Many of us dream of a business. Some people start a small business that grows over time due to customer demand for their products or services. They grow based on what they experience and how they manage the supply and demand.
On the other hand, there are folks who gather money first, leave their 9 to 5 jobs and think they will be successful because they have invested some money also because they saw how they came out of a job which was a successful business. Now most of the time this group can’t manage the business properly or would not understand why and how a business becomes successful.
Before starting a business, it is essential to understand key elements of that business. Not understanding the full nature of what a person is undertaking increases the risk of failure.
Whatever position someone is in, there are great business theory lessons that can provide a key ingredient into the recipe of making the business a success. Therefore, it is worth spending a bit of time exploring the overall goals, the vision, mission, and the strategy of a business.
A vision is the answer to the question: What do we want this organization to be like in five- or ten-years’ time?
What are the steps of Strategic Vision?
There are three steps of a strategic vision:
First, decide what business the organization is in
Next, set a long-term strategic course for the organization
Finally, Communicate the vision to the organization’s stakeholders
Organization’s stakeholders are its employees, customers, suppliers, union, management, and all others who have a stake in the company’s operations
Writing down these will force the entrepreneur to think through fundamentals, and provides key insights as to why or what the business is being started with in the first place.
On the other hand, in determining a strategic vision, an organization must first decide what business it is in by answering these important questions:
⦁ Who are our customers?
⦁ What needs of theirs are we satisfying?
⦁ How are we satisfying those needs?
The mission statement is about the here and now. It answers the question: What business are we in today — right now? The mission statement helps owners, employers, employees, vendors, and customers align their thought process on how diligently you are engaged in your business. Some businesses mention their mission statement at least once a day, so they do not forget their way.
What guides the mission statement of an organization?
Three crucial questions to guide a mission statement include:
⦁ Who exactly are we? This is sometimes stated as the target market.
⦁ What exactly is it we do? What customer needs do we satisfy?
⦁ Where are we now? What activities, technologies, and competencies do we use to satisfy the customer?
An organization must establish and then maintain a competitive advantage over its competitors. Let’s look at Porter’s Five Forces to see how to achieve the long-term strategic goals.
Porter’s Five Forces are as follows:
⦁ Threat of new entrants
⦁ Bargaining power of customers
⦁ Bargaining power of suppliers
⦁ Threat of substitute products or services
⦁ Rivalry among existing competitors
What are the strategies to compete the market?
There are some strategies to compete the market. You may consider all or take a few to be successful. These strategies of the business are:
⦁ Reduce costs, to set yourself up for more effective competition.
⦁ Differentiate products or services, so the business stands out of the crowd.
⦁ Focus on refining specific areas or products instead of increasing the line of products.
⦁ Create alliances. Which can increase co-operation, and help reduce price.
⦁ Lock in suppliers or customers.
⦁ Raise barriers to entry in the market.
⦁ Create new products or services.
Are you starting a business by yourself? Is it a local business? or, Is it an online business with an online store only? or Are you a blogger? or Are you inspired to start a marketing agency? Each of them have different direction!
What is the SWOT analysis?
A useful tool for determining the best strategy is the SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
Examples of strengths include:
⦁ Patents
⦁ Strong brand names
⦁ A good reputation among customers
⦁ Cost advantages from proprietary know-how
⦁ Exclusive access to high-grade natural resources
⦁ Favorable access to distribution networks
⦁ Specialists’ marketing expertise
⦁ A new innovative product or service
⦁ The location of a business
⦁ Quality processes and procedures
⦁ Any other aspect of the business that adds value to the product or service
Examples of weaknesses include:
⦁ Lack of patent protection
⦁ A weak brand name
⦁ A bad reputation among customers
⦁ A high-cost structure Lack of access to the best natural resources Lack of access to key distribution channels
⦁ Lack of marketing expertise
⦁ Undifferentiated products or services (that is, in relation to the competitors)
⦁ The location of a business Poor quality of goods or services
⦁ A damaged reputation
Examples of opportunities include:
⦁ An unfulfilled customer needs.
⦁ The arrival of new technologies
⦁ The loosening of regulations
⦁ The removal of international trade barriers
⦁ A developing market such as the Internet
⦁ Mergers, joint ventures, or strategic alliances
⦁ Moving into new market segments that offer improved profits.
⦁ A new international market
⦁ A market vacated by an ineffective competitor
Examples of threats include:
⦁ Shifts in consumer tastes away from the firm’s products.
⦁ The emergence of substitute products
⦁ New regulations Increased trade barriers.
⦁ A new competitor in the market segment
⦁ Price wars with competitors
⦁ A competitor with a new, innovative product or service
⦁ Better access to channels of distribution for competitors
⦁ The introduction of taxation or other restrictions for the product or service
The first two – strengths and weaknesses – are created by the organization itself over time so they are the inside force. However, opportunities and threats are outside forces that organizations can’t control.
Hopefully this gives you a sense of how a business stands out of the crowd and becomes successful.