Starting a business is a gamble. You never know how the chips will turn:
you may hit the jackpot, or break even, but sometime you may lose. You
must make sure that you have the right elements to increase your chances
for success.
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Max Fallek in his book "Finding Money for Your Small
Business" identifies what he calls "money keys" that will
make your business a success. According to him, you must:
1. Have a
Desire to Make Money.
If you want to become successful as an entrepreneur, you must first and
foremost have the desire to make money. To turn this desire into
reality, Fallek cites four factors that comes into play:
- Understanding the costs of doing business. Your profitability
hinges on your understanding of the true costs of your business. By
knowing what it actually takes to run your kind of business, you will be
able to identify the right pricing strategy that will cover all the
costs of doing business.
- Making sure relationships with family and friends do not interfere
with your business. You are in business to do business. Families and
friends that purchase your products or services should be treated just
like any other customer. Sure, you can give them a courtesy discount.
But if you give away the store for them, you will not be in business for
long.
- Hiring the right individuals for the job. If you are hiring
employees, they should be hired for only one reason: they are qualified
to do the job. Do not hire someone simply because he or she is a cousin,
or is referred by a friend. Rather, take them in only if they are
capable of doing the tasks the position demands.
- Placing advertising where it will help you most. The success of
your business will depend on how well you are able to reach your
customers. This in turn will depend on the effectiveness of your
marketing and advertising strategies. However, you also need to
understand that advertising entails cost. Therefore, you must select the
right venues that bring the most return-on-investment.
2. Know all
about the features and benefits of the products or services you sell.
As the owner of your business, you must know everything there is to know
about the products or services that you sell. What are your product
lines? What are currently available? How can a customer use your
product?
However, you must go beyond the physical dimensions of the gift baskets
that you create, the contents of your e-book, or your web design service.
Instead, you must understand the features that offer valuable benefits for
your customers. Keep in mind that you may not be the only one that offers
the same exact products or services. You may have a dozen, if not hundreds,
of competitors fighting for the attention of same customer. You must be able
to convince the customer to give his business to you. As Fallek describes
it, "a good salesperson sells the sizzle, not the steak. But before you
can sell that sizzle, you have to be an expert on the steak."
3. Know how to
get money from the customer's pocket into your pocket.
To achieve this, you must have a deep understanding of your market - who
they are, what is their size, how can they be reached, what makes them
respond and other crucial details about your potential customers.
You must know about their demographic characteristics. If you plan to
start a dry cleaning business in a rural farming area, you may want to
rethink your business because farmers may not find a need to dry-clean the
shirts they use for herding the cattle or toiling the farm. The key is to
determine whether the market size can support your planned business and make
it profitable.
Once you have identified who your customers are and verified that they
really need your type of business, you must then think how best to reach
them. What will make them buy your products or use your services? Do they
respond to coupons? Or do they need a personal presentation or
demonstration? Do they buy your type of product only if they see it being
advertised in the local newspaper? Or would they rather hear about your
business on the radio? Or do they rely on recommendations from their peers,
families and friends?
Some customers respond to hard sell. Others want a more subtle form of
marketing. You can experiment and see what strategy is most successful in
getting them to take their money from their pockets and put it into yours.
Your business stands a greater chance at success if you know how to push the
"hot buttons" of your customers. As Fallek advises, you must
"know what appeals to your customers and prospects."
Why are they buying your products or using your services instead of your
competitors? What sets you apart from the rest of the pack? You may want to
casually ask your clients why they chose your business, instead of your
competitors. Your customers' views and opinions are a gold mine of
information that you can harness to your advantage. Then use this
information to harness a very important ingredient - your sales expertise.
4. Know how
your leading and most successful competitors make their money.
To succeed in business, you need not be the most original, most creative
and the first mover in your industry. In fact, you can make good simply
by following the direction taken by your competitors - AND taking it up
a notch. You can improve on your competitor's pricing strategy, add more
value to your products or services, offer better customer support and
service, even provide a better ambiance to your store or web site.
Fallek cites the example of McDonalds. McDonald's, perhaps the world's
most successful fast food chain, was not the first in its field. When it
first opened, there were already A&W Root Beer, White Castle Hamburger
shops and others. McDonald's simply copied what others did, but went a step
further - and succeeded. You can follow McDonald's example, making sure that
you always improve what is currently offered by your competitors.
According to Fallek, you need to look at various elements of your
competitors. You must analyze the kinds of services they offer - do they
offer gift wrapping, personalized customer support, free delivery, etc. Can
you offer the same? If not, how do you compensate for it (e.g. your
e-business competitor offers free shipping while your bottom line shows you
that it is not possible)? Perhaps you can add a new twist in your service,
and highlight this addition that only you offer.
You should know how they operate their business, including the business
hours and days of the week they are. More importantly, examine their
inventory and how it is managed. If you are in the business of selling baby
gift packages, what kinds of packages are being offered by your competitor?
What are their shapes, colors and sizes? Do they have a separate product
line for corporate and consumer clients?
Knowing these things about your competitor can help you examine your
strengths and weaknesses. It can help you identify how you can market your
business by focusing on what sets you apart, or what marketers call your
"unique selling proposition." Getting all these information may
not be easy; but understanding the factors that contribute to your
competitor's success and using these same factors can enhance the likelihood
of your success.
5. Know how to
find and use somebody else's money in order to make money.
One reality that you have to bear in mind when starting a business is
that your entrepreneurial dreams could easily crumble if you have
insufficient funds to sustain it and make it grow. The ideal situation
would be to have all the money in the world to finance your venture.
Alas, that is not always the case. More often than not, you would find
that all your savings, credit cards, investments, life insurance, home
equity, or sale of personal assets are still not enough. You may still need
to seek out additional financing from other sources.
Your success will depend on your ability to secure resources for your
business. You must know where to find them, and how to get the additional
money that you need. As Fallek says, "the more successful a
businessperson is, the more he or she knows about obtaining the necessary
money for the business." Of course, it wouldn't hurt that you have a
well-conceptualized business with a ready market and a product or service
that the customers really need.
About the Author:
Lyve Alexis Pleshette is a writer
for Power HomeBiz Guides (http://www.powerhomebiz.com).
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