High expectations are the key to everything.
I had to pick myself up and get on with it, to do it all over again, only even better this time.
I have always been driven to buck the system, to innovate, to take things beyond where they have been.
Outstanding leaders go out of their way to boost the self esteem of their personnel. If people believe in themselves, it’s amazing what they can accomplish.
There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending the money somewhere else.
SAM WALTON, Founder WAL-MART
"My son is now an 'entrepreneur'. That's what you're called when you don't have a job." - Ted Turner, broadcasting entrepreneur
An entrepreneur is not a worker but a job creator. S/he is an innovator, a dreamer, who has the ability of converting his/her dream into reality. S/he is the one who spots a gap in the market or a commercial opportunity. S/he turns the idea into a marketable product or service.
Here, we will discuss how an entrepreneur converts his idea into a business, what are the factors considered, what a business plan is, what a business plan includes, what challenges an entrepreneur faces and what the common mistakes are.
It is the dream of every entrepreneur to build a company that is built to last. Yet, it is that rare exception of an enterprise that makes the transition from Good to Great. Like an unprotected fawn in the big and dangerous forest, a new business must navigate difficult and challenging terrain as it grows from its early days to maturity. Pierre Omidyar and Jeffery Bezos of eBay and Amazon have succeeded in this transition from Good to Great in the e-commerce market.
To transform an idea into a business, a business plan is required. A business plan helps provide direction, structure and future of your venture; it is a continuous process in itself, a process of results, because even a great plan is wasted if the follow up is not done. A business plan will be hard to implement unless it is simple, specific, realistic and complete. Even if it is all these things, a good plan will need someone to follow up and check on it.
The best example that describes plan as a process is given by Google. Google founded by Larry Page and Sergey Brin with an idea to organize the world’s information and make it universally accessible and useful. Google is still in the beta version and keeps enhancing day by day keeping in mind the consumers needs. It is a process of inventing new things, revising and improvising it.
Planning is a Process, Not Just a Plan
The criteria an entrepreneur need to keep in mind for selecting business venture:* Scalability * Sustainability * Profitability * Environment Friendly * Socially Responsible venture
The Business Plan
The business plan should explain the nature of the company's business, what it wants to achieve and how it is going to do it. The company's management should prepare the plan and should set challenging but achievable goals.
What a business plan should cover
- Business description - What do you plan to do; why are you starting the venture.
- Market analysis - Who will be your customers; what do they want from you. It offers the reader a combination of clear description and analysis, including a realistic "SWOT" (strengths, weaknesses, opportunities and threats) analysis. Define the market and explain in what industry sector your company operates. What is the size of the whole market? What are the prospects for this market? How developed is the market as a whole, ie. developing, growing, mature or declining. It is essential to describe the distribution channel, targeted customers and the price sensitivity of the market.
- Competitor assessments — Who will you compete against; what do these competitors offer.
- Marketing plan— How will you reach your customers. Having defined the relevant market and its opportunities, it is necessary to address the prospective business will exploit these opportunities.
Outline the sales and distribution strategy.
What is your planned sales force?
What are your strategies for different markets?
What distribution channels are planned to use and how do these compare with your competitors'?
Identify overseas market access issues and how these will be resolved.
What is your pricing strategy?
How does this compare with your competitors'?
What are your advertising, public relations and promotion plans?
- The management team - Demonstrate that the company has the quality of management to be able to turn the business plan into reality. Include organization chart.
- Operating plan - How do you plan to implement your idea
- Financial plan - How much money will it cost, and where will you get the necessary funds.
Funding is perhaps the most important issue with budding entrepreneurs. The funds can be either obtained by venture capitalist or from banks. The concept called business incubation has gained popularity recently for providing the funds for upcoming entrepreneurs. Business incubators are the organizations that help entrepreneurs get off the ground through mentoring, funding and other assistance.
- Risk analysis - all the risks related to the new venture should be considered and evaluated. Not only the analysis but also risk managing and risk identification is important. The measures in case of any event should be considered.
- Executive summary - What are the fundamentals of the venture? It summarizes the business plan.
Challenges
Starting a business in itself is a challenge. You have an idea, a destination but no path. You have to make a path of your own. While making the path, there will be many challenges. While making the business plan, you need to be very objective at circling the threats and opportunities lies for your product in the market as it helps to prove that a market exists for your product.
Secondly, in the market analysis, you need to narrow the range of potential customers to those specific ones who are willing and able to buy your product. Although your product or service may meet the needs of a large constituency of potential customers, the goal is to define your target customer as specifically as possible both quantitatively and qualitatively.
To access your competitors in the market is a big challenge. You need to define who your competitors are, and then profile them. You should assess competitors with a critical eye on their strengths and weaknesses compared to your own. It is important to have an understanding of the operations of your competition so you know how you stand in relative terms
Pricing your product is another challenge for the entrepreneur. Pricing strategies are based on the perceived value of your products and services, your cost of doing business, your marketing goals, and expected competitive actions.
Once your product or service is ready for the market, it needs to be distributed in a way so as to get the most visibility and attention. While selecting the distribution network, you need to consider how your product/service will be distributed and over what geographical area. Distribution decisions concentrate on the methods and channels of delivery that will optimize your sales and profits.
Why the entrepreneurs fail
- Incomplete market research – market research can be tricky if not done scrupulously. Trying to gauge who wants the product, how much they want, what they will pay and how the competitors will respond is not an easy task. Your business should be market driven rather than product driven and your business plan should not be built around a product searching for a problem to solve.
- Making unrecognized assumptions – putting together a business plan requires estimates about many things that are not known with certainty – sales volume, construction cost, competitor response, etc. the problem occurs when your assumptions about something you don’t know becomes a fact in your business plan. For eg, sales volume are assumed in the business plan but if these volumes are treated as a fact, then you have not planned for a situation where actual sales volume or market share turns out radically different from the assumption.
- Lacking in competitor assessment – while entering a new market, it is very necessary to assess the existing competitors and have strategies in line on how to tackle the competition. For eg, when Netscape Navigator’s “mosaic” entered the market with MicroSoft as its competitor, initially it did get the boom because of its “the world’s first graphical web browser” but MS responded with IE and after some time the shares of Netscape Navigator were ten folds down.
- Not considering the social, cultural and ethical factors seriously – these factors are relative to different regions. People in different places are sensitive to different things and hence it is very important to consider these factors to succeed. The cigarette brand “MS Special Filter” for females launched by Golden Tobacco Company in 1989, was an unsuccessful attempt. It was launched in India in 1989 when cigarettes and women together were considered as unethical.
Thus, in order to successfully implement an idea, ample amount of time should be invested on feasibility of idea, planning and analyzing resource availability. If all the things are in place, the conversion of idea to business does not take much time.
As it is said “Winners never Quit and Quitters never Win”, the entrepreneur should possess the “NEVER GIVE UP” attitude because during the conversion, there would be many hurdles to cross. He should be a visionary, should know the destination and then decide on the path. “High risks mean high gains” should be the motto if we need to have a successful conversion of our idea. But this high risk should be an intelligent decision made on certain facts and evaluations. For this we need to have a proper risk analysis in place.
At the end, I would like to say that maxims like “Customer is the King” or “Customer is always Right” is very important for a business but we should understand that it’s in our hand to make the customer feel like a king or make him realize that his voice never goes unanswered.