What product brands need to create a great business strategy...
Strategy is one of those words that sounds enormous and you can have one for all parts of your product business, especially when you’re in the growth stage.
The key thing is to break down what you need to into priorities and what will give you the best return on investment (ROI) for the cash you are investing, whether that be in new products, tools or the skillset you need to help push things forward.
Having worked for some massive retail brands in my career we’ve always reviewed our strategy as things change and it’s important in this industry to be flexible because sales can boom or bust for many different reasons and you may need to change tack quite quickly.
In this post I want to tell you about four key areas you can look at that will help determine what you may put into your strategy or use as a process so you can identify if you need to turn your action plan on a sixpence and change your direction:
- Financial Planning
- Buy Strategy
- Sales Channels and Promotional Sales Plans
These are aimed at identifying opportunities that will help you build your financial foundations and will then support what you want to do creatively because the base is there.
1. Business Strategy for Product Brands – Financial Planning
First of all I would make sure you have a financial plan, this will be your sales goals by month and how much stock you need in your business to make them happen. It will help you plan cash flow so you can spot when you will be spending money to make money because there will be peaks and troughs to deal with. This is all about visibility, when you are growing a product brand you are going to have to spend cash to increase sales in some respect on stock and then potentially invest in better websites or other tools that help you take sales. Having your financial plan in place will show when looks good for doing this and how you can potentially pay for it.
2. Business Strategy for Product Brands – Buy Strategy
I’m sure I don’t need to tell you that your buy strategy will then come next as you will no doubt be spending most of your time looking at products and how your customers might react to them. Looking at your sourcing and managing risk around disruption to your suppliers and supply chain will keep your business in an excellent position so you can feel confident you will get those beautiful items through and launch them on time. Where you manufacture or source your range will have a knock on effect to your sales so a strategy around how you can have more than one or two suppliers will enable you to be more flexible as you expand your offer. As you bring on board new products look at whether you might choose new suppliers to try so all your eggs aren’t in one basket.
Identifying Buy Strategy Opportunities within your Business Strategy
You can also look for opportunities with your core suppliers and grow with them because more volume means better cost prices and profit margins so you can re-invest that money back into your brand. Discuss also whether they could also help you phase your orders to help with your cash flow plan so your business stays in a good place.
Other buying strategy points could be around your range and how much you invest into your core products and your trend products depending on what product categories you sell. Understanding what products boost your sales and learning from those that don’t will form actions to change what you’re buying. Having a good foundation of core (those lines you can sell at any time, that don’t date quickly and have good volume) underpins your sales and supports you trying different trends.
When you know what you want to buy to drive your sales plan it could also be broken down into some other opportunities for strategy, namely looking at where and how you take your money so you can achieve those overall goals. This will mean looking at your channels and your promotional plan which I have found many independent product brands often overlook and only use when they are forced to.
3. Business Strategy for Product Brands – Sales Channels and Promotional Sales Plans
Sales channels will be one or a combination of a store, events, marketplaces and your own ecommerce website which can be linked to your social media platforms of choice. Looking at how much turnover you drive through these individually can enable you to form a strategy to increase or decrease them if they are too costly to run. Your online conversion metrics and insights will show you where you are getting the best customer purchase to visit rate but also, if your event or store customers buy more per transaction how could you make the journey for those online just as good so they do too? Learnings from one channel could inspire growth in another and adds great actions to your strategy.
Incorporating Promotional Sales Plans into your Business Strategy
A promotional sales plan works hand in hand with your overall goals to keep your stock in a good place (usually your biggest cash asset) and you will inevitably need to promote at some point to clear down what you don’t need. Deciding how this could work well for your brand could mean that this is a strategic focus for you so you can build some great levers to pull when you need to increase your sales.
Your promo plan could include: end of season and mid-season sales with permanent markdowns, short term discounts that could be attached to key dates or events your customer will be interested in and also outlet style areas in stores or on your website where products can be moved to keep them selling even if you are not advertising discounts anywhere else.
How you market these and the message you use will be key but if you try and review the success of what you do then you will spot the ones that work for you and you can be strategic as to when you use them to suit your sales flow. But don’t ignore promotions, your stock mix is so important to keep on top of and every brand can find a way to do this that fits with their values and needs.
4. Business Strategy for Product Brands – Process
So we’ve talked about having a financial plan that will drive strategy, buying strategy and sales strategy so the last piece I want to talk about is process.
Having a process for planning and review means you are following a path that guides you as to when you should be doing what’s required to check you are on track. A plan is as only good as the information you have at the time, if things change you need to move with it so a process of review of how things are going are crucial.
Regular Check Ins and Lessons Learnt as part of your Business Strategy
I’d put this into two buckets – regular check ins and lessons learnt. Regular check ins are all about knowing you are achieving what you set out to do with your sales and profit and if you’re bang on target that’s perfect! If you’re over achieving why is that and what can you do to maintain momentum? If you’re under achieving what has changed versus your plan and how can you drive your sales a bit harder? Doing this weekly is ideal because you spot trends quicker and take action quicker, getting this in as a regular process for your business will keep you flexible.
Lessons learnt are the big ones and doing this quarterly means you can assess the success of the actions in your strategy and take the learnings of why it has been so good (or not so good) and use that to build your growth on. You can apply a lessons learnt to any area of your business and get deep into what’s happening – this will throw up opportunities for change that will form new strategy or updates to your current plans.
In summary, you can find opportunities to work on in the key areas I’ve mentioned and track their progress regularly in how they impact your sales. You can also mitigate risk to your business by finding issues or weaknesses in how things are done and then dealing with them so they become opportunities for you.