The most important questions in business

22 Mars 2008 à 12:09

Hello !

Companies fail for a host of reasons. Bad luck plays a role, sure, but disaster usually strikes because of a more fundamental flaw-in the original idea, the strategy, the execution or all of the above.

What entrepreneurs can do is ask the core set of tough questions that govern the fate of any enterprise. Armed with those answers, they stand the best chance of beating some fairly dire odds: Studies estimate that just two-thirds of all start-ups survive the first two years, and less than half make it to the fourth.

What is your value proposition?

This is the single most important question of the bunch. why customers need your product ? you do not have a value proposition. Without a need, there is no incentive for customers to pay. And without sales, you have no business.

What differentiates your product from the competitors'?

Few companies can rely on--let alone afford--clever marketing schemes to separate themselves from the competition. If you want to win in business, you need to offer something tangibly valuable that the competition doesn't.

How much cash do you need to survive the early years?

It doesn't matter how much money your business might make down the road if you can't get out of your garage. Plenty of business plans boast hockey-stick-style financial projections but run out of cash before the good times kick in. (all those busted dot-com companies from the tech boom?) Three words: Mind the cash.

What are your strengths?

Figure out what you're good at and stick to it. An obvious notion, perhaps, but plenty of zealous entrepreneurs lose their way--especially when the world seems so full of possibilities.

How big is the threat of new entrants?

If you're smart enough to spy a profitable business opportunity, you can bet competition isn't far behind. Some barriers to entry--patented technology, a storied brand--are more fortified than others, but eventually someone will find a way to do what you do faster, cheaper and maybe even better. If not a direct competitor, then a substitute technology might take a chunk out of your hide. The trick: building a loyal following before that happens.

How much power do your suppliers have?

Convincing customers to buy your products is tough enough without suppliers breaking your back. Basic rule of thumb: The fewer the number of suppliers, the more sway they have. Take the steel industry, which relies on a handful of companies for its iron feedstock. They would have significant pricing power, potentially crimping steel producers' margins. On the flipside, beware getting hooked on low-cost providers who don't keep an eye on quality.

Does the business scale?

Bill Gates plowed piles of money into developing the first copy of Microsoft Office. The beauty: Each additional copy of that software program costs next to nothing to produce. That's called scale--and it's the difference between modest wealth and obscene riches. Think service businesses, where the need for people grows along with revenues.

What price will your customers pay?

Get this answer wrong and you could leave bags of money on the table--or worse, send customers running into the arms of the competition. Consultants get paid handsomely to help companies arrive at the right price.
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Everything is marketing, & marketing is everything

06 Octobre 2008 à 03:34

Hello,

Your thread is very interesting to me. BTW, I'm interested to know your opinion about the "Sales Myth" according to your expertise.

Regards.