue growth or your customer satisfaction or the number of new visitors your website has. You should be able to measure these. How much is it costing you to acquire a customer?

Compare these against industry benchmarks.

Without KPIs, you’re driving blind. With them, you can spot trends early and course-correct before things go south.

Risk Management

Identify your risks or threats and get yourself a plan to minimize them. Risks can be quite broad and every business has them, but they are different to each of them. Write them down in a way that you can understand them and then assess them. By assessing them you would choose the likelihood of them occurring; and if indeed they were to occur what kind of impact would they have on your business.

“Most risks don’t kill businesses; ignoring them does.“

Keep in mind that risks can change over time, so it’s important to review them regularly. What seems low risk today could become high risk a few months from now. Also, remember that one risk can trigger another. For example, ignoring a compliance issue might not only cause legal trouble but could also damage your business reputation.

The TARA method is simple way to accept and manage your risks. It assists you in making informed decisions about the type of risk you have and what you intend to do about it. It is short for:
Transfer – you generally transfer the risk to a third company. Example insurance.
Avoid – you don’t take the risk
Reduce – you reduce your risk. For example, investing in machinery to mitigate the risk of downtime in manufacturing.
Accept – you don’t particularly care and you are happy to accept the risk

Some Examples of Risk:

Credit Risk

Customers (by conducting a credit check on your customer, you can manage this risk)

Compliance Risk

Keep up to date with any rules and regulations or laws that may affect your business. They may change from time to time and you must stay on top of them. For example, the European laws regarding privacy (GDPR) were introduced in 2018. Failing to comply will result in serious penalties. There are services that can keep you on top of all these changes such as Iubenda.

Supply Chains

Ensure your business does not rely on one supplier. Networking is an important part of business and building your connections is like a superpower. I made sure that we had at least 2 suppliers for every aspect of our business. This included raw materials, packaging supplies and even office equipment. It will provide you with price negotiating power as well as reduced risk for supply chain issues – such as shortages and shipment delays. Supply chain disruptions are a major threat to any business and you should seek to mitigate your risk. You should also be mindful about giving too much power to your suppliers.

Manufacturing

If you are a manufacturer, invest in additional/duplicate machinery to avoid downtimes. Check to see what sort of raw materials are required to manufacture your product and if they need special storage. Look at your quality control procedures and ensure you are compliant with any laws and regulations. You must be Worksafe compliant at all times.
Understanding your production capacity is essential. How many units are you able to make under your current set-up.

Understand the Shelf Life of Your Products

Imagine you send out 12,000 parcels a year and use compostable satchels that cost $1.50 each. You normally order them as needed, but your supplier offers you a discount if you buy 20,000 at once. Excited to save money, you place the big order and feel set for the next year, maybe even two.

It sounds like a smart move, but it’s not. Compostable satchels have an average shelf life of only about nine months. That means out of the 20,000 you bought, around 11,000 will expire and end up in the bin. That’s thousands of dollars wasted.

The lesson? Always check product shelf life before bulk ordering. A small detail like that can make the difference between saving money and losing it.

Insurance

Ensure adequate business Insurance is in place. A good insurance broker can guide you with the type of insurance you need for your business. In general terms, you should seek to insure the building/premises (if you own these), and your business. This would include, stock, equipment, and even income protection. Think outside the box as well. If you have a dog with you at work – ensure you have insurance that covers all aspects!

Going Digital & Diversifying Your Base

Go online. Seriously. If you’re not visible digitally, you barely exist. Try and generate sales from as many platforms as you can. For example eBay, Amazon, website, social media, brick-and-mortar, and pop-up stores. This means if one platform is inactive, you still generate sales from the others. Having a digital presence and going online is an absolute must for any business. Use CDNs (content delivery networks); they will reduce your risk of DDos attacks on your online store.

Diversify your customer base

Never let your business depend on just one or two customers, no matter how large their orders may be and no matter who they are. I followed a simple rule. No single customer should make up more than 20% of my annual revenue. Putting all your eggs in one basket gives those customers too much power and puts your business at risk.

If one major client leaves, it can hit hard. In fact, I know a company that had to shut down completely after their biggest customer moved operations offshore. Diversifying your customer base is one of the smartest protections you can have.

Beware of flashy deals

Big organisations love making shiny offers that look too good to pass up; bulk orders, major exposure, the promise of your product sitting proudly on their shelves. But here’s the truth: those deals usually work out a lot better for them than for you. They can drain your stock, your cash flow, and your sanity.

Don’t get caught up in the excitement of “big brand” orders. Some of these giants won’t pay you for 90 days. Others want 12 month return or exchange programs that basically keep you on the hook forever. By the time you’ve met their terms, your margins are gone and your team is exhausted.

