STARTERS for a STARTUP !
A successful company starts with a strong “Why”: a reason for being. A “Why” alone is not enough. It needs to connect to the consumer in a direct and continuous way.
One of the most important things a company should emphasize on is the importance of the product or the service that would fulfill the job the consumers hire it for. The second point to note is to avoid the pain the consumers normally suffer wrt that job and also to capture the gains for the consumer.
The following are some of the pointers which could come in handy during the initiation of a company :
1) Customer segmentation : Based on sociographics , demographics or geographics , we could look into defining attributes like common culture or common behaviours within the population. This kind of classification based on relevant differences helps in giving sustainable profits.
2) Channels through which the product or service reaches the consumer : It is quite important to have a rough idea of distribution and sales during the initial stages of business and decide on the kind of salesforce that would be used.
3) Consumer relationships : Establishment, maintenance and growth of relationship with the consumer can be everything from after-market support to marketing and direct sales. It is about how the relationship is being fed.
4) Revenue streams : If we’re successful in building 1 , 2 and 3, we can combine them to generate sales which is called revenue in business terms.
5) Key resources :They include the physical raw materials , intellectual resources like patents, property rights etc and financial resources (money through sales) which will fund the physical and intellectual resource requirements.
6) Key activities :The key activities for any business would include maximizing their network and invest in R & D activities to keep improvising the product.
7) Key partners : Apart from the partnership with whom the business should form, so that their revenue and marketing improves, the partnership with Government regulations is also a major consideration.
8) Cost structure :The key activities, key partners and key resources determine the cost structure. For product based businesses, R & D is the major resource invested upon where as, for service based businesses, payroll for employees is the major investment.
9) Accounting is about identifying, recording and presenting information so we know where we stand and where we should be allocating our resources.
Accounting equation :
Assets — Liabilities = Shareholder’s equity
This should be a positive figure so that the company can be called successful. If negative, the figure is enclosed in round brackets denoting that the company is at loss.
10) Horizon scanning helps in the visualisation of where exactly our business is heading at.
Michael Porter developed a model in 1979 and companies still use it to evaluate an industry, to come up with objectives and strategies to take advantage of key factors and trends.
He names four main forces that act as inputs:
1. Buyer Power : looks at factors such as the number of buyers, if buyers are price sensitive and how concentrated their buying power is.
2. Supplier Power : concerned with how much leverage a supplier has in the industry.
3. Threats of Substitutes : Sometimes, consumers may look for substitutes to the product and they might go for it (ex : redbull instead of coffee)
4. Threat of New Entries : Sometimes, there could be competitors to our business and we must take that into account as well.
Leading to the fifth force:
5. Competitive Rivalry : This force is the resultant of all the above forces combined.
There are so many tools and analysis theories which could be used to consider the feasibility of our startup in the initial stages itself so that we’re confident . Like the saying goes : “Well begun is half done! “
