Does your business really need a strategy? The short answer, yes. The long answer, TBD. No, I'm just totally messing with you.

Yes, you need a strategy, but here's the deal. I have business owners come to me all the time and they're like, Steve, we need a strategy. But I tell them you already have a strategy.

See, that's the thing. If you're wondering whether you need a strategy, you already have a strategy because check this out. A strategy is all about making decisions, cohesive decisions, decisions that build on each other about where you're going to compete, how you're going to compete, and ultimately how you're going to win.

In other words, they're the decisions that inform what you're going to say yes to and what you're going to say no to. So you have focus because there are millions of decisions out there in business. So many different options, so many different paths to take, but we have finite resources.

So right now in your business, even if your strategy isn't written down on a piece of paper, guess what? You have a strategy because you're making choices. The difference is when I say, do you need a strategy? I'm really talking about a system — a system so you can solve problems in your business.

So here's the deal. A strategy starts with defining your strategic problem. And your strategic problem is the number one obstacle or constraint that's holding you back right now. That could be sales. It could be losing customers. Maybe you don't have the right talent. Maybe you need more capital in your business.

Every business has a constraint. The key is identifying what that constraint is. That's your strategic problem. And once you define that, then you're going to want to explore what are all the possibilities or what are all the options to pursue in order to overcome that strategic problem.

Then you're narrowing your options until you define a path or maybe two paths, and then you can go run experiments and see which one works out the best. But it's all about a system.

So let me walk you through that. You identify your problem, right? This is the one thing, like I said, that's holding you back. And you have to get real here. You have to get real with your team because you have to sometimes face the stuff that's terrible in your business.

Sometimes you have to admit like, yeah, we kind of suck right now. We're not doing well. That's totally okay. Because the more clear you become on your problem, then the faster you can solve it.

So many companies struggle because they don't want to face the facts. I'll go into a company, I'll look at their numbers, I'll interview their employees, I'll talk to their customers, and then they'll tell me what they think the problem is. And I'm like, that's not even close. It's not that you're missing a brand guide or that you need a new logo. It's the fact that your product is terrible. That's why you're losing customers.

So you could get very distracted very easily in business. Defining your strategic problem correctly and facing the facts and just the brutal, honest truth will help you to have that clarity to move forward to the next step.

All right. So when it comes to looking at options, imagine a square. It's broken into four different boxes and you have a circle in the middle. In the circle is your customer because your strategy has to start with your customer. Everything has to revolve around your customer. Otherwise you're just making decisions about yourself and about your business.

So I like to relate this story. It's funny because before I got married, I would go on some dates. All right. So I went on this date with this girl and I was really excited to go on a date with her and she's attractive. She seemed really friendly, smart, et cetera. So I pick her up and she gets in the car and immediately she starts driving the me car.

Okay. So this is the me car. This is what it sounds like. Me, me, me, right? And then every once in a while, there's a downshift to you, you, me, me. And she would just talk all about herself. Me, me, me, me, me, me, me, me, me, me, me, me, me, me, right?

And it's exhausting. And every once in a while, she'd downshift to you and ask me a question. But then before I could even answer it, she would interrupt me. And so it was just all about her.

And so many businesses are like this, and this could be you. I mean, go to your website and look at all the messaging on your website. Are you talking about your customer and how you solve their problems uniquely? Or are you talking all about you?

Now there's a balancing act, right? You need to provide social proof. You need to tell people your story. But at the end of the day, so many companies are like, yep, we started in 1965. We serve this many customers. We have this and this and this — blah, blah, blah, blah, blah. And then there's no mention of the customer.

And the same thing is true with a lot of strategies. Companies will come up with a strategy and I'm like, where's the customer in all of it? So the customer's at the core.

Now let me take you through the other boxes so you can understand the entire framework here. The first box is your shared aspiration. In other words, this helps you define what does winning even look like? Is it you want more customers? You want to build a community? You want to generate wealth? What is it? What does winning look like in your business?

Then you move on to the next box. And this is your market focus and position. In other words, this is your go-to-market strategy. And it helps you define what customers are you going to go after? What geographies are you going to compete in? Are you going to go high-end, low-end, residential, commercial?

