Taking the Plunge?
Five Essentials for Entrepreneurial Success
Are you considering entrepreneurship, full-time or as a side hustle? At what point should you decide to take the plunge?
This may be the best time in history to become an entrepreneur. We are in a fundamentally new economy, the Innovation Age, where technology transforms, opening new fields of small business opportunity. Information technology enables small business to compete more effectively and customers are becoming much more knowledgeable and demanding. Meeting the needs of individuals is a small business strength, positioning them for success.
Yet, it is very scary to start a business!
Not only can it be isolating and the work overwhelming, but everything rests on the owner’s shoulders.
I’ve been self-employed since 1984, having owned seven businesses, often with partners. We offer consulting services, software sold internationally, retail, finance, education and entertainment. Four have been sold, the most recent, a destination retail and flower shop located in Jasper National Park. One business trained entrepreneurs, so I’ve reviewed many business plans.
Developing a business plan is a key component in helping small enterprises succeed. Unfortunately, owners often develop their plans by filling in the blanks within a planning format, then blindly follow their plan into oblivion. Plans should change. Besides, it isn’t the full plan, it’s the components within a business plan that count.
These five essentials must be assessed and managed to make a business successful.
1) Your business must fit your life:
Look for fun, joy and supports.
I tour and speak professionally about future success strategies. Parents often approach me after a speech to ask, “What is the best education stream, or career path, for my child to pursue?”
Sure, higher education helps…in the future we’ll be learning a living… but something else is at play. I see constantly across sectors that high achievers, certainly successful entrepreneurs, all derive joy from what they do. No job is all fun, but if the core role is fun for those doing it, watch the results come. So, what career should a young person pursue? Whatever work brings them joy.
A friend who enjoys baking elaborate decorated cakes asked me if he should start a business doing it? I asked him if he’d enjoy decorating cakes full-time? The question prompted him to evaluate his idea in more detail. When he eventually entered the business, it wasn’t as the lead baker.
Try stuff. Find what provides joy. Try to make a business out of that.
Successful entrepreneurs build greater wealth. Yet, they face higher income risks. More unknowns.
Would you feel better if your plan was bulletproof?
No entrepreneur has all the answers. Form a team. Get help for your business weaknesses. It’s tough to make a go of a business when your significant other isn’t supportive. Garner backing from the people around you.
Do you have an idea that gets you fired up? Okay, let’s make your plan as bulletproof as possible.
2) It’s about your customers’ needs, not your needs.
Your business is the needs you satisfy. Period.
We are all walking need bundles, each with differing priorities. My work as a futurist is to determine how human needs are changing and advise clients how to better meet them. For example, world population growth increases demand for food, and 40% of food produced is wasted. So, is a blockchain application that limits food waste really a blockchain application, or a better way to feed the world? It’s the needs we meet that count.
Business Success = Need Satisfaction
Often failure occurs when entrepreneurs assume that if they like their idea, their customers will too. It can be dangerous making these sorts of assumptions, without verification. Usually, verification of customer needs and interest in the idea is accomplished by sampling the opinions of target market customers.
Bob Dylan said it best: Everybody serves somebody. Revlon™ doesn’t sell make-up, it provides hope, with lines of products for different hopes, whether to look younger, or project professionalism. Car companies don’t sell cars, they sell lifestyle mobility, defined different ways by different customers.
Just because you like something doesn’t mean your customers will. Ask them. The key to business success is to identify a growing need for a target customer who cares and provide need satisfaction in a better way than they might otherwise receive it. That’s it, the magic bullet to success: Your better benefit story.
3) It’s all about the better benefit you provide.
This story guides everything: Branding, marketing and sales.
Business and selling success are a direct result of providing need satisfaction. All planning should be through the window of customer needs, specifically identifying a customer base with a growing need and delivering enhanced need satisfaction over other options they could choose. This “better benefit” story is how you compete and your best link to future profit. It is the basis for branding, marketing and sales strategies. It is the core of any business plan.
For any leader who wants to create a vison that motivates, the best motivator is the project’s better benefit goals.
All grocery items require a better benefit to survive. Tide™ is “cleanest”. Cottonelle™ “softest”. The better benefit must shine through. Better benefit recognition turns every sale and helps you outcompete rivals. Better benefits are the only justification for customers to pay more for an item and are the ultimate margin and profit enhancer.
Your elevator pitch should be your better benefit story.
All businesses should start by identifying stakeholders with differing need priorities. And differing need priorities means different potential target customers. By evaluating competitive offerings, you can determine which product/services you could deploy to provide the best match of better benefit to need priority.
