Why Strategy Matters.

Strategy is crucial for small businesses in New Zealand, the concepts and frameworks proposed at universities and by academics are applicable because it serves as a roadmap for success, helping small business owners focus their resources, adapt to changes, and achieve long-term goals.

Here are key reasons why strategy matters in small business in an ever evolving planet where economies, political leadership and technological advances or changes take place in 2025 in New Zealand and overseas:

1. Provides Direction and Focus

A clear strategy helps small business owners define their goals and prioritize tasks. Without a strategy, it's easy to become distracted by day-to-day operations or short-term challenges, leading to inefficiency and lost opportunities.

It can be as simple as having a strategy for wealth creating and partnering with the right advisers to guide you in the efficient allocation of resources that grow over the long term and beat inflationary factors that erode your purchasing power.

2. Efficient Use of Limited Resources

Small businesses often operate with tight budgets and limited manpower. A well-thought-out strategy ensures that every dollar, employee, and hour is used effectively toward achieving specific objectives.

This is different from operational efficiency, and it is aligned to the innovation of a new business model or the improvement of the existing one to capitalise on new market opportunities.

3. Differentiates from Competitors

In competitive markets, a strategy helps small businesses stand out by clarifying their unique value proposition (see our Value Proposition Canvas for Free to use as a tool for your business).

Whether it’s exceptional customer service, innovative products, or niche market targeting, strategy provides a framework to highlight and leverage these strengths.

We strongly recommend understanding the concept of red ocean and blue ocean strategy whereby your small business competes and is set apart by establishing a new market or creating a new one from an existing one. The book Blue Ocean Strategy is highly recommended for those wanting to understand more about this strategic concepts and learn more about it.

4. Adapts to Changing Environments

With smaller margins for error, small businesses need to respond quickly to market changes - political changes, interest rates, innovation and new technologies, etc.

A good strategy includes contingency plans and fosters flexibility, enabling businesses to pivot when necessary while staying aligned with their goals. This is important when dealing with operations and trying to create efficiencies to keep more profit and cash in your bank account.

5. Drives Customer Relationships

A strategic approach helps small businesses build strong relationships with customers and enlarge your already existing networks. By understanding their target audience and tailoring offerings to their needs, businesses can create loyal customers and word-of-mouth advocacy.

In some ways, as a small business owner one way to drive customer relationships is by keeping constant communication channels open and tell your story to the world because it is more likely than not that you will inspire others to dive into the world of business ownership.

6. Supports Long-Term Growth

Instead of focusing only on short-term survival, strategy keeps small businesses on track for long-term goals. It helps entrepreneurs plan for expansion, invest wisely, and scale sustainably.

This is a paradox and can be a double edge sword. Too much focus on long term planning may lead to analysis paralysis and not taking the immediate actions you have to take to ensure your business engages with customers and clients and makes those operational improvements that allows for the creation of sustainable and profitable business.

This is where your business advisor or coach comes into play, to regain focus on what is important in the short term and long term.

7. Guides Decision-Making

Every small business faces tough decisions, from pricing and hiring to marketing and inventory management. A clear strategy provides a decision-making framework, ensuring that choices align with the company's vision and goals.

Internally, operational and quality control audits are a key piece to align yourself and your small business to rapidly changing environments and how external forces you cannot control shift entire industries of which we are a part of.

At the governance level you need to evaluate your vision and mission - why is it you do what you do. What are the driving forces for yourself as a business owner for being in business and taking on the challenge.

8. Attracts Investors or Partners

Having a clear, documented strategy demonstrates to potential investors or partners that the business has a well-defined plan for success. It builds credibility and shows that the owner has thought through challenges and opportunities.

This is important specially for start ups, those companies aspiring to attract capital to get those projects off the ground investing in R&D, operations and more. A strategy that may disrupt or evolve to add value to investors is one piece of the puzzle the look before they decide to invest not limited to your values, your age and personality, market size, profitability prospects, etc.

9. Improves Accountability

A strategy often includes measurable goals and timelines, which hold business owners and teams accountable. Regularly evaluating progress ensures that everyone stays on track and identifies areas for improvement.

This is so important and cannot emphasise it enough. Having a strategy improves your accountability at the personal and business level. Personally, it challenges you because business is more of a 'mental' sport where you're always trying to move forward making those economic gains while adding value to your customers or clients.

From a business standpoint, depending on your industry you need to be accountable for how the market reacts to your offering and the way you will solve problems for your clients.

10. Boosts Confidence and Morale

A defined strategy (not a static one) gives business owners and employees a sense of purpose and direction. It instills confidence in the team, knowing there’s a plan to achieve shared goals.

While there will be times of uncertainty in the world and industries alike, it is a key part of the leadership role to understand and set a strategy that is commercially sound or likely to yield economic gains to owners or investors, sustainable, adaptable and able to be understood by those people who depend on it to get paid and improve their own lives (i.e. your employees or contractors).

Lastly, failure in business is not a detriment to having a sound strategy, it is a learning process whereby you should be able to take from it the lessons learned and apply it to a new strategy or innovate from the existing one.

In essence, strategy isn’t just for large corporations. For small businesses, in a New Zealand business setting it’s the foundation for sustainable growth, competitive advantage, and resilience in a dynamic marketplace.

Would you like help developing a strategy for a specific small business scenario? Contact us at admin@cmgadvisory.co.nz to set up a meeting to discuss this very important aspect of running a small business.