Always read the fine print, crunch the numbers, and make sure the deal genuinely works for you. I turned down more than a few tempting offers to stock our products in big stores. The quantities looked great on paper, but the conditions would’ve put my business in serious danger. Sometimes walking away is the smartest deal you’ll ever make.

CyberSecurity & Online Fraud

Data theft is a major risk to any business, ensure you are protected. Learn how to reduce your risk of fraudulent transactions and how to spot the fraudsters.

Staffing Risk

Staffing can make or break your business. You need to be able to replace people quickly without throwing everything into chaos. Keep a running list of potential hires; a mini talent pool ready to go. I always had an ad running year-round just to collect resumes. It saved me when someone left unexpectedly.

Don’t be afraid to outsource either. Handing off certain tasks can save time, reduce pressure on your team, and even improve efficiency.

Most importantly, stay involved. Know your business inside and out. I learnt every part of mine, from the manufacturing floor to the executive office. I’d spend time on the floor even when I didn’t have to, just to stay connected and keep the team spirit alive. You can feel the culture shift long before problems start, but only if you’re there to notice it.

Efficiency vs Effectiveness – The Cranky Truth

Be efficient and effective with your operation. They may both ‘kind of’ mean the same thing but they have an important difference between them – and you need both.

Being Effective is doing your job properly that gets a desired result. Being efficient is the ability to do that same job with ease and without wasting time and valuable resources. Time Management is critical to every business owner. You must work smart not hard. This is particularly important to solopreneurs who wear many hats to run their business. Having good time management can be the difference in success.

Don’t Spend $5 to Save $1

Jane places a $500 order with her supplier. The invoice comes through with a $10 delivery fee. Jane doesn’t like that. She decides she’ll save the ten bucks by picking it up herself.

So off she goes (45 kilometres there, 45 kilometres back) burning fuel, time, and energy. She spends about $20 just on the trip (and that’s before counting her time).

Sometimes the smartest business move is to pay the ten bucks and get on with your day.

Distribution

If you sell online, getting your distribution right is non negotiable. Your products should be dispatched quickly, and your courier partners need to be reliable; the kind that deliver at lightning speed, not snail pace. Always be upfront with customers about delivery times. If you promise next day shipping, make sure that’s exactly what they get. Nothing kills trust faster than a late delivery.

And here’s a golden rule: negotiate everything. Your courier rates today won’t be your best deal tomorrow. When your contract is up, renegotiate. Do it again next year. If you send 10,000 parcels a year and manage to shave just one dollar off each, that’s ten grand straight back in your pocket. For a small business, that’s not pocket change, that’s serious money.

SWOT Analysis: See Your Business Clearly

Every business needs a reality check, and a SWOT Analysis is one of the simplest ways to get it. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. By breaking your business down into these four areas, you can see exactly where you shine, where you struggle, where you can grow, and what could trip you up. It’s a powerful planning tool that helps you stay grounded and strategic at the same time.

Strengths

Your strengths are what make your business tick. They’re the things you do better than anyone else. They are your edge. Maybe it’s your outstanding customer service that keeps people coming back, or your loyal, highly skilled staff who’ve been with you for years. Strong systems and efficient processes also count as strengths because they save time and boost profit. Don’t forget your trademarks, patents, or any intellectual property. Those are major assets that protect your brand and set you apart from the competition.

Weaknesses

Weaknesses are simply the areas where your business falls short or struggles to keep up. They highlight what you lack or what is holding you back. For example, if your production capacity is limited, your equipment is outdated, or your systems are slow, these are weaknesses. A shortage of skilled staff or poor cash flow can also be warning signs. Even a lack of innovation or failure to keep up with competitors fits here. Identifying your weaknesses honestly is the first step to improving them.

Opportunities

Opportunities are the possibilities that can help your business grow and move forward. They are the openings you can take advantage of to create positive change. For example, you might discover a niche market that your competitors have missed and position your product there. In niche markets you can often carefully implement a price skimming strategy.

You could expand into new regions or even international markets where demand for your product is higher. If you sell woollen gloves in Australia, you might explore markets with colder and longer winters or look into specialised uses such as medical or therapeutic wear. The key is to recognise where potential growth exists and act on it before others do.

Threats

Threats are external factors that can harm your business or limit its success. These are usually things outside your control, such as new competitors entering the market or existing ones gaining strength. Economic changes can also pose a threat, especially if they affect consumer spending habits. Disruptions in the supply chain, cheaper imports, or rising international tariffs can quickly impact your bottom line. Even government policy changes, like the introduction of new taxes or regulations, can affect your operations. The goal is to stay alert and prepare for these challenges before they catch you off guard.

