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Business Start-Up

Small Business Design – Is It Necessary?

I’d better make it clear what I mean by small business design. It has little to do with website design or graphic design.

What I mean by small business design is carefully planning out:

  • Who the business will serve.
  • Why the business exists.
  • What benefits the key stakeholders of the business will get – how customers will benefit, how employees will benefit, how suppliers will benefit (including finance providers) and how the owner will benefit.
  • What the business will do.
  • Where the business will operate.

And then building a business that turns the design into reality.

Perhaps less obviously business involves a similar group of negative answers:

  • Who the business won’t serve.
  • What pains and penalties you won’t allow the key stakeholders to suffer.
  • What the business won’t do.
  • Where the business won’t operate.

Business design is about focus and clarity and that’s particularly appropriate in a small business.

Nearly all small businesses have limited resources and like sunlight through a magnifying glass, great power comes from concentrating energy in one small area.

Quoted failure rates for small businesses are terrible and while I feel these are often exaggerated by business advisers and consultants to sell their services, the fact remains that many small businesses fail in one of two ways:

  • A public failure when the business goes bankrupt and creditors and investors lose money.
  • A private failure when the business is closed by the owner after an unprofitable struggle. Third parties don’t lose money but a business owner often loses his or her life’s savings, suffers a huge blow to their pride and is forced into a job they don’t want.

Why does this happen?

Often because the business is managed in a haphazard manner.

There’s no clear business design which focuses attention on the right things and avoids distractions that don’t fit.

Without a clear small business design, the owner is likely to jump from one nice sounding initiative to another, either at their own whim or that of marketers with a new shiny money-making button.

If you’re an email inbox victim and you find your agenda set by what you read first thing in the morning, you’ll know exactly what I mean.

It’s the difference between one housebuilder working to a clear set of architect plans and another who makes it up as he goes along, on a whim and influenced by what he saw each morning on his way to work.

The second is pretty scary if you’ve got a financial interest in that house. It may turn into a masterpiece but the odds are that it won’t and it will take much longer to finish since the builder keeps knocking down what he’s done and starting again.

It’s the same with a small business.

As the business owner, you have a huge financial stake in its success but if you don’t have a clear business design, you’ll keep undoing the progress that you made yesterday because you’ve changed your mind.

My advice is to get clear on the business design you want and what it takes to build it. Be intentional.

When should you start working on your small business design?

First choice, yesterday, second choice today.

Not tomorrow… because there’s a danger that tomorrow never comes and your business design is much too important to leave as one of those “nice to do when I can find the time” activities.

Business design is easiest when you’ve got a blank page to work with – when you’re thinking about starting a business and all the options are in front of you.

It’s harder – but still essential – when your business is up and running.

Yes change has to be managed and yes some people involved in the business may not like the change but many more will love it because their jobs are more secure and enjoyable if your business is well managed.

A business designed to fill the needs of a particular group of customers will be able to develop special expertise, skills, products and services which raise it out of the ordinary and into the extraordinary.

I asked at the start, “is small business design necessary?”

I believe it is critical if your business is going to be as successful as you want it to be.

in 2 – Your Inner Game, Business Start-Ups

One Size Fits All & The Myth Of Procrustes

The opposite of a niche marketing approach is to use the philosophy of “one size fits all“.

To understand how silly this is, we can go back to the Greek myth of Procrustes.

Procustes was the son of the sea god Poseidon, and he had a stronghold on the sacred way between Athens and Eleusis. He had a bed that would fit all sizes of people.

Unfortunately it wasn’t the bed that was special but would he did to his victims.

Those who were too short were put on the rack and stretched.

Those who were too tall, had their legs chopped off.

There are two options in business.

Adapting your product or service to your customers through bulls eye marketing. This is niche marketing.

The other option is to expect customers to fit themselves around your product.

And just like staying with Procustes for a night, it’s not an appealing offer when you understand the true facts.

The Greek myth makes it obvious that a one size fits all policy is wrong.

But it’s a mistake new businesses make time after time.

Why?

Greed.

The business owners don’t want to say “No” to anyone.

But it’s not attractive or magnetic.

Just like a personal dating ad saying “any woman will do” smacks of desperation and turns off would-be suitors, a business offering a “one size fits all” is turning away everyone who wants something special.

in 3 – Your Strategic Positioning

Differentiation & Business Start-Ups

Is differentiation and how you will attract and convert customers a vital issue that needs your attention while you are thinking about starting a business or is it something that you can afford to leave until your business is more established?

