The Importance of Using Proven Business Strategies When Launching a New Company
by Dominic Basulto, contributing writer
One of the biggest risks in launching a new business is utilizing an entirely new and unproven business strategy. It’s far better to use a time-tested, proven strategy in order to get your business off the ground. The good news is that there are plenty of ways to put proven business strategies to work for you at the very outset of your new venture.
Understand the different business models in your industry
The term “business model” is still very much misunderstood these days. At its core, it just means how your company makes money. And, for every industry, there are proven business models that work. For example, media companies primarily use a mix of advertising and paid subscriptions to make money. Software companies often use a “freemium” model, in which basic software is given away for free, but any premium features require a paid monthly subscription.
Of course, you have plenty of room to tweak these models, or to come up with hybrid versions of these models. This is where a business coach or mentor can play a very important role. He or she can let you know what other companies are doing in your industry, and then come up with clever twists on those models. A classic restaurant business model, for example, could be improved by adding a “food truck,” “catering” or “prepared meals” revenue stream.
Develop key metrics that define success
Many entrepreneurs make the mistake of focusing only on the bottom line. That is, how much money they are making. However, you also need to be thinking about the key metrics or key performance indicators (KPIs) that define success. By tracking these metrics over time, you will have a much more nuanced view of how well you are doing. Within every industry, there are key metrics that all of the top companies use – it’s your job to discover them (either alone or with the help of a coach) and then use them to your own advantage.
For example, let’s say that you are launching a new health and wellness venture that involves a lot of private clients and perhaps a few group fitness classes on the side. Working with a business coach, you might be able to come up with a few metrics or KPIs to be tracking. Of course, there would be the obvious metrics, like “how many people are signing up for 1-on-1 training.” But what about YouTube views of your fitness videos? Or download rates for your new e-book on fitness and nutrition? By understanding where you are doing well, and where you still need to work harder, you can fine-tune your business strategy. For example, you might find that your online videos have turned you into a mini-YouTube sensation, and you might be able to use social media more effectively to market your brand. Instead of burning through cash by running ads in newspapers, you could save money by utilizing social media.
There’s a good reason why some of the most popular business bestsellers of all-time have been written by business leaders reflecting back on how and why they launched their companies. It can be fascinating to read how a world-famous business actually started in a garage with no real business plan in place, or to find out all the mistakes and wrong assumptions that a “genius” CEO made in the very beginning. However, if you want to avoid all of those mistakes (and also avoid a lot of sleepless nights), it’s far better to put into effect proven business strategies that really work.