Start-Up Business Strategy

So You Want To Start A Business?

How is your business unique and why will your goods or services appeal to customers? What are the differences between your company and your competitors? Why choose your business over another or why would a customer do business with your company?

The above questions need to be answered and the following steps will get you started:

1) Define Your Business & Vision

Defining your vision is important. It will become the driving force of your business. Here are questions that will help you clarify your vision:

• Who is the customer?
• What business are you in?
• What do you sell (product/service)?
• What is your plan for growth?
• What is your primary competitive advantage?

2) Write Down Your Goals

Create a list of goals with a brief description. If your business is a start up, put more effort into your short-term goals. Often a new business need to go through a period of research and development before the business can be accurately predicted for longer time frames.

Create two sets of goals:

1. Short term: range from one to two years.
2. Long term: can be two to five years.

Be specific as possible, what you want to achieve. Start with your personal goals. Then list your business goals:

• As the owner of this business, what do you want to achieve?
• How large or small do you want this business to be?
• Do you want to include family in your business?
• Do you desire to have employees, or perhaps, you have a strong opinion on not wanting to manage people.
• Is there some cause that you want the business to address?
• Describe the quality, quantity and/or service as well, as customer satisfaction levels.
• Describe your competitive advantage?
• How do you see the business making a difference in the lives of your customers?

3) Understand Your Customer

It is not realistic to expect you can meet the needs of everyone, no business can. Choose your target market carefully. If you overlook this area, and I guarantee you will be disappointed with the performance of your business. Get this right and you will be very pleased with the results.

• Needs: what 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 needs.
• Wants: think of this as your customer's desire or wish.
• Problems: remember people buy things to solve a specific problem. What problems does your product or service solve?
• 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.

4) Learn From Your Competition

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:

• What do you know about your target market?
• What competitors do you have?
• How are competitors approaching the market?
• What are the competitor's weaknesses and strengths?
• How can you improve upon the competition's approach?
• What are the lifestyles and demographics of your ideal customer?

5) Financial Matters

How will you make money? What is your break-even point? How much profit potential does your business have? Take the time to invest in preparing financial projections.

These projections should take into account the collection period for your accounts receivables (outstanding customer accounts) as well as the payment terms for your suppliers. For example, you may pay your bills in 30 days, but have to wait 45-60 days to get paid from your customers.

A cash flow projection will show you how much working capital you will need during those "gaps" in your cash flow.

Research tools to help you do an initial financial analysis of your business. Then write a business plan to test your assumptions and determine your break-even point and the validity of your plan. You should be able to report on key areas:

1. Start up Investment
2. Assumptions
3. Running Monthly Overhead
4. Streamlined Sales Forecast
5. Cumulative Cash Chart
6. Break-even Charts
7. Conclusion
8. Identify Your Marketing Strategy

There are several steps to creating a marketing strategy for your business:

• Identify All Target Markets: define WHO is your ideal customer or target market. Most companies experience 80% of their business from 20% of their customers. It makes sense then to direct your time and energy toward those customers who are most important.
• Qualify the Best Target Markets. The strategy is to position 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.
• Identify Tools, Strategies and Methods: a market you cannot access is a market you cannot serve. Test Marketing Strategy and Tools: the assumptions we do not verify are typically the ones that have the potential to create business problems. Take the time to test all business assumptions.

A Business Plan should be developed as a reality check when you examine the feasibility of your business idea.