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new business

Growing to profitability

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 August 2011 and is posted here by their kind permission.

 

A new entrepreneur faces a steep learning curve with no mentoring

 

 

The challenge

An entrepreneur started a website to provide youth with a free service for employment and small business opportunities. The income comes from web publishing and affiliate programs. He has no IT background and has to learn operations, marketing, finance and everything at once. He also doesn’t have anyone to bounce new ideas off.

Response

This entrepreneur, operating in a rural area, wanted to make a difference to young people and small businesses. The web site breaks even but he is frustrated at the slow growth and his own lack of knowledge. This is a near-universal problem with new businesses, the learning curve is both steep and multi-disciplined. Affordable advisors are hard to identify.

Learning and getting advice

Finding appropriate learning opportunities and information while running a new business is a challenge. There are many courses advertised and choosing the right one is crucial for entrepreneurs on tight budgets and with limited free time.

Start with the free information on the internet. Entrepreneur magazine’s website at www.entrepreurmag.co.za is a valuable resource, so is the SME Toolkit (www.southgafrica.smetoolkit.org) and many others. There are many great business blogs which starts ups can follow at no cost including my own at http://marketingstrategy.co.za. It takes time and patience to search for good information, but this is time very well spent.

Entrepreneurs should not be afraid to ask for advice, but only when they have done the basics. Many business people are happy to help but don’t expect them to come up with answers when the entrepreneur has been too lazy to investigate options. Start with a successful business nearby that is not in competition with yours and then ask the managers for assistance. This works well in the internet world, where free advice is a part of life. Coaches and mentors are available for a fee, but set the expectations and budget in advance. Continue reading

What do customers need?

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 August 2011 and is posted here by their kind permission.

Starting a new business to supply an innovative solution needs lots of research

By Ed Hatton

 

 

The challenge

I have been developing a product for the health and beauty industry for the past 2 years. How do I sell and market my product both nationally and internationally?

Response

Many wonderful inventions never see commercial reality, let alone international success so the questioner is wise to ask for advice on the way forward. If the market does not see the value of a new creative concept it will not sell. The inventor may get excited about something that solves one of her own problems, but before launching a start up business she needs to be sure that the market has the same need and sees the value of her product in addressing that need. Continue reading

Starting over

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 May 2011 and is posted here by their kind permission.

 Moving a business to a new location can be like starting all over again. By Ed Hatton

Challenge

An entrepreneur moved his event management and wedding planner business to a new province where no-one knows his business. He needs to attract clients but isn’t sure where to begin. He has been distributing pamphlets, but so far no-one has gotten back to him.

Solution

This entrepreneur had a thriving business doing wedding planning, parties and corporate event management and then he moved to a different province. When he started operations in his new location he realised just how much personal reputation and word of mouth had meant. In the new location he is unknown and potential clients are wary of entrusting important events to him.

The business must be started again in the new location. As before, he has to build a client base and a solid reputation to provide a platform for growth. He has the advantage of being experienced in running events and weddings, so he does not start quite as ‘cold’ as he did originally. Against this are a number of part-time wedding planners and event managers who are established and compete with him for business. Continue reading

Find a gap in the market – and meet it

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 March 2011 and is posted here by their kind permission.

Responding to a need is a great way to start a business, but it is not as simple as it seems

The Challenge

An entrepreneur has recognised that government departments and some private companies often pay their suppliers very late, or make wrong payments. Together with her spouse who runs a human relations consulting firm which is fully accredited with ETDP-SETA, she has the knowledge and expertise to set up policies and train people to fix this problem and so improve service delivery. However she has not be able to form a strong sales and promotion strategy.

Our response

This woman dreams of becoming an entrepreneur while she runs the department which pays suppliers in a large company. She sees entrepreneurs struggling to get paid on time by government departments, local authorities and some large companies.  She knows she could put the right policies, processes and training in place to turn the situation around. Her spouse could do the training and the combined service would enable departments to make payments on time. President Zuma, in his State of the Nation address suggested that this improvement in service delivery was vital, so the need for the service is there.

Who has the need?

This business opportunity looks like a textbook case of identifying an unmet need and having the capacity to fill that need. But, and this is a lesson for all entrepreneurs, first ask who has the need. For instance consider out of order traffic lights. The motorist desperately needs them fixed, but the duty pointsmen earn their living from them. The roads department is judged on performance but has harsh budget restrictions, so they may have mixed feelings. The point is that answering a need may have to include appropriate strategies if the party with the need is different to the party who will pay. Continue reading

Advice for the lifestyle entrepreneur

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 February 2011 and is posted here by their kind
permission.

