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November 24, 2012 / glennlim thots

Business – 8 aspects to consider when creating a sound Business Model

Continued from previous post:

So once you’ve got your initial idea, and toyed with some initial plans. You’ve got to build yourself a sound total business model. Here are 8 aspects to consider:

1) Uniqueness
Before you worry about upstart financing, marketing or business location, you should begin with an idea – not just any idea, but one that’s unique. A USP (Unique Selling Point). A value differentiation. Ask: what makes your business stand out from the rest? Uniqueness doesn’t necessarily mean you have to invent something, it just means that you have to set yourself apart from the competition. If you’re starting a catering company, say, what will make your catering service different from the rest? These are tough questions, but important ones. The most successful businesses have a strong, unique concept, and a clear identity. Take the time to define yours.
2) Funds
What will your start-up cost be? Every business has some expenses at the start, whether you’re paying for equipment, rent or just basic marketing materials. Make a realistic estimation; you’ll need these figures to obtain a loan or simply to budget if you’re paying these expenses out of pocket.
3) Customer
Who’s your customer? Knowing who will be buying your product or service is vital to your business success – how else will you find your customers if you don’t know who they are? Are you catering to busy professionals, stay-at-home moms, college students, retirees? Define your customer, even if you have to be broad at first. If you’ll be renting a space, make sure the local demographic fits this profile; the real estate agent will be able to provide you with that data.
4) Competition
Unless you’re lucky enough to find a hole in the market, your business will have competitors. Check them out, because your future customers surely will. Competitors can be a great resource to you as an upstart; you can see how much they charge, what marketing strategy they use and the location they chose. Ask yourself: how can I do better than the competition? Use your uniqueness identified in step one to find ways to outdo your competitors.
5) Marketing
Remember step three, where you identified your customer? Now you have to develop a marketing strategy to make sure these potential buyers know about your great new business. With today’s internet capacity, marketing can be relatively low-cost, using online coupons and mailing lists. Brainstorm ideas with friends and family, and look at what your competitors do to get new business.
6) Continuing Cash Flow
Imagine this: business is booming, you’re on a roll and getting in more orders than you ever imagined. But you have to front the money for supplies and other costs, and you’re out of cash – just like that, your business stumbles because you can’t meet demand. This is a classic cash flow problem many new businesses face, and one that can be prevented with proper financial planning. Before you open up shop, prepare a detailed financial plan. Now is the time to plan for your business’ first year, to make sure you can face any obstacle thrown your way – especially financial ones. Don’t overlook the details when starting up a business. It’s the small expenses that have the potential to make or break a great idea.
7) Timing
Timing is crucial, especially for an upstart. Opening an ice-cream outlet in cold, rainy season is a bad idea; opening during a hot summer period can make it an instant hit. Do you expect your business to be seasonal? If so, time your opening to the strongest consumer demand. You’ll come out of the gates with a flood of new customers, customers who will come back for more.
8) Economic Climate
Your business’ success can greatly depend on economic mood: imagine starting a luxury real estate business at the start of the housing crisis. Gauge the state of the economy, and think of how it relates to your upstart: where are consumers’ mind right now? Are they cutting back, spending more time at home, concerned about the environment? Even an economic downturn can be an opportunity if you can meet the mood of the consumer. If your business idea doesn’t fit the current trends in spending, think of ways you can tweak it to tap into today’s needs.
Remember to use the above 8 aspects as an evaluation tool to assess your business model and plans. All the best to your start-up!
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