Stage 2: Strategies
Step 5: Set Marketing Strategy
The Concept:
Determine how you will introduce and sell your product or service to your target market.
What you need to know:
The umbrella term of marketing means many things. Specifically, it is the process of delivering your product or service to the people who need or want it and, most importantly, getting them to buy. The strategy begins with your mission statement and extends to the image you convey through your company name and product offerings, your customer service and marketing campaigns. The critical step of developing an effective marketing strategy will ultimately deliver increased market share for your company but not without specific planning, scheduling and budgeting.
Marketing budgets are "investments" in business growth. Sound, ongoing marketing investments yield new customers and additional sales. Establish a detailed timeline to address marketing needs and then evaluate those efforts. Are they effective? Ideally, marketing will target the customers identified during the market research process.
Points to consider:
- What are the avenues to reach customers? Potential customers?
- What methods will you use to attract customers?
- How will you encourage repeat business?
- Will you utilize contracts?
- What is the best use of your marketing budget?
- Does each aspect of your company and its operation reflect positively on your marketing strategy?
- Does your marketing strategy reach those customers whom you have identified in your market research? Does it prompt them to purchase your product or service?
- Will your marketing efforts be ongoing?
Step 6: Identify Technology Uses
The Concept:
Successful entrepreneurs make the best use of current technologies not just for technology's sake, but to make the business stronger and more competitive.
What you need to know:
Two companies provide the same service, yet one utilizes automation and computerization, and the other does not. Guess which one thrives? Use of technology in your business will yield faster and better-quality product output; more accurate bookkeeping and inventory control; a more informed, cohesive, and productive workforce; and more responsive sales, customer service and marketing. Startup businesspersons with a future know how to use a computer—software exists to simplify and integrate every conceivable corner of business management, and the Internet has emerged as a tremendous tool for acquiring new business, keeping current customers satisfied, and collaborating and maintaining contact with partners and employees.
Points to consider:
- What technologies are or can be employed in your company's industry? Are you comfortable with them or willing to learn?
- What training is needed to best utilize appropriate technologies?
- How fast is technology changing? How will this affect your business? Can you keep up?
- What is the life of your product or service given the pace of technological change?
- What is the cost of technology within your industry?
- Is technology providing maximum benefits to your business?
Step 7: Define Personnel Needs
The Concept:
No matter how well you utilize technology, people are still the key to the success of your business. Make sure your employees have the skills, experience, and training they need, and pay them competitively.
What you need to know:
Talent and dedication will take you far but once day-to-day requirements expand beyond what you can do by yourself you'll need to hire employees. Proper planning will allow you to efficiently navigate the hiring process while minimizing obstacles and wrong turns in the highly demanding atmosphere of a young business. A competitive job market can limit your choices whether you're hiring highly skilled employees or teenagers just entering the workforce. Avoid the lure of an overly simple hiring decision done in the interest of time. Conduct in-depth interviews and interview more than one candidate. Reference checks are a must. Contact a candidate’s previous employers. Background checks will reflect driving records, criminal records and citizenship. There are organizations that conduct background checks for a fee.
These steps are vitally important especially when you consider that a key employee will need to know "key information," such as bank account numbers or the combination to the office safe.
Before placing a "Help Wanted" ad, carefully consider how many employees are needed. Define a position with an overview of requirements and duties. Write a job description. This helps clarify what you need and serves as a guideline for a new employee. What education and skills are required? What training might be needed, who will provide it and at what cost? The need for personnel will change as the company grows and changes. Consider whether you require help on a permanent basis or if a contractor, consultant or temp can assist during a busy time.
Assuming you find the right people for the job, you'll have the dual role of wage provider—offering competitive salary and benefits—and mentor—addressing each employee's need for a sense of accomplishment and being appreciated. You'll have to do well on both counts if you hope to hang onto good people and, by extension, everything you've worked so hard for up to this point.
Personnel Policies need to be developed in order to protect you and your company, and at the same time protect and promote a positive, productive environment for your employees. Employees should be given copies of the company’s policies, preferably along with a training manual. Employees should read and sign these policies. Should any policy issues come up during employment, the signatures can confirm that employees were informed.
In consultation with a business or labor attorney, draft a personnel manual that addresses some or all of the following areas: attendance, conflict of interest, non-compete issues, employee benefits, holidays, open door policy, performance reviews, sick days, termination, vacation, and sexual harassment. Consider employment agreements with key employees. Again in consultation with your attorney, draft and execute agreements that detail responsibilities for key employees or executives.
Points to consider:
- What level of wages and benefits must you provide to be competitive in your industry?
- What costs connected with hiring, benefits, training, workstations, etc. should you expect?