Growing a business in a niche market
needs a strong understanding of your clients.

Challenge

A young entrepreneur has developed a personal PA service. Her company handles the
personal, social and home management aspects of her clients’ lives. She wants
to market her service to entrepreneurs, as she believes this is her ideal
target market: people who do not have time to take care of daily non-business
related chores themselves. However she is not sure how to cost-effectively
market her service to such a niche client base.

Solution

This entrepreneur has devised a service to support busy and successful people who do
not have the time to manage homes, social activities, gifts, pets, bills,
licenses and the many other activities that are a part of modern lifestyles.

She has identified her target market as successful entrepreneurs who do not have
support systems in place. As a typical start-up the company needs steady income
from contracted clients. Like many entrepreneurs she had developed a website,
and placed a couple of adverts in a lifestyle related magazine, but has had no
enquiries.

I wonder how often I have heard the phrase ‘and we didn’t even get ONE lead from that…’ Remember this: A single advert or
sign that describes your business is highly unlikely to bring sales leads.
Advertising is great at generating enquiries from prospective clients, but only
as a part of a campaign. Start-ups with limited marketing budgets usually need
to find alternate ways of finding prospects. Continue reading

Time to stab the wounded?

CrosshairsAn old saying is that auditors arrive after the battle and enter the battlefield to finish off the wounded…

The events of 2008 and 2009 were a serious battlefield in many business sectors, with lots of failed and severely damaged businesses littering the landscape. A colleague expressed it in these words: “Those that survived the downturn often did so by using their reserves. They now are in business but in a vulnerable position with little or no reserves to fall back on. The ones who had no reserves when the downturn hit are not around anymore.” A harsh analysis perhaps but with much validity in many areas of business.

The euphoria of the successful Soccer World Cup and the air of optimism about the end of the recession is a good time to reflect where your business stands. Are you still skating on thin ice, where any major reversal right now will destroy you? Are you so overburdened by debt you find it difficult to trade? Or are you in a better shape than that, with limited but positive cash flows and some reserves?

If you fall into that latter category you may choose to start right now with a major and aggressive marketing campaign designed to take market share away from those competitors who are worse off than you. Continue reading

Starting a new business

pic courtesy of freeimages.co.uk

pic courtesy of freeimages.co.uk

Starting a new business is an exhilarating and scary step across a line that non-entrepreneurs will never experience or understand. It’s a bit like going solo if you trained as a pilot. Suddenly there is nobody to back you up, nobody to rescue you, nobody to ask. It is the most incredible sense of achievement and excitement, and a bit frightening too. You can create in the corporate world but there is something special about creating a new enterprise that moves the sense of satisfaction into a different league.

The pointers below are there to help new entrepreneurs to reduce their risk and increase their profitability and enjoyment. And to avoid tripping over things that have felled others – I trust they will be valuable.

    • Be passionate. If you believe you supply goods and services that are really great, and you love what you do, you reduce your risk and improve your enjoyment.
    • Don’t be a ‘me too’ business – If you are just another supplier doing the same as many others around then you are likely to struggle. Be different.
    • You will get scared. You will worry you won’t make it, or be afraid you are not good enough. You will be tempted to give up. Get used to all this, it keeps you sharp.
    Continue reading

Twelve reasons why marketing plans fail

pic courtesy of imageafter.com

pic courtesy of imageafter.com

It has become fashionable to discuss only business plans in the entrepreneurial environment. The marketing plan should be incorporated within the business plan, but many business plans provide only a cursory look at marketing. One reason is that many business plans are produced with the sole purpose of gaining finance for an enterprise, and so the focus is on financial projections, staff required and management experience. Once the finance has been secured the plan can be buried with all the other tiresome paperwork.

This is sad, because my belief is that most entrepreneurial failures and businesses in difficulty arise from one simple fact – they do not sell enough! And many times the reason that they do not sell enough is that their marketing and sales is unplanned, and poorly funded, the salespeople are insufficiently trained and the person responsible for marketing lacks either knowledge or clout or both.

As Dwight Eisenhower famously said “Plans are nothing, planning is everything”. The process of marketing planning will force research and debate and question assumptions. It will point to the need to set aside budget and train people. And it will link performance to actions.

Even with a carefully thought out marketing plan there is still a risk of the plan not having the desired effect. In my experience the failure of marketing plans comes from some or all of the following: Continue reading