Subscribe

Stay tuned to the latest posts by having them delivered to you for free via RSS or Email. Simply Enter your email address or click on the "Subscribe to RSS" button.



OR

Subscribe via RSS

new business

Strategic competitive positioning

 

 

This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in April 2016 and is posted here by their kind permission

 

Attack, defend, innovate or do nothing

 

 

We know that 2016 will continue to be a difficult year. Entrepreneurs I speak to believe competitive pressures are increasing as businesses chase shrinking markets. Price cutting is common as competitors do anything they can to get a slice of the limited business available. Some entrepreneurs may respond to this situation by assuming there will be less income and cutting costs to remain at least marginally profitable. Others will look for new markets or slash prices, and some will simply hope things do not become catastrophic. The problem with all these plans is that almost all competitors will to do similar things, so competitive pressures will be unchanged.

This is a good time to think strategically about positioning your business to get through bad times while increasing your competitive advantage. I suggest you take a deliberate competitive position and I have listed three possible strategies for your consideration, and a fourth which you could fall into if you do nothing. Continue reading

Tenders – timewaster or business generator?

2015-september

 

 

This article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in September 2014 and is posted here by their kind permission

 

 

Should you tender or stay away? Some basic rules

 

 

Tenders are used by all levels of government and many companies to buy goods and services and issue contracts. The total value of tender business is enormous, so an immediate reaction is to get involved. There is a downside as many small businesses and start-ups have experienced. It is entirely possible to submit many, many tenders without success. The direct cost of preparing a tender is high, but the opportunity cost of conventional sales you could have made instead is higher.

Me too

I call these ‘me too’ tender submissions, where you have nothing special to offer, and the company never heard of you. Among the bidders will be existing suppliers, those having specialist skills in the area and those bidding the lowest price because they can. Your chances of success are almost zero. Instead of wasting your time, develop a specific niche expertise or technology then tell potential buyers about it. Your chances of winning subsequent tenders increases dramatically. Continue reading

The one giant deal

2015 April cover

 

This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in April 2015 and is posted here by their kind permission

 

 

Opportunities and risks of getting the biggest deal ever

 

 

What do you do if you get the opportunity of a huge sale, one bigger than anything you have done so far, maybe bigger than your entire business? This is a potential game changer, the opportunity to grow spectacularly. At the same time it is scary. Will you be able to continue to supply regular customers? How will you finance this deal, what will happen if you do not get paid? Can you deliver? The opportunity opens up dreams; all the wished for things you will be able to afford for the business and your family, security for you and your workers…

Best and worst

The best things that can happen are really good. If you make reasonable margins on the huge turnover increase the extra cash can be used to increase competitiveness with additional resources, creative marketing, better buying terms and the best information systems. Once you have executed a large deal successfully, you attract other large deals. Big organisations like to deal with suppliers who other big organisations use, so your business may be at the start of an incredible growth curve.

The worst things that could happen are very bad indeed. Many suppliers have gone insolvent because large customers persisted with unreasonable demands or did not pay. You may not be able to deliver to specification or on time and have penalty or cancellation clauses invoked. If you have personal guarantees to any supplier your lifestyle can be at risk too. Continue reading

Tenders – timewaster or business generator?

2014_SeptemberThis article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in September 2014 and is posted here by their kind permission

 

Should you tender or stay away? Some basic rules

 

 

 

Tenders are used by all levels of government and many companies to buy goods and services and issue contracts. The total value of tender business is enormous, so an immediate reaction is to get involved. There is a downside as many small businesses and start-ups have experienced. It is entirely possible to submit many, many tenders without success. The direct cost of preparing a tender is high, but the opportunity cost of conventional sales you could have made instead is higher.

Me too

I call these ‘me too’ tender submissions, where you have nothing special to offer, and the company never heard of you. Among the bidders will be existing suppliers, those having specialist skills in the area and those bidding the lowest price because they can. Your chances of success are almost zero. Instead of wasting your time, develop a specific niche expertise or technology then tell potential buyers about it. Your chances of winning subsequent tenders increases dramatically.

