Changing business strategy can be a daunting task. We talk to Shaun Donaldson from Halpin Partners on how to make successful changes in your business.
For many of its early years, Google had no specific identity or business model. In John Battelle’s book, The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture, the author explains how Google was a frustratingly unprofitable company, indecisive on its position in the technology field. After continual years of only just scraping by financially in selling its own search technology to other search engines, Google radically changed its business strategy.
Strategy is the term given to the overarching objectives of a business. Strategy decisions affect what line of business a company is in, who it serves and how it serves them, as well as how the company operates internally. It can be difficult to predict exactly what will happen when an organisation changes its strategy, but there are a number of common positive and negative effects when going through a strategic transition.
While most accounting firms solely look after the number crunching, Halpin Partners offer a focus on business advisory, which is essential if you’re considering a tack change. “Getting the best financial results is clearly the focus,” “ say Halpin Partners Director, Shaun Donaldson. “However, we also concentrate on helping our clients understand HOW to make their businesses grow, and how to achieve their business goals.”
Why would a business change its strategy? “Every business will have a different answer, depending on the industry, the environment its in, and also its particular situation,” “ explains Shaun. “Technological change is a big one – we see this a lot in marketing and advertising fields moving from traditional media into social media, as an easy example.
“So much change is happening around us that isn’t easily quantified into a pie chart. For example, in discussions with our clients in the financial sector, we’re seeing huge business changes as a result of the Royal Commission; in the hospitality sector, a restaurant may need to change its initial offering to support public demands in dietary, costs etc. It’s essential to take into consideration all the ways change can occur and subsequently impact the business.
“We see the number one factor for businesses instigating a business strategy change comes down to poor business performance. If business is going well, owners and operators will rarely look at the future. Clients generally come to us needing to change with the catalyst being financial pressure.”
When planning a change in business strategy, it’s advised to always start at the end point, which will clearly identify the path to get there. Visualising professional and financial objectives for your business and plotting out actions that are credible, measurable and realistic pave the way to a successful shift. Doing your research and talking to experts in your industry are important steps in developing a new strategy.
“We have plenty of examples of businesses successfully implementing change through a change in strategy,” says Shaun. “Cairns based business Norweld are an aluminium fabrication business. The business found itself in an environment which did not allow for growth. It pivoted to start making ute trays and canopies for recreational use. Now the company are market leaders, with growth tenfold in the last three years.
“Another client is a civil construction company that initially focused on smaller contracts requiring low skill. After an ownership change, the new owners decided to adjust that business strategy and invested heavily into training, bringing the skill level up and purchasing new machinery. By focusing on a different market and adjusting the business model, their turnover has increased four times what it was a few years back. They are now able to complete higher end work at a higher margin.
Of course, the alternative is the not so successful stories. “Hospitality is a perfect example,” explains Shaun. “It’s an incredibly volatile industry, and not all businesses are financially viable. People start out starry-eyed, but high staff costs and severe financial pressures can often mean a quick change in strategy without clear thinking. For example, a restaurant that starts out as high end, but then begins to change tack to lower costs – tablecloths, opening hours, style of food. Without a clear plan, this confuses customers and the business hasn’t really addressed the real underlying business problems..’
Changing your business’s strategy must be approached with discipline and pragmatism. Face forward, not back and empower yourself and your team to live the strategy and deliver against realistic goals. Connect halpinpartners.com.au