Cross Checking

Once you have completed your SWOT analysis, take a step back and crosscheck it. Look for ways your strengths and opportunities can help you reduce or even eliminate your weaknesses and threats. For example, a strong brand reputation might help you face new competition with confidence, or an opportunity to upgrade equipment could fix a long standing production weakness. The aim is to connect the dots and turn potential risks into areas of improvement.

Proactive Vs Reactive

Be proactive, not reactive. Hindsight is helpful, but foresight is what keeps you out of trouble.

So what does that actually mean? Being proactive in business means staying one step ahead. Spotting problems before they turn into disasters. Being reactive means sitting back until something goes wrong, then scrambling to fix it.

Here’s a simple example:
If you know your orders are running late, don’t wait for angry emails. Get ahead of it. Send your customers a quick message, let them know about the delay, or even include a small thank you gift in their parcel. That’s proactive.

Doing nothing and waiting for the complaints to roll in? That’s reactive, and it’s also how you lose loyal customers.

The smartest operators don’t just solve problems. They prevent them.

Learn from Others

Seek out and learn from other peoples mistakes, rather than your own. The most cost effective strategy out there.

Analysing Data

Analyse your data – or call in the experts to analyse it for you and give you a run down. Business Intelligence is an important part of strategic management. Data reveals patterns, profits, and pitfalls you’d otherwise miss.

Working Culture

Create a good working culture and ensure you are in line with Fair Work, award wages and you operate a safe working environment for all. Create a fair and equal workplace.

Be a business that leads the way to sustainability. A safe working environment includes both physical and mental and includes being in line with government policies and regulations. Steer clear and try to resolve any office politics as this can quickly create a toxic environment. Politics belongs in Parliament, not your office.

Avoid Micromanagement (Seriously, Stop It)

Nothing kills morale faster than a boss who can’t let go.

Micromanaging increases anxiety and stress levels, and reduces confidence in your team. If your team is not happy, their productivity will decline. Learn to delegate. You can’t do everything, so don’t even try. In fact you are probably wasting valuable time by doing so and leaving everyone around you deflated.

Examples of micromanagement include managers or employers who sit on top of their employees for most of the day, nit picking at their work, questioning the way they do it, suggesting other ways it could be done (with no real evidence that their way is any better) and needing to give their final approval on pretty much everything.

A micromanager is a the sort of person who cannot be left out of any meetings or simple conversations and must be copied in on all emails. They must know what is going on at any given time. In fact you will often hear them say things like, “stuff just doesn’t get done if I am not here” or ” if you want to get it done right, you have to do it yourself”. Here are ten signs of a micromanager.

Smart Vs Right

Running a business tests your patience daily. Being right isn’t always smart.

Example: a customer complains unfairly. You could argue (and win), or refund quickly and keep your online reputation spotless. Which outcome builds your business faster?

Sometimes being smart means swallowing your pride.

Fixing Something That Is Not Broken

Don’t try to fix something that isn’t broken. If a system or process is running smoothly, leave it alone. Making unnecessary changes can create more problems than it solves. This often happens when new managers or owners come in and feel the need to “make their mark.” For example, changing how a well-functioning production team operates might sound like an improvement, but it can easily lead to confusion, frustration, and lower productivity. Sometimes the smartest move in business is knowing when not to interfere.

Create an Expandable Business

Creating an expandable business from the very beginning is wise as it is able to accomodate and support growth. It is easier to scale a business (when the time is right) if it has the foundation from the get go.

A business designed to grow can adapt easily when opportunity knocks. Systems, processes, and structure are the secret weapons that let you scale without chaos.

Exit Strategy

Know your endgame.

Every business owner should have an exit strategy. Whether your goal is to run your business until retirement and close it down, or to build it up and eventually sell, planning ahead is essential. If you’re aiming to retire early, start mapping it out now. If you want to sell, give yourself plenty of time to prepare; it can take years to get everything in order.

Selling a business isn’t something you do overnight; it requires structure, clean financials, and the right timing.

Just as you needed to understand the barriers to entry when you first started, you should also understand the barriers to exit. Knowing how you’ll eventually step away helps you make smarter decisions while you’re still in the game.

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Poor Strategic Management is the number two (out of the top four) reasons why businesses fail.
Let’s check out the other reasons why businesses fail & see more information on each:

It’s essential to understand these four reasons as they have critical information to the success of your Finances and Strategic Management which is one of the most important steps in the 5 basic step guide to running a successful business.

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