Before you even get to tender stage you may have to register as a potential supplier. Government departments, municipalities and corporates frequently publish invitations for suppliers to list their companies in particular categories. If you have a highly competitive attribute or niche and are listed you may become one of a handful, or the only company invited to bid when the company needs your speciality. Continue reading

Customer information

2014_AprilThis article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in April 2014 and is posted here by their kind permission

 

A seriously valuable marketing tool – and it is free

 

 

Good customer information held in a structured system will tell you whether customers are growing with you or reducing purchases. It will have a record of every meeting, sales order, complaint, compliment, reference given, products purchased, payment history, budget cycle, nature of their business, basic credit information and key contacts. All of these are stored somewhere in your company records anyway, but are they accessible in an effective customer information system?

If you have a good system you can research target markets, make individualised tempting offers to customers, cross sell products and plan campaigns in target market niches with a high likelihood of success. What a great marketing tool, and its free.

Using the information

One way of using this information would be to list of all customers in a particular line of business, and list which products all or most of them are buying. Now you could do a survey among them to find out how they are using the products, their degree of satisfaction with those products, and any needs which are not being fully satisfied by the products. With this information you can: Continue reading

Marketing on a tiny budget

13 Nov CoverThis article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in November 2013 and is posted here by their kind permission

 

 

You have to tell potential customers what you offer – even with no money

 

 

It is almost a caricature. A new business is launched. The entrepreneur has used all the available funds to perfect products. There is no marketing and consequently no customers and all the technologically wonderful products remain unsold. The world does not beat a path to the door of the person who has the better mousetrap; it continues to buy whatever it has done in the past.

The message is clear – you have to tell people who could buy from you that you exist and why they should consider you. You can do this with little or no money for marketing promotions, but there are some rules.

The first one is to realise that with limited funds you needs to reach the people likely to buy from you as efficiently as possible; you cannot afford to market to people who will never be your customers. It is amazing that this simple piece of logic is so often ignored. Identify who your most likely customers are, and then to figure out the best way to get a marketing message to them with as little wastage as possible.

The right media

Another rule is that you have to use the right media. It does not make sense to advertise wedding dresses by flyers in business post boxes. Instead you must be on the internet – unless you can afford to be at bridal exhibitions or to advertise in specialist magazines. Find out which information sources are used by your target market and then use the most cost effective ones. A useful cost saver is to form an alliance with a non-competitive supplier to the target market. The allies agree to share exhibition or other marketing costs, but they also introduce each other to their customers.

Barter is an ancient and honourable way of saving cost – you print my brochure and I will plan your conference for example. Community service by you and your staff can attract the attention and goodwill of community minded businesses and individuals and it is free. Continue reading

Start-up sales

13 Sept CoverThis article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in September 2013 and is posted here by their kind permission

 

Early sales are vital for start-ups, early bad sales are dangerous

 

 

 

When you open the doors of a new business your immediate thoughts are likely to be about income producing sales. If it is a retail business you will be watching anxiously for the first people to enter the store, restaurant, hairdresser or filling station. If you sell business to business (B2B) you must build new prospects to develop early sales. Expenses mount up, and insufficient sales income means your business could run out of cash and be forced to close before it really got started. Making early sales is that important.

Low hanging fruit

Everyone has heard about ‘low hanging fruit’ and you, the new entrepreneur, should look for those sales which you can most readily close. ‘Low hanging fruit’ is usually understood to mean potential customers which are easy to start selling to, but there is a problem in trying to sell to anybody who will listen. If the prospect is obvious to you it is also obvious to competitors, and they are more established, have customer references and will be more assured than you. They will also be eager to shut out a new competitor.

To really be ‘low hanging fruit’ the prospects should be those which your new business can easily close. This means retail customers who buy rather than browse, and a high ‘strike rate’ – the ratio between sales cycles begun and closed – in B2B organisations. Continue reading

What do they want to hear?

13 March coverThis article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in March 2013 and is posted here by their kind permission.

