AUGUST 2006 ISSUE VOL 6 NO. 8 CALIFORNIA EDITION |
10 Keys to Business Success
1.“Most importantly, have the passion for your business.”.
•Confirm that your entire heart and soul is behind the business.
•Insure you have family and friends supporting you.
The Challenge:
Having passion for your business means it is something you may want to
do for the rest of your life. It is not a sideline until the job market
improves. It is not something you can manage parttime while you are looking
for a “real” job. You may
not be passionate about the idea initially, but if you don’t become
passionate as you do your research, beware. Sometimes, your passion will
be the only thing that will keep you going.
2.“Define
your market.”
•Focus on large and growing opportunities.
•Intimately understand your buyers’ wants and needs
The Challenge: A market is a group of buyers that have common buying wants
and needs. Business owners need to understand if the market is big enough
to go after and whether or not it is reachable. Many small businesses
fail to define their market, lack emphasis on customers and groups of
customers (market segments), and how to reach buyers in those market segments.
Your market definition should include market size, growth rate, market
trends, market influencers, number of buyers, buyer wants and needs, competitive
analysis and regulatory influences. Test your definition by meeting with
other companies in your market segment and with potential buyers.
3.“Ensure you have a winning business model.”
•Understand everything that affects your market segment.
•Determine if your business will produce results.
The Challenge: A business consists of a market and a product or service;
not just an operation or a product. You must define both. Export-import
is not a business; rather, “importing decorative candles for sale
by mail-order to wealthy collectors of oriental art” defines a business.
You need to understand how your business
will coexist in your selected market segment. How will your business operate
within an environment of suppliers, manufacturers, distribution channels,
competitors, and buyers?
Put the whole picture together so you know how your company fits in.
4.“Know how to beat your competitor(s).”
•Understand their strengths.
•Exploit their weaknesses.
The Challenge:
New businesses need a creative concept. sometimes they just follow the
pack; thus have no competitive advantage. New businesses cannot ignore
the competition. You must look forward for underserved niches in the marketplace.
The creative concept does not have to define a totally new class of
business, but rather a “twist” on an existing business may
be adequate. Know all about your competitors and clearly understand how
you will beat them. With a product that is uniquely differentiated and
satisfies the buyer’s need, you will win more than you lose.
5.“Create
a winning product or service.”
•Provide what the buyer wants and in the way they want it.
•Have a plan to expand to new opportunities.
The Challenge: There are three strategies for success in dealing in a
competitive environment: lowest cost (not lowest price), best product
and market focus. The first two are difficult to achieve for most small
businesses. The third, focus, requires management discipline and overcoming
the urge to do too many other things. If
you really understand your buyer and know what it takes to win against
competition, your product or service will be easy to sell. Anything else
will lead to failure.
6.“Have a compelling value proposition.”
•Solve a truly important problem with an attractive return on
investment.
•Make sure it fits into your buyer’s priorities.
The Challenge: You must fit within your buyer’s priority list for
planned purchases. The benefit of your product has to be at the forefront
of your customer’s needs. The best way to express the value of your
product or service is to present a return on investment (ROI) analysis.
You should be providing either higher
revenue or lower cost/expense, and it should take less than a year to
pay the investment back. Anything else is probably a “nice to have,”
and is unlikely to win in a market where buyers are only purchasing “must
have” solutions.
7.“Have a targeted marketing plan.”
•Know how to reach your buyer to gain awareness.
•Establish a cost effective lead generation plan.
The Challenge: Select the right way to deliver your message to your potential
buyer: advertising, trade articles, mail or email campaigns, telemarketing,
distributors, value-added remarkets, dealers or direct sales force. Many
companies are over-reliant on franchises as offering a silver bullet strategy
for support and getting started. They don’t sufficiently analyze
what the franchiser brings to the table that you can’t do for yourself.
Franchisees sometimes over-estimate the value of the support from the
franchiser; in that, is it worth the franchising fee and the royalty payment?
Can those costs be made up by efficiencies offered by the franchiser?
Can those costs be passed on to your customer?
If not, the franchisee is at a competitive disadvantage. Those with a
“brand” that can bring customers in the door on “day
one” and provide active business operation assistance, rather than
arms length promises, are particularly worth looking into. Once you have
generated qualified leads, manage them through the entire sales process.
8.“Create the most efficient sales channel
and excellent customer support.”
•Ensure the sales approach is affordable.
•Build satisfied customers.
The Challenge: Establish a sales forecast. Hoping for sales is not planning.
Sales forecasts are based on understanding the buyer in your selected
market segment and on the experience of others in
it. Many new companies underestimate the time it takes to build a business
to the point where it is profitable. As a result, many new businesses
are under-financed and have insufficient working capital to sustain themselves
in the initial growth period or during
seasonal downturns. Being new and small is no excuse for cutting corners
in dealing with customers. Would you go into a shop in the mall with cheap
looking furnishings and lighting? Don’t try to save money there.
Your sales and support efforts should be guided to create a satisfied
customer who is willing to be a reference
to other potential customers and give you repeat business
as well.
9.“Understand
your entire financial model.”
•Establish realistic sales, cost, capital and expense plans.
•Understand cash flow and profit dynamics.
The Challenge: Establish a solid financial plan. Many new
companies are unplanned or under-planned. Planning cannot
deal with all the surprises in the real world, but why be surprised
by things you can anticipate and deal with beforehand? Planning requires
a highly detailed and kinetic vision of the future of the business that
reduces that vision to the language of business, dollars, and cents. A
financial plan is required to raise money from banks and investors in
addition to helping you set financial
objectives. Many new companies try to save money by avoiding the costs
of lawyers, accountants, and insurance agents. One mistake can cost you
many times the small cost of relying on experts. Operationally, the most
important financial dynamic to understand is cash flow. Know how the money
comes into and goes out of your company when the transactions occur. The
penalty for not managing your financials is running out of money and probably
losing your business.
10.“Ensure you have a winning team.”
•They should have the passion for success.
•Attract the best experience and know-how.
The Challenge: Pick the best people for your company. Many new businesses
reach too far in a single step; for example, starting a trucking business
without any prior experience. Take it “step-by-step”. Often
the first step is to get a job in a business similar to the one you want
to start. Learn the business from the inside out. Then start your own
business. With the right experience under your belt, build your team with
people that fill out the strengths that you need to run your business.
Pick only the best people that can get the job done. Avoid hurting friends
and family.
Source: Small Business Administration
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