Why Most Businesses
Don’t Actually Have a Strategy
And How to Fix It
24th Mar 2024
Why Most Businesses Don’t Actually Have a Strategy
Most businesses think they have a strategy. They don’t. What they have is either a goal, a mission statement, or at best, a list of tasks they think will help them grow.
A strategy is not "increase revenue by 50%" or "expand into three new cities." Those are outcomes. A real strategy answers:
- Where are we now? (Current market position, limitations, strengths)
- Where do we want to be? (Competitive advantage, business moat)
- How will we get there? (Step-by-step decision-making framework, not just tasks)
Most businesses fail not because they execute poorly, but because they execute randomly. They scale bad models, optimize things that don’t matter, and make tactical decisions with no strategic backing.
Now, let’s break down why most businesses don’t actually have a strategy and how to fix it.
1. They Confuse “Doing More” With Strategy
A business struggling with profitability usually thinks:
- "Let’s increase our marketing budget."
- "Let’s offer discounts to attract more customers."
- "Let’s expand into a new location."
None of this is strategy. These are actions, and actions without a guiding framework are just expensive guesses. If your business isn’t working at a small scale, scaling it won’t fix it— it’ll break it faster.
2. They Copy Competitors Without Understanding Them
- A local retailer sees Amazon offering same-day delivery and assumes they should do the same.
- A new startup thinks their app needs an AI-powered chatbot just because their competitors have one.
Here’s the truth: Your competitors might not even have a real strategy themselves. Copying them means copying their mistakes too. Instead, understand why they’re doing what they’re doing. If you can’t answer that, you shouldn’t follow them.
3. They Don’t Acknowledge Constraints
Every business has constraints—capital, manpower, brand recognition, operational complexity.
- A small e-commerce store cannot compete with Amazon on price and logistics.
- A new SaaS startup cannot compete with an established brand on features.
Instead of ignoring constraints, businesses should use them to define their competitive advantage.
- Amazon is big, but it’s impersonal. A small e-commerce brand can win on personalization and niche expertise.
- A new SaaS product can’t have the most features, but it can be simpler and faster than bloated competitors.
Your limitations force strategic clarity—if you acknowledge them.
4. They Chase Growth Without Solving Profitability
Many businesses pour money into growth before fixing their core business model.
- Funded startups burn capital to acquire users, hoping they’ll figure out monetization later.
- Small businesses chase more customers without understanding if their pricing model is sustainable.
If growth isn’t profitable, you’re just subsidizing failure at scale. Before focusing on "more customers," businesses should optimize:
- Unit economics: Are we actually making money per transaction?
- Cash flow stability: Can we sustain operations without needing constant external funding?
- Customer retention: Are we acquiring the right customers, or just any customers?
How to Fix It with a Real Strategy Framework
1. Define Competitive Advantage Before Growth
Instead of just growing for the sake of it, ask:
- What makes us different (not just better)?
- Why will customers choose us and keep choosing us?
If you can’t answer this, growth will just expose weaknesses.
2. Build a Decision-Making Framework
A strategy is a set of decisions, not just a list of tasks.
- If a new marketing trend appears, how do you decide whether to adopt it?
- If a competitor drops prices, how do you respond?
- If customer acquisition costs rise, what’s the backup plan?
Good strategies reduce randomness by defining principles for decision-making.
3. Optimize Before Scaling
- If your conversion rate is 2%, scaling ad spend won’t magically make it 10%.
- If customer churn is high, increasing traffic won’t fix retention.
Instead of just "doing more", fix efficiency first:
- Cut costs where value isn’t added.
- Improve retention before dumping money into acquisition.
- Identify the actual bottleneck before increasing output.
4. Make Cash Flow the First Priority
Revenue and profit are not the same as cash flow.
- A profitable business can still run out of money.
- A high-revenue business can still collapse from debt mismanagement.
A real strategy prioritizes cash flow stability—because no strategy survives if you can’t afford to run it.
85% of executive leadership teams spend less than one hour per month discussing strategy, and 50% spend no time at all.
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