 

The subject must be important to potential buyers

 

 

 

 

 

Challenge
This entrepreneur was the victim of a horrific motor vehicle accident that left him brain damaged. He has beaten the odds and gained several tertiary qualifications. He asks how he can turn his inspiring story, as well as information about brain injuries into a career as a speaker.

Response
This entrepreneur is very passionate and knowledgeable about his subject and has researched the high prevalence and management of brain injuries. He believes everyone should be aware of this information. He also has an inspiring story to tell, of overcoming huge obstacles on his way to his qualifications. His problem is getting paid speaking assignments.
Many entrepreneurs have products and services in which they believe passionately, and think potential customers should share their enthusiasm, but consumers at every level have the choice of more products and services than they could ever buy. They select those which are important, which may not be the services the entrepreneur believes in so passionately. So they do not come asking for the entrepreneur’s services and that can leave the him bewildered and frustrated. Continue reading

Talents and weaknesses

13 Feb coverThis article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in February 2013 and is posted here by their kind permission.

 

 

Capitalising on strengths and overcoming problems are essential entrepreneurial abilities

 

 

Challenge

This entrepreneur asks if it is advisable to start a clothing business without the ability to sketch or draw designs. She has a good eye for trends and understands the clothing manufacturing process.

Response

This entrepreneur-to-be has identified her major strengths and weaknesses. She then asks for advice about a significant weakness. This is smart thinking. All too often would-be entrepreneurs simply dive into their dreams without evaluating their talents and skills and then become frustrated when they cannot get start up finance, or attract customers because they lack a vital skill or simply do not understand the complexities of the business they wish to enter.

In this case her strengths of having an eye for trends and understanding the manufacturing process are significant advantages  in a business where being the first with a trend is a huge competitive advantage. She worries about her inability to get her ideas on paper, and correctly so. If she cannot overcome this weakness then all the talent for spotting trends cannot be turned into saleable garments. Continue reading

The very first thing

12 November cover This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in November 2012 and is posted here by their kind permission.

 

The first actions can turn a dream into a business – or a nightmare

 

 

Challenge

This entrepreneur has what he believes to be a viable idea for a new magazine. He asks what the very first step should be, in order to bring the idea to fruition.

Response

Of the many things that have to be done to convert an idea into a start up business, which is the most important first step? I suggest there are two equally important considerations; ensuring real passion to launch and run a business, and testing for commercial viability of the venture.

Starting up and running a new business is not easy. It is extremely hard work, risky and unrewarding in the early stages. Start up entrepreneurs work long hours and are confronted with unexpected problems. They need to become instantly proficient in marketing, finance, HR, production, negotiation cash flow management and motivating staff. They risk family disruption, business failure and the loss of substantial amounts of money. Continue reading

How do I get started?

Image: www.freeimages.co.uk

Image: www.freeimages.co.uk

You have the idea, but what are the steps needed to turn the idea into a business

I meet and communicate with many people who have an idea that they think can be turned into a payable business but do not know where to start, and many such ideas never become enterprises, which means no new economic boost or jobs, and we need both to take the focus from large organisations and ever increasing government bureaucracies.

So here are a few steps to convert ideas to enterprises.

Who will buy it?

Without sales there is no business and yet too many start ups have only an optimistic guess at sales income. To reduce the risk of early failure the target market has to be clearly identified, it has to have the disposable income to buy the product or service and it has to be one that the new business can communicate with and sell to.

Break that sentence down into its components and you will see the need for a whole lot of research, thinking and planning. The advantage of doing this is it is easier and less expensive to communicate the values of a product to a tightly defined market and much easier to attract them to the ‘storefront’ – whether that is an actual store, an internet site or a salesperson. Continue reading

Starting alone

12 September coverThis article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in September 2012 and is posted here by their kind permission.

 

Leaving the security of the corporate world to start your own business requires more thought than expected

 

Challenge

A prospective entrepreneur asks how he can make the transition of leaving full time employment in the corporate world to make a career as an independent IT consultant. He does not have enough funds to cover expenses in the early months.