The Role Of Differentiation In Business Start Up Planning

This is one of those irritating questions where the answer is “it depends”.

Differentiation is about establishing positive reasons for customer preference in the buying decision.

In my article, Will Your New Business Start-Up Succeed? I looked at the three big risks that every business must face and conquer.

Differentiation is a key issue in the second risk – can your business survive the competition?

If You Don’t Have Any Competitors?

If you’re selling into a very clear need or want and you are in the very lucky position that you don’t have any competitive rivalry or threats from close substitutes, then differentiation isn’t a core issue that needs to be tackled in your initial business start-up planning.

You can focus more on the demand risk (and whether there is enough demand for the business to be viable because there might be a good reason why this opportunity has been ignored) and the capability risk.

However, your success might attract competitors and at that stage differentiation and defending your market share become critical issues.

If You Do Have Competitors

If you are competing against competitors then there’s only one occasion when differentiation isn’t a critical issue for your start-up business planning. That’s if demand is much larger than supply and you confidently expect that situation to continue for the foreseeable future.

Few of us are in that situation.

Usually we have spare capacity and so do our competitors. Winning a customer increases our profits and losing an opportunity reduces their profits. If competitive rivalry is intense, then price wars can easily develop unless customers’ bargaining power is reduced by forcing them to make a choice between products and services that aren’t commodities.

If you’ve got competitors, you need to be thinking about target marketing and about what it takes to win business rather than just get in the game.

That means that you’ve got to have a very clear differentiation strategy from the very beginning.

And as you’re clear, you can build it in to everything your business does, inside and outside its boundaries. Your differentiation strategy has a big impact on what you say in your marketing and in how you structure and manage your business.

in 3 – Your Strategic Positioning, Business Start-Ups

Will Your New Business Start-Up Succeed?

Have you ever seen the TV programme Dragons’ Den where entrepreneurs and inventors pitch for real money from multi-millionaire investors?

The Dragons only have a short time to decide if they are going to invest based on whether they think the business that is being pitched to them will succeed or fail.

How do they do it?

How can the Dragons or any other experienced entrepreneur or investor decide if a business is going to succeed so quickly and especially if the new business start-up has little or even no track record?

Or how would you do it if you were in their place, listening to an eager and persuasive pitch from an ambitious entrepreneur eager for your cash?

I look at three major risks for new business start-ups and any business that hasn’t really established its position in the market:

  • Market risk – is there demand from customers and clients? Does the product or service solve a pressing problem? Will people be willing to pay for this solution to a problem?
  • Competitive risk – can the business survive competition? How is  the business or the product differentiated and is that differentiation sustainable?
  • Capability risk – can the business owner and business deliver on the marketing promises? Is he or she prepared to do whatever is necessary to make the business succeed?

Which factor is most important?

They are all vital and you need to make sure that you’re getting three Yesses.

Preferably three loud, proud Yesses.

Demand Risk – Will Customers Buy The Generic Product or Service?

A business operating in a weak market – either with a solution to a problem that no one really cares about or with an unconvincing solution to a real problem – will struggle to first attract attention and second to convert some attention into paying customers.

This is the focus of step 4 your customers and step 5 the future are so important in my differentiation process. It gives you the understanding of what customers want and what frustrates them about the current solutions as well as looking at how those needs are likely to change in the future.

Competitive Risk – Will Competitors Offer A Product Which is Preferred By Many Customers Because It Is Better Or Cheaper?

A business which is uncompetitive or too similar to existing competitors in a strong market will be ignored. If competitors are better and cheaper, then you’ve got huge problems. What are the economics of the business like? Are margins high or low? Is the break even point realistic?

This is the main focus of my differentiation process, from step 3 on your competitors, step 4 customers, step 5 the future, step 7 your differentiation options and step 8 the differentiation strategy you choose.

Capability Risk – Can You Really Deliver On The Promises You Make To Customers?

A business may have a great market and appear very attractive but if it can’t deliver on the marketing promises, then unhappy customers will create chaos and ultimately destroy the brand.

Negative word of mouth can be even more powerful than positive recommendations and the big number of Internet searches for scams shows that buyers have learnt to be wary.

Step 2 of my differentiation process looks at your existing business (or your underlying skills if the business hasn’t started) and step 6  delves deeper after you’ve done the work on looking at customers, competitors and the future.

