Opening Your Business: Challenges and Obstacles
More and more people are thinking about how to start a business nowadays. Such reflections are well founded, because the media reports interesting facts about people who, in a short period of time, managed to achieve great success by starting their own business.
It seems that every person is able to become a successful entrepreneur and realize their own ambitions.
Based on statistical research, 70% of businessmen who today managed to earn significant capital started their own business from scratch. What measures need to be taken to ensure that your business starts successfully and start to generate revenue?
How to achieve the financial benefit of investing in new projects within a minimum period of time
The method of analyzing similar business models of your direct rivals is very reliable. Carefully analyze their strengths and weaknesses and look at what they focus on in order to attract the target audience and the profitability of their organization.
Creating a business is considered a rather complex strategy, which entails the investment of large funds. It is difficult to predict what lies ahead: tangible winning potential or huge financial losses.
To warn your business against this, you can resort to copying the business.
What is a Business Model?
A business model is understood to mean the standard of entrepreneurial initiative that characterizes the connections and components between them. The development of the business model can be attributed to the stage of strategic design.
At this stage, we draw up a schematic description of the business, which is taken into account during the subsequent conduct. This stage is important for clarifying the basic keys to the well-being of the enterprise and choosing the way for its further growth.
Summarizing the above, it can be clarified that the concept of “copy business” implies the creation of a template from a prototype taken as a basis and the further implementation of a new business.
Business Model Structure
It can be represented as a collection of nine elements:
1. Consumer segment
2. Interesting options
3. Sales and distribution variants
4. Customer relationships
5. Profitability
6. Statutory fund
7. Certain activities
8. Main business partners and manufacturers of goods
9. Production costs
Key Steps to Developing a Business Model
First of all, you need to select a field of activity that you will be interested in. The field of study should be clear to you and deliver a pleasant feeling. Show tolerance to the chosen activity and desire to achieve new knowledge in the chosen area of your business.
Secondly, identify the most promising business models in the area of interest and the sample company.
Third, make a detailed analysis and develop your model. Do not forget to describe:
- Organization and arrangement of the workflow
- Projected profitability
- Investment payments
- Estimated payback periods
- Selection of client base and targeting of a certain audience
- Map your commercial territory
- A client offer
- Select the main directions that you can borrow from
- Highlight paragraphs requiring appropriate changes and improvements
- The main indicators of success
- The fourth phase consists of developing a business plan.
- Define your niche and patterns.
If opening a business is based on a copy method, it is necessary to pay special attention to the following conditions:
1. Create a functioning sales area.
2. Adequately evaluate your strengths in comparison with competitors in your particular niche.
First, highlight the points that you first need to pay attention to when comparing the particular organization you choose for your prototype. Depending on what expectations you have for opening your business, these characteristics are:
- Financial regulations
- Scale
- Geographical location
- Product range offered to the buyer
- Counterparty feedback
- Popularity in the market, etc.
You can get the necessary information from the following sources of information:
- Specialized online resources and customer feedback
- Reference literature
- Exhibition events and catalogues
- Internet sites of different manufacturers
- Statements of professionals in this field and your personal observations
By making the final summation of points, you can easily decide on the choice of the institution that suits you as a model taken for the business model.
How to create your business model
The creation of your business model represents a serious step toward the realization of your business. You will be required to collect the maximum amount of information about prototype organizations, since this is based on your personal subjective assessment of the competitors and you can have an erroneous opinion. And your task is to most accurately evaluate the prototype organizations from all sides.
