It strongly suggests that “would-be” entrepreneurs should do a business plan. As a result of completing the plan, you will be much better prepared and know whether or not your business idea is feasible. What is the unique of your company? Why will your goods or services appeal to customers? What are the primary differences between your company and your competitors? What are the driving factors to choose your business over another? What is the underlying reason a customer would do business with your company?
You, who have a startup business, need to make a different strategy. The strategy of a big company is not the same as startup. For big companies, the goal is to maximize return on shareholders’ investment and arriving at that means making two fundamental strategic choices:
A. CHOOSING WHERE TO COMPETE
The idea is to pick an industry that is big, growing fast, profitable and likely to remain so.
B. DECIDING HOW TO WIN THE SELECTED MARKET
Two basic strategies work here: differentiation undertaken by a company that gives customers more of what they want, thus boosting their willingness to pay (such as Starbucks) or serving as a low-cost producer whereby the enterprise charges the lowest price in an industry (such as McDonald’s).
A big company’s selection of the right choices can help it earn more profit than its rivals and perhaps enable it to enjoy faster stock-price appreciation. But a startup has a different goal and therefore must make different strategic choices: New ventures face huge odds in trying to avoid perishing and they lack the cash to pay suppliers’ bills and to compensate workers what their labor is worth. The entrepreneurs should make the following six decisions in the right way can help boost a startup’s odds of success:
NUMBER #1 : DEFINE YOUR BUSINESS, VISION, AND (OF COURSE) PICK GOALS
Defining your vision is important. It will control and manage your business. Here are questions that will help you clarify your vision:
a. Who is the customer?
b. What business are you in?
c. What do you sell (product/service)?
d. What is your plan for growth?
e. What is your primary competitive advantage?
This is the reason why would a talented person take a pay cut to work with you, as a new venture. The right mission can inspire terrific talent. Create a list of goals with a brief description of action items. And if your startup business commits to an IPO or acquisition, this could help convince an investor that the firm will make him or her richer.
You need to put more effort into your short-term goals. Often a new business concept must go through a period of research and development before the outcome can be accurately predicted for longer time frames. Create two sets of goals:
a. Short term: range from six to 12 months
b. Long term: can be two to five years
Explain, as specifically as possible, what you want to achieve. Start with your personal goals. Then list your business goals. Answer these questions:
a. As the owner of this business, what do you want to achieve?
b. How large or small do you want this business to be?
c. Do you want to include family in your business?
d. Is there some cause that you want the business to address?
e. Describe the quality, quantity and/or service and customer satisfaction levels.
f. How would you describe your primary competitive advantage?
g. How do you see the business making a difference in the lives of your customers?
NUMBER #2 : CHOOSE MARKETS
The venture could theoretically sell its product to anyone in any market. But, it is not realistic to expect you can meet the needs of everyone, no business can. Choose your target market carefully. Overlook this area, and it is guaranteed that you will be disappointed with the performance of your business. An entrepreneur should pick a market about which he or she feels deep passion and that is big enough to help the firm become a $100 million company (even if the founder only receives 10 percent of it). Get this right and you will be more than pleased with the results.
a. Needs
What unfulfilled needs do your prospective customers have? How does your business meet those needs? It is usually something the customer does not have or a need that is not currently being met. Identify those unmet needs.
b. Wants
Think of this as your customer’s desire or wish. It can also be a deficiency.
c. Problems
Remember people buy things to solve a specific problem. What problems does your product or service solve?
d. Perceptions
What are the negative and positive perceptions that customers have about you, your profession and its products or services? Identify both the negative and positive consequences. You will be able to use what you learn when you start marketing and promoting your business.
NUMBER #3 : FINANCIAL MATTERS
Take the time to invest in preparing financial projections. How will you make money? An entrepreneur needs money to pay suppliers and employees. But it’s also important to maintain control of the venture. To keep control, a company can borrow on its credit card or crowd fund until it has proved that customers will pay for its product. Then the entrepreneur can sell a stake to a venture capitalist to cover the last mile before an IPO.
Then, what is your break-even point? Or how much profit potential does your business have? These projections should also take into account the collection period for your accounts receivables (outstanding customer accounts) as well as the payment terms for your suppliers. A cash flow projection will show you how much working capital you will need during those “gaps” in your cash position. Try to think about these six key areas:
a. Start up Investment
b. Assumptions
c. Running Monthly Overhead
d. Streamlined Sales Forecast
e. Cumulative Cash
f. Break-even
NUMBER #4 : SELECT A TEAM
The entrepreneur can’t do everything! You need to hire and motivate A-level talent. The stock options offered will only help to recruit the talent if the entrepreneur has already built successful startups and provides an emotionally compelling mission.
NUMBER #5 : IDENTIFY YOUR MARKETING STRATEGY
There are four steps to creating a marketing strategy for your business:
a. Identify All Target Markets
Define WHO your ideal customer is or target market. Most companies experience 80% of their business from 20% of their customers. It is better to direct your time and energy toward those customers who are most important.
b. Qualify the Best Target Markets
The purpose of this step is to further qualify and determine which customer profile meets the best odds of success. The strategy is to place your business at the same level as the majority of the buyers you are targeting. It is critical to figure out who your best customers are and how to best position your company in the marketplace.
c. Identify Tools, Strategies and Methods
A market that you aren’t able to access is a market that you can’t serve. Marketing is the process of finding, communicating and educating your primary market about your products and services. Combine tools and strategies, so you could increase your odds of success.
d. Test Marketing Strategy and Tools
Every business has the potential to create problems. So, make time to test all your business assumptions, especially when you are making major expenditures. You may also find inspiration in the marketing strategies used by other businesses. Because sometimes the best ideas are already out there, and free for the taking.
NUMBER #6 : OBTAIN MARKET SHARE
Potential customers don’t buy from a company that’s probably going to fail in six months. So, the startup should do two things to overcome this problem and gain market share: Find a customer who has “pain that has no cure” and deliver “the cure” at a price that makes the product irresistible — what I call a quantum value leap.
NUMBER #7 : RESPOND TO CHANGE
Once customers buy the product in droves, you need to figure out additional products to build and fresh markets to conquer! The entrepreneur should go upstairs to monitor changing customer needs, new technologies and competitors.
You can learn a lot about your business and customers by looking at how your competitors do business. Here are some questions to help you learn from your competition and focus on your customer:
a. What do you know about your target market?
b. What competitors do you have?
c. How are competitors approaching the market?
d. What are the competitor’s weaknesses and strengths?
e. How can you improve upon the competition’s approach?
f. What are the lifestyles, demographics and psycho graphics of your ideal customer?