Thursday, March 17, 2011

So You Have A Business Idea . . . Now What?

imageThis article was written by Barry McKinley, SCORE Orange County Management Counselor

After providing counseling to over 1,700 businesses. I have seen a trend: The majority of potential business owners have not done enough research. For example, I asked one client company which was struggling if they had “shopped” their national competitor who was less than a ½ mile away. This competitor had over 1,000 locations across the country and was very successful. To my surprise the owner said that they “hadn’t had the time to go by”, and then went on to say they had never been in any of this competitor’s locations! It turned out their pricing compared to the national company was anywhere from 10-25% higher and they did not offer a full range of services like their competitor. There is an old saying “you can lead a horse to water, but you can’t force him to drink”! That was the case with this business; the owner lost a substantial amount of money and was forced to close in under a year of opening. That could have been prevented by taking half a day and visiting all of their competitors within a 10 mile radius.

Investigation

Just because you have a good idea doesn’t mean that someone else may not have come up with the same idea, months or years before. The internet will provide an excellent source of reference. Search for your type of business many different ways. It may not show up in the way you describe but that doesn’t mean it doesn’t exist. Look at your competitors’ web sites to get ideas, and to analyze their strengths and weakness. Use their ideas and build on them!

Research Development

Great! Now you know who your competitors are and what their strengths and weaknesses are. Don’t be shy in calling them and pretending to be a customer to get more information and hear their “sales pitch”. Start developing you own reasons for customers to choose you.

Do you know what demographics you are trying to serve? If you are a physical location, is this the best location for your potential customers? It is not uncommon for the big companies to have an employee sit in a parking near a potential site and count shoppers by age, etc. for a couple of days. Cities can provide you with car counts on most main streets. Most cities’ web sites also provide an excellent source of information on its residences, age, race, income, etc. If your business is web based, is it designed to attract the demographics that you will serve? Is the web site easy to use and navigate? I personally make 10-15 purchases a month online and am amazed at how hard some companies make you work to place an order. Make sure you have “potential customers” visit your web site and place orders without any help from you.

Listen

Ask potential customers and business associates as many questions as you can. It continually amazes me how many clients come to SCORE asking for advice and then want to argue about it when it doesn’t match their thinking or business model. Unfortunately many times the same clients come back a year or less later seeking advice on how to close their business. Sadly, this time they are now much more receptive to suggestions. Listen to what people have to tell you, weigh their knowledge and their reasons and then store it in your business resources. Just because somebody doesn’t agree with you doesn’t mean that they are wrong! I can’t count how many times I have heard a client say “Yeah, everybody tells me that!” Hmmmm, think there is a trend?

Funding

To clear up any misconception the banks, government or angel investors don’t owe you anything. If you are looking for a loan they will expect you to have a good credit score, money to put in the deal, assets to guarantee the loan, a proven track record and a good solid business plan. Without those things you can expect it to be very hard to get anybody interested in your business idea.

Accomplishing the (seemingly) Impossible

imageThis article was written by Harvey Mackay, Business Owner, Author and Columnist (Reprinted by Permission)

A college student arrived a few minutes late for his final exam in mathematics.  The room was quiet, with everyone working hard, and the professor silently handed him the test.  It consisted of five math problems on the first page and two on the second.  The student sat down and began to work.  He solved the first five problems in half the time, but the two on the second page were tougher.  Everyone else finished the exam and left, so the student was alone by the end of the time period.  He finished the final problem at the last second.


The next day he got a phone call in his dorm room from the professor.  "I don't believe it!  You solved the final two problems?"


"Uh, yeah," the student said.  "What's the big deal?"


"Those were brain teasers," the prof explained.  "I announced before the exam that they wouldn't count toward your final grade, but you missed that because you were late.  But hardly anyone solves those problems in so short a time!  You must be a genius!"
"Genius" is sometimes just not realizing that something is impossible.


Truly, some feats are impossible.  I don't expect to ever see a person fly without some mechanical help.  I'm not betting on anyone outrunning a high-speed locomotive.  But then, I probably wouldn't have put money on Antonio Albertondo, who swam the English Channel in 1961.


The Channel waters are cold and unpredictable.  Only a tiny percentage of those who have attempted to swim across have reached the other side.  But Antonio, who was 42 years old at the time, swam from England to France, where his waiting friends congratulated him for accomplishing what they thought was impossible for a man his age.


Antonio stopped long enough for a hot drink, and told his friends they hadn't seen the impossible yet.  Then he dove back into the water, swam 22 more hours and made it back to England.  Did he accomplish the impossible?  I vote yes.


I do believe that there are limits to our physical abilities.  But I absolutely accept that our minds have capabilities that we cannot begin to comprehend.  Antonio's physical accomplishment also had a major mental component.  He put his mind to accomplishing the seemingly impossible.


"So many of our dreams at first seem impossible, then they seem improbable, and then, when we summon the will, they soon become inevitable," said the late actor Christopher Reeve.  Reeve's dream of walking after a catastrophic horseback riding accident was never realized, but because of his activism and fund-raising activities, major research breakthroughs for spinal injuries have given hope to many.


While most of us will be asked to perform difficult assignments, not many will be actually expected to accomplish the seemingly impossible.  Some days we may wonder how we'll get all our work done, or catch up, or be successful in the next project.  Those days pass, usually leaving us with a sense of pride that we have greater capacity for achievement than we realized.


What we call progress was once called impossible.  If necessity is the mother of invention, then a positive attitude is the master of the impossible.

A positive attitude leads you to ask "what's possible?" and then follow that question with "what else is possible?"


The Walt Disney Company employs "imagineers" to explore the possibilities and push the limits of reality.  Even though their businesses are built on fantasy and illusion, the effects must all look real and believable.  I believe accomplishing the seemingly impossible is a daily event for this creative and determined company.


