Basic Strategic Planning Approaches

The primary strategic options for a new or established business include the following:

Grow fast (and ahead of most competitors)

Grow in line with industry

Defend existing status (assumes a moderately strong starting position)

Catch up (with leaders & then grow with or ahead of them)

Turn around (from being an underperformer)

Hang in (go with the flow but don't expend much effort)

Harvest (milk the opportunity with a view to withdrawal)

The preferred option is likely to be very influenced by the dynamics and prospects of the sector in which the business operates. For example, if the sector is under serious long-term threat then the only realistic options might be to hang in or harvest.

The two main approaches to strategic development for an established business can be classified as either organic or quantum as illustrated below:

Organic	Quantum
Lower risk	Higher risk
Limited resources needed	Substantial resources needed
Absorbs less effort	May divert/deflect attention
Low immediate returns	Higher returns (?)
Incremental learning/progress	Excellent insights required
Strategic flexibility	Unforgiving of errors

In the case of a start-up venture, organic and quantum approaches translate into soft or hard start-up strategies. An example of a soft start would be a software company which evolves from a part-time business into full-time service provider and then progresses into software products (classic "back room" start). Another example, would be an engineering company which starts in a shed and gradually moves into a proper premises ("garage" start).

Soft start strategies can be very effective as they allow entrepreneurs to learn the trade (and make mistakes) without incurring major, irrevocable (and maybe premature) commitments. Hard starts are obligatory where substantial investments (in R&D, market or assets) or resources (technology, manpower etc.) are needed from the outset. It may be possible to soften a hard start by renting (rather than buying) premises; leasing equipment (instead of purchasing); acquiring a franchise (in lieu of developing a new brand, systems etc.); entering into a joint venture; or subcontracting manufacturing, distribution, accountancy services and so on.