As entrepreneurs, our minds are constantly buzzing with ideas for growth, troubleshooting issues, and calculating the next steps. The truth is that it never stops! You’re always going to want to do the best for your start-up. But this constant state of infinite wondering and planning for an entrepreneur can be overwhelming, time-consuming and self-doubt-inducing too!
How about we avoid going down this path by implementing strategic frameworks many businesses use worldwide? Used by business owners, consultants, managers, and analysts, these models can regularly streamline your thoughts, vet them and turn them into confident actions at supersonic speed!
Even if you didn’t attend business school, this easy cheat sheet of strategic frameworks could transform your business decisions overnight.
1. Defining Company Business Model
Business Model Canvas
The Business Model Canvas is a visual tool that helps you look at the big picture of your business. It consists of 9 building blocks: value proposition, customer segments, channels, customer relationships, revenue streams, essential resources, key activities, key partners, and cost structure.
It does not need you to go extremely deep into each because this method is used more to understand an overview of the relationship between the various blocks that keep a business running like a well-oiled machine.
When to use the Business Model Canvas:
- Starting a new business and testing ideas
- Pivoting or changing the direction of an existing business
- Seeking investment or partners
- Assessing a competitor’s business model
How to use the Business Model Canvas
You could start this process by simply writing down whatever comes to mind- but there is an optimal order to fill this out:
1. Customer Segments: Who is your target demographic?
2. Value Proposition: How are you addressing your customer segment’s problems? What makes you unique to them?
3. Customer Relationships: What kind of relationship will you have with your customers? How do you plan to retain them?
4. Distribution Channels: What channels will you use to reach your product/service to your customers?
5. Key Activities: What activities will you do in-house to deliver value to your customer?
6. Key Resources: What resources (human, financial, or material) are needed to deliver value?
7. Key Partners: Who are the partners you need to create/deliver value? (suppliers, strategic partners)
8. Revenue Streams: How does your business make money?
9. Cost Structure: How are the costs allocated?
Once you have completed the canvas, step back and assess the overall picture. This is a flexible model, so feel free to return to it as your business evolves.
2. Strategic Frameworks to Analyze Growth Opportunities for your Start-Up
This multi-purpose tool can help you evaluate Strengths, Weaknesses, Opportunities, and Threats. This framework provides a format for a comprehensive overview to analyze internal and external facts in any situation.
When to use a SWOT Analysis:
- Assessing the competitive landscape in a market to enter
- Assessing a new business plan
- Evaluating your current product or service
- Planning future growth
How to use the SWOT Analysis:
First, list strengths and weaknesses, generally internal factors. Then, list out your opportunities and threats, generally external factors. Analyze each quadrant to determine its potential impact. The final aim should be to use this information to develop a plan that leverages your strengths and weaknesses while taking advantage of opportunities and mitigating threats.
Created by experts at the Boston Consulting Group, this is a strategic planning tool best used to help you evaluate your portfolio of products or businesses. It can help you understand the relative position based on market share and growth. Popularised in 1970, the BCG matrix was used by more than half of the Fortune 500 companies at its peak!
When to use a BCG Matrix:
- Evaluating a company’s product portfolio
- Evaluating a company’s business portfolio
- Deciding on investment or divestment in products/companies
- Determining resource allocation
How to use the BCG Matrix: Based on the rationale that market leadership leads to sustainable returns, which leads to a cost advantage, the BCG matrix makes you segregate your portfolio into Stars, Cash Cows, Dogs and Question Marks.
Low Growth/High Share: Cash Cow (milk it!)
High Growth/High Share: Stars (bright future!)
High Growth/Low Share: Question Marks (unsure status!)
Low Share/Low Growth: Dogs (be gone or strategize!)
Porter’s Five Forces
This framework helps you assess levels of attractiveness or risk of a competitive market by analyzing 5 key forces. It can support your process when determining the potential profitability of a product/service in a new market.
