WHEN YOU ARE STARTING<br />A NEW BUSINESS<br />BY - NIKET PATEL<br />
Characteristics of Successful Businesses<br />A successful emerging growth business is likely to display many of the following characteristics:<br />Sensibly financed (with prudent mix of equity and debt).<br />Strong cash position (with access to follow-on or contingency funds).<br />Offers above-average profitability (in terms of return on capital invested).<br />Aims for rapid growth in revenues (with profits lagging but in prospect).<br />Targets expanding, or otherwise attractive, market segments.<br />Develops a strong franchise or brand.<br />Devotes substantial resources to innovation (R&D, offerings or market).<br />Competes on non-price issues (e.g. quality, service, functionality).<br />Very close to customers and responsive to their needs.<br />Seeks specialist/leadership image with superior offerings.<br />Well managed with high-grade staff & good people-management.<br />
AVOID BUSINESS FAILURE<br />Use market research to confirm demand and assess suitability of proposed offerings.<br />Create a management team to offset any gaps in experience or expertise.<br />Raise equity to reduce exposure to interest rate changes, reduce gearing etc.<br />
Clarify Existing Business Strategies<br />The business has been financed entirely from retained profits and without recourse to debt or external equity.<br />The implicit sales strategy has been to offer a very broad range of products at premium prices and to invest heavily in promotion.<br />The senior management team has been drawn exclusively from family members.<br />Instead of doing R&D, the business copies competing products and sells them at a discount<br />
Look into Future SWOTs for Strategies<br />An effective SWOT (strengths, weaknesses, threats & opportunities) analysis is a key component of strategic development. It can prompt actions and responses:<br />Have a look at the discussion on SWOTs and related matters in Developing a Strategic Business Plan <br />Survey about Strengths & Weaknesses of Businesses<br />Survey about Writing a Business Plan<br />
Basic Strategic Planning Approaches<br />Grow fast (and ahead of most competitors)<br />Grow in line with industry<br />Defend existing status (assumes a moderately strong starting position)<br />Catch up (with leaders & then grow with or ahead of them)<br />Turn around (from being an underperformer)<br />Hang in (go with the flow but don't expend much effort)<br />Harvest (milk the opportunity with a view to withdrawal)<br />
Creating Strategic Combinations<br />This Section presents several different combinations of strategies which could be used to help develop a range of strategic options<br />EXAMPLE- Any Inc's central objective is to become a full-line supplier. It will reduce its cost base through introducing new processes as result of licensing-in technology in parallel with broadening its distribution activities financed byretained profits and external debt.<br />
Compiling Strategic Statements<br />Limit the number of strategic statements to what can be realistically achieved within a realistic time frame and, if necessary, prioritize them. It is possible that just one strategy is needed for each of the main functional areas<br />It might help to summarize and sequence the key elements in a color-coded Gantt chart or table functional areas<br />
Next Steps towards a Strategic Business Plan<br />Software for writing business and marketing plans - Plan Write Business Planner, Marketing Planner and Expert Business Planner.<br />Software for appraising business proposals and marketing strategies - Quick Insight (smaller businesses) and Business Insight (larger businesses).<br />Financial planning software - Exl-Plan.<br />Template for a business plan - Free-Plan.<br />Online Strategic Planner for creating a 3-page plan.<br />
Introducing PlanWare<br />Papers on cashflow, financial, strategic and business planning topics.<br />Advice on getting new business ideas, managing working capital, devising business strategies and much more.<br />Pages devoted to famous business quotations and examples of bad business advice and mistakes.<br />
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