We can do this in our businesses too -- and we must if we intend to survive.  If you value your customers as much as we value ours at Mackay-Mitchell Envelope Company, you'll settle for nothing less.  A positive attitude, creativity and determination combine to create genius.


Former First Lady Nancy Reagan recounts a story about the genius of the Greatest Generation.  "Once, at the University of California, a student got up to say that it was impossible for people of Ronald Reagan's generation to understand the next generation of young people.  'You grew up in a different world,' the student said.  'Today we have television, jet planes, space travel, nuclear energy, computers...'


"When the student paused for breath, Ronnie said:  'You're right.  We didn't have those things when we were young.  We invented them.'"


Mackay's Moral: What could you accomplish if no one told you it was impossible?

Strategic Vision

imageThis article was written by Dick Hartl, SCORE Orange County Management Counselor

If I were to draw a “picture” of the future look of my company, what would the picture look like? Another way to ask the same question could be “how does the look of my company translate itself into physical evidence”.

In other words if someone asked me to invest one hundred thousand dollars into his or her business on the basis that it “would be a good bet,” I would certainly ask myself:

Where is this company going??

What would it “look” like down the road?

The answers would help me determine, in advance, if it will be a good bet!

Therefore, I would start looking for physical indicators of this company’s direction and its eventual look. The things that would serve as physical indicators of the company’s strategy, direction, and eventual look include:

+ Its product/services catalogue (current and announced)

+ Its people

+ The markets it serves

+ Its Competitors

+ Its Customers

+ Its Suppliers

+ Its Market Segments

+ Its R & D or innovation

+ Its Facilities

In fact, there are numerous things I could look at for this company, or any other – each of which would serve me as an indicator of the direction and eventual “look” of that company. However from that long list, four items are the true reflection of a company’s strategy, direction, and eventual look:

+ The nature of its products/services

+ The nature of its customers

+ The nature of its market segments

+ The nature of its geographical markets

Everything else that goes on in an organization is either an input to these or an output from these four items. Capital, people, skills, facilities, and technology are all inputs. Sales and Profits are the outputs.

Thus, the most important questions the leaders must ask themselves are:

+ Which products/services do we offer? But more important, which products/services do we not offer?

+ To which customer groups do we offer these products/services? But more important, to which customer groups do we not offer these products/services?

+ Which market segments do we seek? But more important, which market segments do we not seek?

+ Which geographic areas do we pursue? But more important, which geographic areas do we not pursue?

The result of a sound strategic thinking process must, in my view, produce a very clear profile of the kinds of products/services, customers, market segments, and geographic areas that the strategy of the business lends itself to and that will thus receive emphasis, capital, people, skills, facilities, and technology in the future.

There is only one person in any organization who can “drive” the strategic thinking process and that is the CEO / owner of the organization. This is the most important activity that the CEO can do and doing it well will make a significant difference in the future of that business.

Understanding Value

imageThis article was written by John Pietro, SCORE Orange County Management Counselor

When businesses think about how to bring their products and services to market, they often forget to define why their products bring value to the customer. Value is very motivating to your customer and can often give you a competitive advantage. First, let’s define value: Value is Quality over Price or benefits over dollars. What businesses do with these variables will determine the Value Proposition that will be presented to the customer. The customer’s perception of value is all that matters, therefore we had best understand what our current and perspective customers value.

Value does not mean discounting, in fact, discounting often lowers the customer’s perception of value for your products and services. Research has shown that long term discounting de-values brands. Stated differently, the customer thinks less of your products and services as a result of constant discounting.

Ultimately, the customer determines the impact and success of my value proposition, they validate or reject my value offering by shopping and purchasing my products or by buying my competitor’s products. How can we tell how our value proposition resonates with the consumer? We need to talk to current and perspective customers to understand what they want. We then need to develop our product offerings to give them what they asked for. Any size business can do this, it just takes time. People will tell you what they want if you ask, and will respond positively if you provide them with solutions to what they asked for.

Two well known Marketing Consultants, Fred Wiersema and Michael Tracy, have written a book on Value Leadership called The Discipline Of Market Leaders. In this book they define three valid Value Propositions, they are:

· Best Total Product

· Best Total Experience

· Best Total Cost

I’ll briefly explain each:

Best Total Product:

A company sets out to develop a “best in class” product as defined by the customer or target audience. The company does not bring the product to market until the customer validates their product as best in class. These companies often invest heavily in Research and Development. Examples of Companies who have successfully executed this strategy are Apple, Sony Television, Lexus and Microsoft. Small businesses can execute this strategy by focusing on making one signature product be best in class to their target audience. This is the most difficult business model to build, but very ownable and resonates very well with the target audience.

Best Total Experience:

This business sets out to deliver a “best in class” experience. To do this, a company needs to establish the current level of service and experience of the competition. They also need to understand what the customer expectations are. How? By asking the customer. They then build a business model to exceed customer expectations. Not in thought, but in deed. Small business can usually outperform much bigger businesses in the area of service. All this takes is effort and commitment by the business owner.

Best Total Cost:

This model is built to deliver very competitive pricing to the customer. This pricing is available everyday and all day. There is no need to discount because you deliver value every day. This model is built on very special relationships with vendors and suppliers. Examples are Target, WalMart and Costco. This is a very doable model for small business with proper planning. This has to do with careful planning of costs and understanding the relationship between product turn and margin.

The upshot of the value discussion is this: Every business needs to develop a strong value proposition that resonates well with the customer. Why? Because customers choose products and services that deliver value. We know there are different ways to deliver value, we also know that all businesses of all sizes need to have a strong value offering to sustain and grow. Value that is meaningful also provides you with a reason to be. What is your Value Proposition?