Minimise your Risk- Dont lose your money!
It’s a simple fact that if you gave £10k – £100k to the average man or woman on the street with no business experience to start a new business it is quite likely that within 18 months he or she will have blown the lot….
Typical & True Business Scenario…
A friend of the family who had never been in business but always dreamt of owning her own wedding dress shop suddenly had the opportunity to start her own wedding dress retail outlet after her mother kindly lent her £40,000 to start her dream business.
Typical & True Business Scenario…
A friend of the family who had never been in business but always dreamt of owning her own wedding dress shop suddenly had the opportunity to start her own wedding dress retail outlet after her mother kindly lent her £40,000 to start her dream business.
She quickly found “suitable” premises nearby and subsequently signed up for a long-term contract (as the rent was cheaper that way) and then eagerly visited wedding dress exhibitions to buy wedding dress samples and spend her easily obtained cash.
On visiting her first exhibition she was impressed if not slightly intimidated by the sales reps of these high-end designers and was told she would require a minimum spend to represent their brands. She subsequently spent thousands of pounds on the stock of the latest designs to be used as samples in her retail outlet.
She spent more on stock than she expected as the sales reps for the various designers had convinced her of the great discounts they were providing, feeling extremely pleased with herself that she now had the makings of a great wedding dress business.
12 months later and after many months of hard work and even more money plowed into the business, the wedding shop was making a loss, 18 months later with increasing overheads, advertising costs, and a part-time member of staff to pay she had to go back to her previous part-time job; the shop was now making an even bigger loss.
The “greatly discounted” sample wedding dresses couldn’t even be sold for what she had paid and she was now starting to panic, reducing the prices of dresses as next season’s “new fashions” had arrived. There was an impending feeling of doom and the possibility that she might soon have to close the business and wave goodbye to the kindly £40,000 investment from her mum.
So her business plan was to open a retail outlet fill it with stock and wait for the customers to roll in. With a little more business acumen and experience, how could she have improved her chances of success?…
In the first instance, there was no real research that took place to determine the market demand or competitor analysis. The first thing we do with all of the businesses we work with is run our “has it got wings” test to ensure business planning & strategy has the best possible chance of success.
If you she had a little more business experience and confidence she would have been less intimidated by the sales rep and negotiated far more favourable terms, realising that the suppliers have competitors also, a little more business savvy she could have played them against each other. And was there a need to buy all of the dresses that in the end she struggled to get rid of?
Did she need to invest in premises? Could she have potentially operated a mobile or online version of the business? Delivering dresses directly to customers’ homes instead? All of these potential avenues would have minimised risk and determined the real demand. If a business has real momentum you can always invest and grow with demand.
In complete contrast take a read of the following story of RightNow Technologies- a company started by Greg Gianforte- ther’s a sign on their wall with the quote “Nothing happens until somebody sells something. In other words, sales is where your business begins. You don’t have a business until you start selling.
In 1997 RightNow began as just an idea for a product. And the only thing that could make the product real was a sale. That year the Internet was just starting to boom. However, a lot of companies did not have a good way of responding to customer inquiries through their websites. Most of their software solutions seemed to be homegrown and rather ineffective. So Greg tried to imagine what kind of software could respond automatically to customer inquiries. One by one he made a list of features he thought would be central to the product. Then he hit the phones.
Greg called hundreds of companies and asked to speak to the customer support manager. He described the software and emailed the specification, just one page, nothing more. Then he asked them whether they’d be willing to buy this product for their company’s website if it were available.
A core minority said yes, they would in principle like to buy such a product. Most companies of course said “no thanks”. But far from being despondent, Greg saw in this response a real business opportunity. When a potential customer declined, Greg went into fifth gear and started to listen really hard. The customer would be asked, “Why not, may I ask?” and then other core questions: “What features do you really need? What additional features would it take to really make you buy this software?” Then the managers would tell him. Greg would then add the customer’s required features to the specification list of his yet non-existent hypothetical product- and put that customer’s name next to it.
Reactions to this “pre-sell the product” strategy yielded other instructive surprises. Some of the software’s features that had seemed likely to be snapped up by the managers aroused nothing but indifference. These were dropped from the specifications, an action that saved many hours of unnecessary and pointless development work. The beauty of the process was that it all yielded invaluable feedback. All of the favoured features went into the product and all the unpopular ones were discarded.
Has Your Business
Got Wings?
Ever wondered about the full potential of your business?
Are you 100% confident that you have the best possible business strategy in place?
Grow your Business 10x
If you are 100% confident that you have the best possible business strategy in place but your business is swimming in a sea of competition, your marketing isn’t working and you’re struggling to stand out then Time to Fly has been designed just for you.