When to use Porter’s Five Forces:
- Conducting market research and analysis
- Assessing the competitiveness of an industry
- Evaluating the success of a product/service in a market
How to use Porter’s Five Forces:
This model requires you to dive deep into the industry stakeholders you’re planning to enter.
1. Supplier power. Assess the number of suppliers, size and strength of the supplier. Is it easy for them to drive up the price? Is it easy for buyers to switch suppliers?
2. Buyer power: Assess the number of buyers, the ease with which they can drive prices down, and the importance of each individual buyer to the organization.
3. Competitive rivalry: The number and capability of competitors in the market. Do the competitors have differentiated products?
4. Threat of substitution: Do close substitutes exist? Would customers switch to alternatives because of the price?
5. Threat of new entry: Are there any strong barriers to entry? Does the market require patents, large capital investments, and licences?
Each of the above contributes to the level of attractiveness to enter a particular market and the potential of being a sustainable competitor. E.g., If buyer power is high, the threat of substitution looms, and barriers to entry are low, you may want to re-think the market itself.
Also called the product/market expansion grid, Ansoff’s Matrix is useful for visualizing the risk and attractiveness of growth strategies for product portfolios in new and existing markets.
When to use Ansoff’s Matrix:
- Developing a business/product expansion strategy
- Considering new markets
- Determining investment in existing products
- Assessing risks with diversification
How to use Ansoff’s Matrix: This model’s logic relies on the relationship between new/existing products and new/existing markets. It helps identify the expansion strategy with each quadrant while shining light on the level of risk.
- Market Penetration –Increasing focus on existing products in an existing market
- Market Development – Expanding existing products to new markets
- Product Development – Introducing new products to an existing market
- Diversification – Entering a new market with completely new products
As marked in the diagram above, each quadrant brings varying risk levels. The final goal is to identify the right expansion pathway for your business. Ansoff’s matrix should be used with financial analysis to get the best results.
3. Strategic Frameworks to Analyse Marketing Decisions for your Start-Up
The best visual tool to help you understand the perception of your company/product relative to your competitors, from a customer’s perspective, by comparing price vs a product’s key benefit. A Strativity survey revealed that 50% of salespeople didn’t know what attributes justify the prices of the products and services they sell!
The Positioning Map is a must-do exercise that can inform many key product, branding and marketing decisions.
When to use the Positioning Map:
- Determining pricing strategy
- Determining product features
- Analyzing competitor landscape
- When considering entering new markets
- Evaluating the potential for brand differentiation
How to use Positioning Map
The Positioning Map asks you to place your brand using a backdrop of two key factors. Price and a Key Benefit – one that is important to the entire consumer base and driving sales.
- Identify a key product benefit that you believe is important to your customers apart from price – it may be quality, convenience, or design. Pick one that is hyper-specific to your market. Map it against Price. This automatically splits your field into 4 quadrants.
- Place your competitors and yourself on the map based on the x/y axis.
- Finally, analyze your placement: Are you in a busy quadrant? Did you identify a blank space? Are you competing with the wrong crowd? Are your prices too high?
7 P’s of the Marketing Mix
If you’ve just been using the 4 Ps of Marketing, here’s your upgrade to the next level! The 7 Ps are Product, Price, Place, Promotion, People, Process, and Physical Evidence.
When to use the 7 Ps of the Marketing Mix:
- Developing a new marketing strategy
- Brainstorming business USPs
- Assessing existing marketing strategy
How to use the 7 P’s of the Marketing Mix: This framework demands a 360 approach towards marketing. It does not view marketing as one of the steps of the sales process, nor does it lead you to believe marketing is just advertising. Instead, it pushes you to build a product/company keeping in mind its attractiveness to customers through the eyes of 7 key verticals.
1. Product: What is your product’s USP? Do you have the right bundle of features to excite your audience? Is your product different enough from the other options currently on the market?
2. Price: Price is a highly underrated marketing tactic! What is your pricing strategy? Penetration? Skimming? Value-based? Will your portfolio be a little bit of all?
3. Place: Physical store, website, or app. Does the place of purchase convert or lose your customer? What can you do to optimize this?