Instead of selling jam at local farmers markets, one of our grads sells heritage jam at pioneer village gift shops, with a great story and much better margins. Instead of making steel shelves for any item stored, one grad made shelving dedicated to the car repair enthusiast who works in their garage. His best marketing was setting up his shelves at local race tracks. One of the best better benefit profit enhancers was a college teaching colleague who went to Russia after the Iron Curtain fell and bought up thousands of watches engraved with military CCCP insignia that were intended to be given to senior officers. He marketed these watches to American war vets as an authentic souvenir to commemorate winning the Cold War. Profit margin: 99%.
All new products and successful businesses start-ups must provide better benefits to survive. We teach our entrepreneurship grads to monitor changes to customer needs and competitive offerings, always looking to create better benefits. Profits flow from better benefit delivery to customers who care.
Your story should reflect BENEFITS (need satisfiers). Key is to provide the BETTER BENEFIT message, serving to answer the customer question of “why buy from YOUR business?”
Organization/Product/Service is the who/what you are that offers better benefit(s).
This positioning sentence guides all marketing and sales strategies. It is the basis for promoting word-of-mouth and developing branding, logos, tag lines, slogans, ads, and all promotions and communications. Speedy Muffler™ didn’t start out with “At Speedy™ you’re a somebody”; it started with offering quicker and better customer service than competitors. Strategy guides the creation of slogans.
4) You need to focus on a target market.
But you can have more than one!
There has never been a business that was successful selling to anyone and everybody. Yet, most start-up entrepreneurs resist targeting, resist focusing on a small slice of a market. They want it all. Why? Because new entrepreneurs worry they won’t generate enough revenue to survive, it seems logical to think that the bigger the base an entrepreneur attempts to sell to, the bigger the potential revenue.
No organization can be all things to all people. A car can’t be built to be both the fastest AND the safest. Thicker steel for greater safety means more weight, limiting speed. What specific needs will you deliver better? It’s always about choices.
This blind spot of failing to target is one of the major causes of start-up failure. Contrarily, by specifically targeting a more focused customer base (who really cares about your better benefit) your marketing dollars will be more effective. Less costly marketing and sales strategies will be uncovered.
A better benefit focus means enhanced prices and profit. The only reason someone pays more for an item is that there is a better benefit in it for them. Customers expect to pay more for better benefits. If you offer a solid better benefit, customers actually believe something is wrong if your price is lower. Pricing is not about cost plus a mark-up, it’s about what your better benefit will bear. New entrepreneurs tend to charge too little, not too much.
For those that resist targeting, the good news is that every business is more than one business.
You can have multiple targets! Think of each as separate business opportunities.
Key to success: Matching my businesses to my target markets.
This concept may mean separate marketing messages and methods to several target groups, serving to not only save advertising money, but also to connect more successfully with customers.
If you want to target your market, start with needs. For example, you could segment the car market by concluding that young and old people buy cars. But thinking it though by first assessing needs, more opportunities reveal themselves. For example, which car buyers care most about the excitement of speed? There’s the traditional youthful male sports car buyer, but also two newer markets: empowered females; and baby boomers looking to reclaim their youth. Always start with needs and decide which one(s) you will meet best.
5) A Business Can Go Bankrupt Making a Profit
Predict and manage cash flow!
The minimum requirement for a Financial Plan is a Projected Cash Flow. Just like a personal budget for an individual, a Projected Cash Flow identifies on a monthly basis whether the business will likely have enough inflow of cash to pay all bills. It showcases what financing is required to keep the business afloat until enough cash flow is generated on an ongoing basis. Business have gone bankrupt making money; they just haven’t received it in time to pay out what is demanded. Understanding and managing cash flow is a basic financial skill that all business owners should develop, whether or not they intend to utilize a bookkeeper/accountant.
A Projected Cash Flow shows revenue inflows by month for the first upcoming year and all monthly cash outflows over the same period. The bottom line for each month should show the total cash flow for the month (either a positive or negative number) and the cumulative cash flow year-to-date.
Developing a Projected Cash Flow is not easy, and is something of a guessing game, but your plan is evaluated according to how educated and reasonable the “guesses” are.
Remember, things change!
Your target markets, better benefits and cash flow are moving targets. Success will come if your business offers better benefits over time. Watching for better benefit opportunities and capitalizing on them is key to long-term success. This skill set, more than anything else, will make your plans as bulletproof as possible.
Good luck taking the plunge!
I wish to thank one of our grads, political cartoonist and graphic designer, John Fewings for the excellent artwork that leads this blog. See more from John at http://fewings.ca/
Hope this advice helps you succeed. Future smiles, Jim
Jim Bottomley is a management consultant, entrepreneur, futurist and professional speaker. His sessions are always fun, dynamic and interactive, with great ideas to enhance your success!