Starting Your Business

Not a week goes by that I don’t get an e-mail from a budding entrepreneur asking advice in starting a new business. So I thought it was time focus on some of the key elements that make a new business venture a success. By the way, if you currently have a business don’t tune out because in the economic downturn such as we are experiencing today, many of these foundational basics can help to strengthen your business as well.

Too often people start a business with a good idea or product that they feel would be successful in the market place. A few succeed, but many invest so much time, effort and money in their product that they forget about the basics.Consequently, a good product or service sits unused because insufficient planning has occurred prior to its launch. Here are seven areas that all new companies should consider before they start offering their products or services.1) What are the needs of your customers, and how many customers do you expect to have?Carefully consider your potential customers. In relation to the product or service that you are about to offer, what are the needs of your potential customers. For instance, when someone buys a shovel, his or her need is for a hole or ditch. The shovel is just the implement required to fulfill the need.Try to get an idea of how many customers there are in the region that you expect to service. Try to find out as much as you can about them; where do they live; how old are they; what are their interests, what price are they prepared to pay for your product.2) How will your product satisfy the need of your customers and how many other companies are offering the same product or service?Having determined the need of the customer, and the size of your potential market, it is now time to look at your own product and others like it in the market.It is important for you to consider what will be your ‘unique selling proposition’ or in simple terms the message that you will communicate to your customers.How many other products are already in the market? If you are competing with several other similar products then it will increase the amount of effort required for you to enter the market effectively. Effort can also mean financial investment. It is important to remember that it will take time for you to capture a share of the market – later in this article we will look at how to maintain it.From the answers to the first two questions you should be able to predict your market size. From this you should also be able to determine the number of sales that you will need (market share) in order for you to operate profitably. In order to determine this you will need to know your margins. Be realistic about your projected turnover. Often businesses think that they can sell a thousand units a month only to find they sell one hundred initially and only climb to a thousand after a year of trading.3) What is the message that you want to tell your customer?What makes you different from your competitors? Have a look at all the advertising and promotional material of your competitors and see what they are saying about themselves. What will make you different from them? Is it the product, location, customer service, price or some other aspect that will ensure you stand head and shoulders above the rest?Your unique selling point will be a statement that you can use in all your marketing material. It should motivate your customer to buy from you rather than your competitor. It may be that you have more than one message that you want to tell your customers.4) How are you going to deliver this message to the potential customer and how much will this cost?Having determined the who, where and what (who your customer’s are, where they are and what you are going to tell them) you are now in a position to decide how you are going to deliver the message. There are many choices including direct marketing, advertising, public relations, seminars, newsletters, etc.There is no simple rule to help you decide which of the above to choose. The aim is to choose the right method that will generate the lowest cost per sale. For instance, if you spend $1,000 on an ad and got four responses but only one sale then the cost of that sale is $1,000. If you spend $4000 on a direct mail campaign which generated 40 responses and results in ten sales then it is a better alternative. It’s all about value!However, if you had placed a second or third advertisement, then your awareness may have gone up and by the forth ad you may have generated 40 responses and 10 sales. The only advice is to choose a strategy and stick to it. Don’t spend little amounts in lots of different places. When choosing the right strategy, it is important to reach as many people as possible, but you must reach them in the right place at the right time. Editorial coverage can often be a very cost-effective method. A single news release can be sent to many publications.5) What process do you have in place to take care of your customers when they come to purchase your product and after they have brought?Think of all the money you have spent to get a potential customer to walk through the front door. Too often, the customer’s experience during their first contact is not managed. They are left waiting, a quote is promised but not delivered on time, a promised meeting is not kept, or the receptionist just isn’t friendly. The customer leaves, not wanting to return. Not only have you lost an immediate sale but you have also lost several future sales and probably a few referrals as well.Managing the experience of a customer is crucial, and if you can’t do this properly then the success of your business will always be an up-hill battle.6) Keep a database so you can get to know you customerAn effective database is one of the most powerful tools that any business can possess. This configuration of names and details is a wealth of information that can be used to generate many additional sales. There are many very effective software programs available today such as ACT!, Goldmine, Outlook, and others.The more you know about your customer the better your relationship with them can be. The better the relationship, the more likely you are to get repeat sales and referrals.7) Finally, consolidate your marketing, production and service activities into a business plan.This plan should reflect the realistic prospects for the business. It should be broken down into quarters (three month periods) and outline the activities that will take place, the anticipated resources required and the associated costs. Most experts recommend that you have funding for the activities for the first year. This means having some of your own financial resources and possibly a loan. There are some fantastic loan opportunities available through the SBA and other governmental agencies.

Posted in Business Start-up, Uncategorized.

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