4. Promotion: How are you communicating the message about your product/service to your customer? Are you using channels your customer is at? Is it doing the job?
5. People: People build businesses. Are your customer-facing employees knowledgeable, prompt, and consistent? No matter the positions, are they trained to be the face?
6. Process: Your processes can make or break your customer experience. These must be considered from an inquiry, order, return, and review to help create a positive brand reputation.
7. Physical Evidence: Anything tangible is also a reflection of your brand and can instantly impact a potential customer’s experience. Uniforms, menus, contracts, emails, brochures, presentations.
Sales Funnel Framework
This model helps break down the psychology of a sale. It divides the sale process into stages and pushes you to design a sales funnel that handholds the customer from awareness to advocacy.
When to use the Sales Funnel:
- Developing sales and marketing strategies
- Analyzing the effectiveness of existing sales strategy
- Seeking to increase conversions
- Tracking customer progress
How to use the Sales Funnel: The sales funnel outlines stages that potentially already align with customer touchpoints in your business or must be created to lead to a conversion.
Your Sales Funnel could be;
- Awareness: a storefront
- Consideration: your sales team
- Consideration: Website/Reviews
- Purchase: Website
- Retention: Personal Follow-Up
- Advocacy: Facebook Group/Reviews
Or it could be;
- Awareness: Facebook Ad
- Consideration: Landing Page
- Purchase: Website
- Retention: Inner Circle Benefits
- Advocacy: Referrals
You could have multiple permutations based on the type of business you are running; you could have multiple touchpoints for each stage or much longer cycles to reach purchase. Now that you’ve identified the flow, custom design each stage to ensure your customer keeps moving to the next! Regularly return to this funnel to track and optimise to create shorter and faster funnels.
4. Strategic Frameworks to Optimize Operational Decision-Making for your Start-Up
Scenario Planning Matrix
This entrepreneur-friendly template for quality decision-making enhances the ability to envision and predict future possibilities. It helps by creating simple but informative scenarios for any decision and how it may impact the company.
When to use the Scenario Planning Matrix:
- For strategic decision making
- For product or service development
- It analyzes options in an unfamiliar scenario
- When mitigating potential risks
- To take premeditated action and skew a scenario in our favour
How to use the Scenario Planning Matrix
This matrix starts with a question you are exploring. For example, What happens if a new law comes into place? What happens if an AI alternative enters the market? What happens if a dependency falls through?
Now select two drivers that impact this scenario and identify the two spectrum ends of each. This will give you 4 distinguished quadrants with 4 scenarios. This enables you to be better prepared, take calculated action and make more informed decisions. Below is an example for the question: How will the metaverse impact our in-store retail strategies by 2030?
They say a business starts and ends with an excel sheet. But this excel sheet is different. Most excel users grossly underutilize the potential of the tool. And financial figures alone may not always be a business’s most accurate measure of success.
Earnings per share or ROI% can sometimes be misleading. Enter – Balanced Scorecard. As the name suggests this framework is a more comprehensive method of reviewing and tracking company performance. It puts multiple perspectives into view, allowing you to reveal the more in-depth status of a business.
When to use the Balanced Scorecard:
- Measuring and monitoring progress daily, quarterly or annually
- Aligning processes and manpower with strategy
- Prioritizing projects, products, services
- Communicating company goals to a stakeholder
Reviewing quarterly company performance
How to use the Balanced Scorecard
The perspectives and KPIs depend on your business model and priorities. Generally, the scope includes financial, customer and stakeholder, internal process, and organization capacity for learning and growth.
Some KPIs for each of the segments you should consider include;
Financial: revenue, profit, market share, EBITDA
Customer: number of customers, customer loss, new customers
Internal Process: expense management, wastage
Organisational Capacity to Learn and Grow: manufacturing output, sales message training
Want to startup in Canada?
We’ve got you covered! BHive is a start-up incubator, located in Brampton, Ontario, that offers international start-ups the tools, resources, and space to establish – and quickly scale – their businesses in Canada and North America. To apply to our Global Entrepreneur Incubation Program, click here!