Business Administration – Choosing a Business
Choosing a Business: There is a very simple list or framework I always use whatever new business I start or project I am working on. I call this my SBP, Strategic Business Plan framework, which I picked up at The Gillette Company.
- Marketing Plan
Mission and Objective
1) Choosing a Business: Mission
One of the most common mistakes people make is to start a business in the wrong industry. There are many ways you can go wrong, whether it is something you are simply not good at, or you are not 100% in it. From a more technical and economical standpoint, sometimes people go into a business just as the economical down cycle starts; this will stack the deck against you. A good friend of mine once told me “find a business that a) you’re good at, b) you are passionate about and c) makes money. Believe me, not an easy thing to do! But take your time to find that “ultimate business proposal” anyway. Your mission should state, what in life do you want with the business? Do you want to help people, solve the world’s problems, what do you want, what is your passion?
2) Choosing a Business: Objective
What is your objective…to achieve your mission in life. For instance if your mission is to “help people with little money to retire”, your (specific) objective could be “to create a business incubator where people with great ideas can start their own business and generate money so they can retire”. It is key to have an objective to work towards. Make sure you set a deadline and an “exit plan”. As we used to say at Gillette, “an objective without a deadline is merely a dream”. Dreams are great but they won’t get you anywhere. An “exit plan” is simply a plan, at the time when you hit your deadline, that will allow you to either close the business, or if you have been successful, sell the business.
Strategy and SWOT
3) Choosing a Business: Strategy
A business plan without a strategy is a trip to a new country or town without knowing how and when to see major attractions. Now when traveling, you may have the time and money to wander about. But take it from me, when starting and running a business, time is money! You don’t want to wander around for months, years to figure out what business you want. Neither do you want to ponder too long what your mission is. And when you finally do know, you need to move along without a solid strategy to achieve your objective. By the time your done you may have run out of money and you’ll have to fold the company. Better figure out what, where and how before you put time and money into a (ad)venture.
4) Choosing a Business: SWOT
SWOT means Strengths, Weaknesses, Opportunities and Threats. I always do a SWOT for any business plan or project I am working on. You want to do research on the topic, which is relatively speaking easy nowadays by utilizing the internet. once you have done your research you create a grid in Excel or Word and outline what the SWOT for the business as a whole, a specific product or service is. That will give you an idea of the overall “risk”, the upside and downside, you may face. To put yourself in context of the business and market you will be targeting, do a personal SWOT. What are your Strengths, Weaknesses, Opportunities and Threats?
Marketing Plan and Budget
5) Choosing a Business: Marketing Plan
Once you have a mission, an objective a strategy and per your SWOT have an idea what you will be facing it is time to put a Marketing Plan together. How are you going to market, communicate and sell your business, your product or service? Will you be doing so via classic marketing, via TV, Radio, brochures and Flyers? Or will you be doing so via the “modern business model” the internet, by utilizing social media, e-mail marketing, affiliate marketing SEO and SEM? To know what channels you will be using it is absolute KEY to know your target market, your target group! Selling cookie to a car dealership may get you a nice order during the holidays, but after that they may not re-order, thus your initial investment has been a waste of money and you have achieved no ROI (return on investment). Selling cookies to a delicatessen store, may get you in during the holidays when everyone is looking for a Christmas present or treat, it will most likely result in a re-order after the Holidays because a delicatessen sells cookies year round.
6) Choosing a Business: Budget
Once you have determined your target market and the channels you will market your product or service to, it is time to determine in detail what marketing activity you will engage in, and subsequently calculate how much the activity will cost you. If you sell a product or service you will of course need to calculate how much it costs to produce that product or service, and determine at what price point you want to position this in the market place. Your revenue minus the cost of the goods you will sell, minus your expenses, for marketing activity, selling expenses and business administration will determine your profit or loss.
In my next articles I will go into more detail how to embrace Business Administration, from the beginning to ensure structure and controlled progression.