What stage of production are you going to enter in? Are you going to build it yourself? Are you going to buy things pre-assembled? So all these decisions affect your go-to-market strategy — your market focus and position.

And when you're clear about where you're going to compete and how you're going to be successful with those choices, then you're ready to move on to the next box. And that's your competitive behavior, which sounds really fancy, right? But it's actually pretty simple.

Competitive behavior is your operating model — all the way from your funnel to your offer, to your pricing, to your delivery, and all the activities you're going to engage in, all the technology you're going to adopt in order to serve your customer really well and at a cost structure that allows you to make money. That's your operating model. And that competitive behavior is really important to decide.

Now, Michael Porter, he talks about three generic strategies: cost leadership, differentiation, and focus. And these three things are just examples of competitive behavior, but you have to choose. You can't pursue a differentiation strategy and go high-end.

So think about Louis Vuitton, for example — they're a high-end luxury brand. At the same time, you can't be a cost leader because they contrast. You're going to have to spend so much money to elevate your brand, to do marketing, to get yourself out there, to endorse celebrities, whatever it may be.

So you're going to spend a ton of money to differentiate your product. And then if you're competing on cost, that means you have to cut costs at the same time. And those costs are going to contribute to your brand, right? So they're conflicting strategies.

That's where you have to be very clear on how you're going to compete based on where you're going to compete.

So once you do that, you're ready to move into the last box — and that's your resources and returns. Now your resources and returns help you to identify what do you even need to execute on your strategy? Do you need more people? Do you need more money?

And based on this option, how much money are you going to make? How much cash do you need? What's your rate of return? And that's where the financial side comes into strategy.

So many companies skip over this and they're like, yep, we like this path. Let's just go open an office in Australia. Let's go hire a bunch of employees. And they'll look at the rate of return, and then they realize later on — that's a terrible idea. You burn through a lot of cash. So don't do that.

So that's why you have to evaluate that last box — resources and returns.

When you go through these four boxes, then you can evaluate: is this option desirable, practical, and economical? And if you can say yes to all of it, then that could be the strategy to pursue.

But guess what? Once you have that strategy, it's not stamped in concrete. You go execute and then you make adjustments along the way. So every business needs to go through this exercise.

So can you imagine that you're just making decisions on the fly? You're like, okay, we need to hire some people. Let's hire this person. Let's hire that person. Somebody comes to you and they're like, oh, you should really run paid ads over here. Or you should put a booth in this conference. Or you should open a new office here. And you should have your employees work remote. Or no, you should have them in person.

And you should use this technology or that. There are so many choices, right? How the heck are you going to make decisions that are cohesive — where you can win — without a strategy?

So that's the long version. Do you need a strategy? The answer is absolutely yes.

Now you may be wondering, okay, well, what about this guy down the street? He doesn't have a strategy. He's been in business 50 years. That's called survivorship bias.

He could be in business and he may not have a strategy, but guess how many businesses failed because they didn’t have a strategy? And more importantly, they didn’t have a strategy that made financial sense — because the two things didn’t connect.

So that’s what I wanted to leave you with today. So you can understand what is strategy and why you need it. Why it’s so important. And I think the reason why people question whether they need a strategy or not is because they don’t understand what it is.

So if you don’t understand what it is, then you may be wondering, I don’t even need it. But absolutely — if you want to win, especially in the world that we compete in — you have to have a strategy.

Otherwise, your returns are going to continue to shrink. Cash flow is going to get tight, especially with disruption, AI, and everything else that’s existing out there.

Now, how do you know if your strategy is working? The best way is to compare it to your financial results. Now you may not be a financial wizard. Accounting and finance may not be your thing. Guess what? You can leave that to the nerds like us.

So we are offering — at Coltivar — we offer a free financial review. If you qualify, you can go to Coltivar.com, check out the link down below, just fill out the form, see if you qualify.

And if you do, we will look at your financials for free — $0 — at a CFO level, and we’ll provide you some feedback and recommendations for how you can improve your business, because this is the first step to getting your company on track.

Right? So you absolutely need a strategy, but you also need to measure that strategy to determine whether it’s working and to pinpoint exactly where to focus — so you’re not wasting a ton of time in the process.

That’s what I have for you. I’ll see you in the next one. Cheers.