Such studies can be carried out by specially created agencies. In addition, you can independently enter the territory of your competitor using the “Secret Buyer” method. Your sample plan of action is as follows:
1. Compiling a description of the target audience
2. Clandestine buyers often create a visit questionnaire
3. Diversify inspection scenarios
4. Select multiple performers for the role of secret buyers
5. Familiarize them with the detailed instruction
6. With the help of such visits, collect as many important materials and various questionnaires as possible
Do the following to avoid making common mistakes:
- Conduct research on one or two outlets. The minimum number of points must be three or more
- Do not interview customers who do not belong to the target audience
Steps to Creating a Business Plan
A well-designed business plan will help you:
1. Compile your personal data with the expected financial indicators
2. Create a phased distribution of all work processes — production, marketing, and organizational
The business plan should take into account starting capital and subsequent current costs, advertising costs, income generation, financial results, and determination of the point of self-return.
Financing small and medium-sized businesses is a problem that requires an integrated approach. Finding optimal sources of financing is important for all enterprises without exception. The importance of finding optimal sources of financing directly for small and medium-sized enterprises is explained by the following features: 1) resistance to external changes, manifested in the ability of small and medium-sized businesses to more successfully adapt to the changing conditions of the market economy; 2) socio-economic significance, manifested in raising the standard of living; 3) business diversification, which contributes to the development of free competition and crowding out inefficient industries from the market; 4) focus on high-tech areas of production.
Currently, loans issued by banks to individuals “for any needs” are one of the most popular tools for financing small businesses. High competition in the lending market has made the cost of such funds quite acceptable, and the lack of business obligations to the bank removes many risks. Large amounts of loans offered by many banks make it possible to freely finance the launch of a small enterprise in the service sector — a café, hostel, or auto mechanic. Risk — the need to communicate with collectors if the business cannot ensure the planned profitability.
Crowdfunding
This is carried out on the basis of various online platforms, as a rule, to finance a “bright” business with an attractive product or service. For example, the financing of the first 3Dpens model (a popular toy that allows you to create voluminous structures from a thin plastic cord) was carried out through a crowdfunding mechanism. The manufacturing company raised funds from the pre-sale of its yet-to-be-finished products.
Crypto investments
An investment instrument that attracted much attention in the second half of 2017. In the vast majority of cases, crypto investments are used to finance startups in the field of software development. For projects in real industries, the problem is the transfer of significant amounts of cryptocurrency into fiat money. Also, all industry participants note a high risk of fraud. Currently, the crypto investment market is only being formed.
Micro IPO
A peculiarity of the Chinese market is the possibility of attracting funds from the placement of securities on the stock exchange by relatively small companies falling under the category of medium or even small businesses. Micro IPOs are carried out by small industrial enterprises, manufacturers of consumer electronics, industrial equipment, etc. This mechanism enables companies to grow their business rapidly.
Grants
A specific tool best suited for start-ups specializing in the development and implementation of new technologies. Using grants is an opportunity for startups specializing in the development and implementation of new technologies. The use of grants is an opportunity for the state and large companies to build the fastest, simplest, and most transparent mechanism for the development of interesting and promising SME developments.
Some ideas for creating a business with minimal start-up capital
Franchising
Franchising refers to a mixed type of entrepreneurship. A contract is established directly between the franchisor and a small organization that uses the privileges in the sale using the franchisor brand.
In the course of cooperation, the franchisor provides the company with its own technologies, instructs, and assists in the business. An example of such entrepreneurship is the McDonalds Corporation.
Internet
This type of entrepreneurial activity implies the presence of good knowledge in such areas as software, web programming, etc. In addition, it is necessary to understand Internet marketing in order to have experience in this area. And without the proper level of knowledge, you cannot count on luck.
Sale of cosmetic products
A modification of the anti-crisis business may be the sale of cosmetics. Such sales are in high demand among women, who monitor their appearance regardless of age. The winner in this type of business will be the one who will be able to acquire a large customer base.
Manual work
This activity does not require large start-up capital. A minuscule amount may be needed to purchase raw materials. “Handmade” is manual creativity, for example, knitting with spokes and a hook, various jewelry and souvenir products made with their own hands, decoupage, and much more. In general, any hobby can be made a profitable business launched from a zero start.
If you finally decide to engage in entrepreneurial activities, then you need to be patient and confident in your abilities in order to get a good result.
