I often find that entrepreneurs have a tough time distinguishing between strategy and tactics. Strategy is the what and why of your business at a vision level: where do you want to go with your business. Tactics is the how, when and where – the means to implement your strategy, at an operating level.
My fellow mentor Peter Dublin gave a great example of the difference in a recent mentoring session: cost is a tactic, price is a strategy.
For example, if your strategy is market share, then your tactic is to keep your price low, often volume discounts, or even use a freemium model. Conversely, if your strategy is to be profitable, your tactic is to figure out what the market will bear and make sure your gross margin – the difference in the cost of goods sold and the net revenue – will be sufficient for profitability. Then set the price accordingly.
