Resources
Problem Statements
A problem statement serves two purposes.
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Identifies the problem your business solves
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Explains how your business solves the problem
A problem statement uses the following format:
(Target Audience) needs/wants a way to _________________ because_____________________________. (Company) solves this problem by ______________________________.
Business Opportunity Types
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New product or service
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Variation of a product or service
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Existing product or service in a new market
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Existing business plan in a new market (Franchise).
Barriers to Entering the Market
When starting a new business, there are obstacles that prevent a new business from entering an industry or business area.
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Economies of large scale production - By growing, a firm can expect to reduce its average costs and become more competitive.
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Ownership or control of a key scarce resource - Owning scarce resources, which other firms could use, creates a considerable barrier to entry, such as an airline controlling access to an airport.
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High set-up costs - Expenses incurred in setting up a machine, work center, or assembly line, to switch from one production job to the next.
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High R&D costs - When firms spend money on research and development (R & D), it is often a signal to potential entrants that they have large financial reserves. In order to compete, new entrants will have to match, or exceed, this level of spending in order to compete in the future.
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Predatory pricing - A firm may deliberately lower price to try to force rivals out of the market
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Advertising -
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A strong brand - This creates loyalty, ‘locks in’ existing customers and deters entry.
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Loyalty schemes - Schemes, such as Tesco’s Club Card, help businesses retain customer loyalty and deter entrants who need to gain market share.
Competitive Advantages
Competitive advantage is an advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers than its competition.
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Cost Advantage: Superiority achieved through factors such as access to cheaper inputs, efficient processes, favorable location, skilled workforce, superior technology, and/or waste reduction or elimination.
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Differential Advantage: Unique benefits or characteristics of a firm, product, or program that set it apart and above its competitors in the customers' viewpoint.
Financing
Financing is needed to start a business and ramp it up to profitability. There are several sources to consider when looking for start-up financing. But first you need to consider how much money you need and when you will need it.
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Equity Financing: Exchanging a portion of ownership for a financial investment
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Venture Capitalists, Angel Investors, Initial Public Offering
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Debt Financing: Borrowing funds from a creditor to be paid back plus interest.
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Loans from friends or family, banks, or commercial lenders
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Psychographics:
Demographics describe "who" people are, Psychographics explain "why" they buy (and how to win their attention and motivate them to buy). Psychographics are the attributes that describe the following of customers and prospective customers:
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Interests
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Personality
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Attitudes
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Beliefs
Psychographic Example
A book publisher is trying to sell a new book. The publisher might want to advertise on facebook to people who have clicked the "like" button on Facebook posts associated with reading. They may also want to advertise to anyone that says they like to read on their profile. Enjoying reading would be a psychographic example because it tells the publisher about your attitude towards reading.
http://www.marketsegmentation.com/what_are_psychographics.html
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Values
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Emotions
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Opinions
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Hobbies
Demographics:
Demographics are used by organizations to learn more about a population's characteristics. Segmenting a population into demographics allows companies to assess the size of a potential market and also to see whether its products and services are reaching that company's most important consumers. Studies of a population based on demographic factors would include:
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Age
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Race
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Gender
Demographics Example
A company that sells high-end RVs would want to know roughly how many people are at or nearing retirement age, and also what percentage of them will be able to afford the product. This information will help the company to decide how much mooney to put towards production and advertising.
http://www.investopedia.com/terms/d/demographics.asp
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Economic status
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Level of education
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Income level and employment
Customer Feedback
Some reasons for getting customer feedback
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Determine if people would buy the product
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Develop a price for the product
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Learn if your competitive advantage is working
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Receive suggestions about how to make the product or service better
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Learn about possible product options that may allow you to charge more or create new transactions
Ways to get feedback from customers
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Focus group - a group of people are asked about their perceptions, opinions, beliefs, and attitudes towards a product, service, concept, advertisement, idea, or packaging.
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Surveys - question or a series of questions in order to gather information about what most people do or think about something.
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Interviews - questioning someone one on one to gain information about their thoughts on a product or service.
Company Culture
Company culture is how employees behave and interact with one another and the expectations of interactions with those outside the organization.
Types of Company Cultures
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Team first - employees' happiness is the top priority
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You may have a team-first culture if:
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Employees are friends with people in other departments
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Your team regularly socializes outside of work
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You receive thoughtful feedback from employees in surveys
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People take pride in their workstations
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Elite - hire the most talented employees for fast growth and blazing a new trail in a market
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You may have an elite culture if:
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Employees aren’t afraid to question things that could be improved
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Employees make work their top priority, often working long hours
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Your top talent moves up the ranks quickly
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You have many highly qualified job applicants to choose from
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Horizontal - titles don't mean much and all employees work together in a collaborative, flexible environment
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You may have a horizontal culture if:
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Teammates discuss new product ideas in the break room
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Everybody does a little bit of everything
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The CEO makes his or her own coffee
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You still have to prove your product’s worth to critics
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Conventional - numbers focused approach to business and decision making is done in the least risky way.
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You may have a conventional culture if:
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There are strict guidelines for most departments and roles
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People in different departments generally don’t interact
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Major decisions are left up to the CEO
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Your company corners the market
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Mission Statement
A mission statement is a short paragraph describing the reason an organization exists. This statement should be used as a guide for decision making in the company.
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An organizations mission statement should clearly communicate what it is that they do.
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Good mission statements should be clear, memorable, concise.
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View the video to the left for examples and details.
Product: job duties and tasks are assigned based on different product offerings.
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Companies that have multiple product for sale that are highly specialized
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Companies whose products serve very different customers.
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The customers that need combines probably will not need construction equipment too
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Geography: job duties and tasks are assigned based on the office location.
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Companies that have stores or facilities in many different areas of the country or world.
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Companies that have customers in different areas of the country or world that may have special needs according to where they live.
Job Duties: job duties and tasks are assigned based on the skill set involved with competing the work.
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Most large organizations use this organizational structure on some level.
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Allows for employee's expertise in a certain area to help with company as a whole.
Organizational Structures
The organizational structure helps employees know their roles, responsibilities, and who their bosses are. For example, if a sales representative is going to have a formal evaluation, the organizational structure would help that person know who is going to be doing the evaluation.
Organizations can be structured in many way, but here are three examples.