What Business Are You In?

Posted: September 11, 2011 by Chuck Matthews in Planning, Startup

This column continues our theme of the importance and value of planning in small, entrepreneurial and family ventures.  Entrepreneurship is the engine of our economy and innovation is its fuel.  It does not happen by accident, but requires planning.  Ultimately, it is the combination of a little planning, a little strategy, and a little luck that rules the day.  Of course, the more you do of the first two, the better your luck will be.

Getting started…

Entrepreneurship continues to emerge as a multi-faceted, complex, social and economic activity.  While it is fueled by creativity and innovation, it must also include a business value proposition. It is the business plan that clarifies the value added and addresses how an idea develops into either a small business or high growth scalable venture.  This includes strong leadership from the founder or co-founders, which balances opportunity, resources, and team; and sets the stage to “chase” the opportunity.

Chasing that opportunity and getting a new venture off the ground involves five overlapping stages: ideation, conceptualization, formulation, implementation, and evaluation (including review and feedback).  Ideas come and go, but the ones that we truly begin to conceptualize into a cohesive vision are the ones that begin to take shape as nascent entrepreneurial ventures.  This vision is what we translate or formulate into our business plan that allows us to implement the plan and deliver value to our customers.  Evaluation is critical and leads the way to future improvement.

What business are you in?

There are four critical questions designed to get us started.  (These are also excellent to review an on-going planning process.) First, “What type of business do you have?” (e.g., wholesale, retail, goods, services, etc.).  This deceptively simple lead-off question, if not carefully addressed, can doom a venture at the outset.  Properly paired with the second question, “What is the purpose of your business?” provides a powerful one-two punch that yields a solid combination for your new venture.  Be precise and concise! For example, the value proposition for Starbucks is not just selling a cup of coffee.  It is selling a coffee experience. These two questions alone can do more to tell the world what you do than any advertising campaign.  Get it right and you are off the launch pad, get it wrong and your business will fizzle.

Once you know what business you are in, you can attack the third and fourth questions: “What is your primary product or service?” and “Who are your target customers?”  Three words of advice here: focus, focus, focus!  Be clear about what you do and equally clear about what you don’t do.  For example, not everyone is going to be a Starbuck’s customer, but everything Starbuck’s does (its products, services, value proposition, etc.) is focused on serving that customer. Also, if you are primarily a business to business operation, your buyer may be different than the consumer of your good or service.  We will discuss sales channels in a later column.  Bottom line: know yourself and your customer.

Building your value proposition…

With this foundation, we can address the next four key questions: What is your reason for being in this business? What is the primary function of your good or service? What is a unique benefit of your product or service? and Who is your competition?

We will explore these next four questions and much more keep you on the fast-track to launching your venture.  Till next time, all the best for continued entrepreneurial success!

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