Response

The entrepreneur must have a very clear idea in his or her mind why they want to take this step. Some of the right reasons are a desire to make much more money, to build something lasting, to taste business ownership or to enjoy creativity which is stifled in the corporate world. Wrong reasons include an inability to get on with the boss, grievances about underpayment or a desire to work less. If these or similar thoughts are the reasons for going alone it may be better to change attitude, or change jobs.

Staying alive

A crucial part of the transition from the corporate world into self employment is having or generating the funds to pay for essentials in the early months. This means either having an income stream or having access to money from savings or borrowings. In either case it is wise for the entrepreneur to have a lean, low cost lifestyle, and cut out any extra expenses. Pay off debt, close accounts and trade in the high cost vehicle, but do not cut to the point where there will be pressure from the family to return to the corporate world.

The best strategy is to make these changes well before the start up is launched, and save the excess so that a reserve is available when there is no corporate salary. At the same time initial customers can be developed and serviced out of business hours. Do not take a loan to support living costs. Continue reading

The risk of innovation

12 July coverThis article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in July 2012 and is posted here by their kind permission.

 

How to turn an idea into a business without someone stealing and using it

 

 

Challenge

This entrepreneur has a business idea, which he believes will be profitable. He is not sure who to talk to or how to go about starting up a business based on his idea. He asks if it is possible to secure a patent or other protection to prevent others from taking his idea.

Response

This is a common situation for many would be entrepreneurs with a great business idea. To develop the idea service providers and funders must be approached and this brings a risk of someone using the idea.

Intellectual property protection through patents, designs or copyright may provide some of the answer, but are not always applicable. For instance a patent applies to something that can be represented by a drawing, model or prototype. It must be new and involve an inventive step.  Patents do not apply to computer programs and the presentation of information. Copyright covers written or artistic works and images, but not the ideas underlying them. A legal action against a patent infringer is likely to cost hundreds of thousands of Rand, and could take years to complete. Continue reading

Penetrating the market

This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in April 2012 and is posted here by their kind permission.

 

 

Start ups in small towns need excellent marketing strategies

 

 

 Challenge

This entrepreneur plans to start an event business that will offer wedding and party planning and a catering service offering African gourmet meals with a twist.  He requests advice on marketing and penetrating the limited market in his small town. As an unknown young black entrepreneur he has concerns about succeeding in marketing to a predominantly white and older community.

Response

The first step is market and competition evaluation, to determine if there is enough market, and whether his business could win against established competitors. If either of these are negative then the entrepreneur needs to answer totally different questions.

Assuming this has been done and the market is available, then there is a mix of good and scary news. The good is that he is thinking of how to be different. The idea of gourmet African meals is exactly the sort of unique selling proposition that great businesses are made of.  The scary part is that any market is really hard to penetrate. What is usually in the target’s mind on first approach is something like:

  • I don’t know you, I don’t know your business and I don’t know why I should talk to you;
  • I have never heard of your products, and I am not sure why they should interest me;
  • I have existing suppliers and I am generally happy with them;
  • Now what was it you wanted to sell me? Continue reading

Failing to deal with failure

pic courtesy of imageafter.com

This article was first published in the South African edition of Entrepreneur magazine as an opinion piece.

Eighty percent of all start up small businesses will fail within two years, right? Or is it 94% within a year? Franchised businesses are safer, are they not? But by how much seems to be a closely held secret.

Into this catalogue of failure and uncertainty a large infrastructure of very smart people and institutions devote huge amounts of money, thought, assistance and support to educate and support entrepreneurs to open up new businesses and grow existing ones. Banks vie for attention, great publications have large circulations, business coaching is one of the fast growing sectors. Against these supposed market results I have to ask: ‘why’?

One reason is that we individually experience much higher success rates than those quoted so universally. I have yet to find anyone associated with the SME sector whose clients’ exhibit the level of failure quoted. It seems that the failure rate only happens to the other guys.

Another reason is confusion about what constitutes a business failure. We identify the surviving businesses, not the failed ones. If only 6% of businesses survive and employ staff then what happened to the other 94%. Did they fail? Did the entrepreneurs die, emigrate, remain sole traders or close their companies when they accepted a job offer? Did they merge with another company or relocate offshore? We don’t know. Continue reading