To Be Successful In Small Business, You Have To Do Your Homework
by Dominic Basulto, contributing writer
While it has never been easier to start and launch a new company, that doesn’t change the fact that you still need to do your homework before starting a company. In other words, you need to spend some time coming up with a business model for your new venture, outlining a potential strategy for your company, and then coming up with a tactical plan to execute on that strategy.
The starting point for any business is coming up with a business model. In other words, how do you plan to make money with your new product or service? The really exciting part about the Internet is how it has opened up many new business models for entrepreneurs that were simply not possible in the old analog world.
For example, consider the “freemium” business model, in which a business gives a way a service for free to a core group of casual users, but then charges a premium price for all the “power users” who need expanded functionality or capability. Most software today, for example, is based on this freemium model. It costs nothing to set up the software and get a basic version of it running, but if you want the “really good stuff,” you have to move to a new premium tier of service.
Another business model to consider is the “subscription” model. As the name implies, it means that you charge a subscription for a certain product or service, thereby ensuring a constant, recurring cash flow for your business. Think about the way you pay for Netflix or any other digital service – you pay a monthly subscription rate. Where things get really interesting is when you move this subscription model to the physical world, and charge a subscription for a physical delivery of products. For example, think about wine clubs, and how you subscribe tin order to receive a constantly new set of wines every month. You’re going to make a lot more money operating an online wine club than trying to sell wine out of a retail storefront!
To be successful in small business, you need to have a long-range plan for the future. If you are simply reacting to events as they happen to you every day, you are not going to be successful. If every day at the office feels like an emergency “fire drill,” where you constantly scrambling to get things done on time, you are also shortchanging your chances for future success. The solution here is to develop a short-term, mid-range, and long-term strategy.
You can think of strategy as a sort of overarching vision of what you are trying to do. It suggests the tactical steps required to fulfill the strategy, but is sufficiently high-level that everyone on your team can easily understand it.
For example, think about the world of sports. In football, for example, the offensive coordinator, the defensive coordinator and the head coach will meet to discuss a “game plan” for the upcoming week. Based on the opponent they are playing, the skills and talents of their own players, and any injuries or other factors, they will decide how best to deploy their players and attack the opponent. The game plan might be something like, “We’re going to establish the run early and try to control time of possession, to keep the other team off the field. We’re faster and quicker than the other team, so we’re going to run wide instead of running right up the middle.”
The world of business is, in many ways, similar. Instead of an offensive coordinator, defensive coordinator and head coach, there’s the VP of marketing, the VP of operations and the CEO. Instead of a game plan, there’s the “quarterly plan.” And so a strategy for a business might be something along the lines of, “We’re going to focus on the high-end, premium market. All of our rivals are selling to demographic X, so we’re going to sell to demographic Y. Our key marketing strength is social media marketing, so we’re going to really hit platforms where this demographic is hanging out.”
After outlining the strategy, it’s time to consider tactics. You can think of tactics as the daily, everyday steps that you are taking to execute on the much broader strategy. Thus, if your strategy is to use social media marketing as a low-cost, high-impact way to reach a certain demographic, then your tactic might be use to Facebook and Instagram on a regular basis. You can then get even more granular, by establishing how many times per week you are going to post on Facebook and Instagram, what type of content you are going to post, and what your calls-to-action will be on these social media platforms.
Getting the advice of a business coach
For each of these steps – developing a business model, creating a strategy, and coming up with a tactical plan to execute on that strategy – you can make the process much easier by turning to a business coach or mentor. This is especially the case if you starting out in a brand new industry where you might have limited experience. A business coach can help open your eyes to the nearly unlimited possibilities that you have to differentiate your new business from all of its rivals.
If, for example, you are thinking about opening up a restaurant, have you thought about all the little tweaks and adjustments that you could make to your business plan – such as operating a mobile food truck to feed hungry office workers, running a home prep meal kit business on a subscription basis, or running a catering side business?
Moreover, a business coach can help you optimize every tactical step that you are carrying out. You might have the perfect business model and a well thought-out strategy, but you might need a little bit of help getting all the tactical steps right. This is where a business coach can play a very important role, helping to streamline different business processes, and providing valuable financial benchmarks that you can use to guide your business moving forward.