Putting It Together

Finally, your business may score three big Yesses but if you’re not prepared to do what it takes to be successful because of hang ups about sales and marketing or building a team to do the work necessary, then the business is never going to grow to its potential.

Steps 9 and 10 of my differentiation process are concerned with communicating with staff and the market.

If you’re going to invest your money – or your time and energy – you need to check the market risk, the competitive risk and the capability risk.

One risk can cause your business venture to fail. If there are problems in all three areas, then you’re best not to start.

What Do You Think?

What do you look for when assessing a business idea?

in Business Start-Ups

Will My New Business Idea Succeed?

Entrepreneurs often suffer from having far too many business ideas rather than too few.

It’s something that sets them apart from the rest of the world.

These people see a problem and their imagination fires up with clever solutions that could be big moneymakers.

These serial entrepreneurs need to carefully filter these ideas. [continue reading…]

in Business Start-Ups

What Should I Do Before Starting A Business?

It’s very exciting to think  or even dream about starting a business but you need to get down to practicalities very early on in the process if you’re going to turn your dream into a successful reality. Mistakes made early on can prove to be very expensive to correct.

What Should I Do Before Starting A Business?

1 – Start Your Own Business Diary

It’s a good idea to start a business diary to record your thoughts, feelings and beliefs as you begin the process.

There are two good reasons for doing this: [continue reading…]

in Business Start-Ups

The Lean Startup by Eric Ries

The full title of this book by Eric Ries is

The Lean Startup: How Constant Innovation Creates Radically Successful Businesses

In my review posted on Amazon.co.uk, I gave the book a 5 Stars rating. This means it is Excellent.

Here is my book review.

An essential essential book for start-up entrepreneurs

I read this book years ago but never got around to reviewing it. I’ve just read it two more times in the last year. It is that good.

I see it as an essential book for start-up entrepreneurs. It is packed with important truths. [continue reading…]

in Best Business Books, Business Start-Ups

Summary: Money Hunt: Review and Analysis of Spencer and Ennico’s Book

The book that has been summarised this time is “Money Hunt: 27 New Rules for Creating and Growing a Breakaway Business” by Miles Spencer and Cliff Ennico.

In my review posted at Amazon.co.uk, I gave this summary Four Stars. This means it is Good and Well Worth Reading.

Here is my book review.

Packed with uncommon sense

In this book summary, there are 27 rules for small business startup success.

I hadn’t heard of the original book but this came up on searches and after the third or fourth time, I was intrigued enough to look for it. Reading the reviews, it sounded very good but was expensive, even second hand. [continue reading…]

in Best Business Books

In my review of

A Guide to Avoiding Business Start-Up Failure by David Morgan

posted on Amazon.co.uk, I gave the book just One Star.

Here is my book review.

Doesn’t live up to the title

This “book” is just an excuse for the author to tell his story as an academy study.

I didn’t feel it lived up to the title and was a waste of my time. I don’t like writing one and two star reviews but I can’t recommend this book to anyone wanting to start a business.

There are plenty of good books to help you get your startup right including books that warn you about what not to do.

There are many thousand of business books, you can see the full list of my reviews at Business Books Reviews by Paul Simister (Please click). I've also narrowed these down to a list of the 12 Best Business Books For Business Owners & Entrepreneurs (Please click).

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Don't forget to download and read my FREE Report - The SIX Steps PROFIT Formula: The Simple Rules That Every Small Business Owner Needs To Know available to download at Six Steps Report (Please click).

 

in Other Business Books

What To Do If You Want To Start A Business

Many people dream about “being their own boss” and, perhaps, you’re one of them.

Others find them forced into self employment and starting a business because they were made redundant from what they thought was a secure job and either, are struggling to get another job or don’t want to go through their recent traumas again.

I started my consultancy/training/coaching business in 1995 and I’ve never regretted it even though I had a few nights where I’d wake up in a cold sweat, wondering what I was doing.

The Different Ways You Can Become A Business Owner

There are many different routes into becoming a business owner:

  1. Starting a business from scratch on your own.
  2. Starting a business with a partner.
  3. Buying a business on your own.
  4. Buying a business with a partner.
  5. Buying into an existing business, perhaps because the existing business owner either needs more cash or wants to reduce his or her hours of work.
  6. Buying a franchise.

[continue reading…]

in Business Problems And Mistakes