- Who will assist with the safekeeping of your important documents?
- Are human resources of the appropriate education, skills and experience available to meet your business needs?
- Should your business be restructured to address a personnel shortage?
- Have you consulted a business or labor attorney and instituted personnel policies that protect your business from legal action or damage?
- Will these policies promote a positive, productive work environment?
Step 8: Choose Equipment
The Concept:
Not only do you need people to make your business grow--you also need equipment to make your product or to help the office run smoothly. From pencils and paper clips to computers and vehicles you need to acquire equipment with an eye toward costs and output.
What you need to know:
The equipment you need depends on the type of business; at a minimum, a business requires office supplies, security systems and signage. Create a list of all equipment you'll need and obtain price quotes from multiple vendors in each equipment category, using these quotes to estimate your start-up costs for equipment.
An important consideration is whether to lease or buy your equipment. If you are well funded, outright up-front purchasing can make more sense. But few startups can afford an initial outlay of capital that might be better spent on product development and advertising. Leasing is one method to acquire needed items, often for less money-down and lower monthly payments than if the items had been bought with a traditional loan.
Certain leasing options allow a business to avoid maintenance costs and either buy or walk away from the equipment at the end of the lease term. While the long-term cost is higher, leasing gives a business time to grow and afford the cost of equipment. Nevertheless, there are many leasing options with varying benefits and pitfalls so any decision to lease should be backed up by a great deal of research, comparison shopping and legal consultation.
Points to consider:
- How fast is production of the product or service? Can desired quantities be produced?
- What is the cost per product at various production levels?
- Can the equipment produce the needed quality of work?
- How long should the equipment last?
- Should you purchase new or used equipment?
- Should you buy or lease the equipment?
- What is the initial cost? Upkeep and maintenance costs?
- Is the desired equipment available?
- How can equipment deficiencies be addressed?
Step 9: Establish Quality Control
The Concept:
The quality of your product and your customer service must be consistently good to stay in business. Quality control systems detect productivity hiccups in every facet of production, marketing and retailing and help a business owner maintain excellence.
What you need to know:
No business can afford to deliver empty promises. As a start-up enterprise, your commitment to the principles of quality control and customer service is critical to future growth. The processes that allow you to deliver on your commitment will help keep your business vibrant. You must install quality control systems to protect and enhance your company’s reputation.
Important components of your quality control plan are implementing steps to empower your employees to excel in customer service and obtaining customer feedback. Consider developing a system for handling complaints and suggestions or conduct annual surveys and customer appreciation events.
Quality processes, discussed in detail in many books on the subject, include:
Quality Teams: Groups of "empowered" employees who are given the responsibility of improving productivity and quality within their areas of expertise. Managers and associates work together in coming up with new ideas and making decisions.
Benchmarking: Referred to as "adopting outstanding and proven practices from any organization, anywhere in the world," which means learning how other firms do the same thing efficiently and borrowing the idea.
Knowledge Management: A strategy of getting the right knowledge to the right people at the right time, helping them share and put information into action in ways that improve organizational performance. Essentially, creating processes that puts everyone "on the same page" and keeps them there.
Measurement: Objective gauging of quality and performance within a certain area, such as production or customer service. When you phone a product support 800 number and are told "This call may be monitored," you're right in the middle of a quality measurement.
Customer Feedback: A process of obtaining information from your customers to learn their opinion and perspective on what it is like to do business with your company. Examples include customer comment cards, surveys, phone interviews and references.
Points to consider:
- What systems are in place to ensure consistent quality products and services?
- What preventative maintenance is needed?
- Are there relevant quality certifications you could pursue, such as ISO 9000 certification?
- Is your staff sufficiently educated and empowered? Is training needed?
- Do your production procedures include a quality standard?
- Are you incorporating employee and customer feedback in the quality management system?
- How does your business know what its customers want and value?
- Will your product be of sufficient quality to be viable in the marketplace?
- Should you consider other technologies in producing your product or service?
- Should you change your product so that quality can be better maintained?
- What processes will help your customers and employees provide feedback?
Step 10: Determine Inventory
The Concept:
The materials you need to be able to deliver a product or service and how you manage the process of obtaining them are vital factors for continued success. The quality of these materials directly influences the quality of the product you deliver.
What you need to know:
You'll now need to determine which raw materials—metals, woods, fabrics, chemicals, food, dry goods, etc.—you need for your business. Are they available locally or must they be shipped in from somewhere else? How quickly will that process occur? What will all these materials and their transportation cost? If you anticipate fast turnover of product you should have a "never run out" procedure to handle the situation. You should also consider whether outsourcing part of your production phase makes sense financially or from an efficiency standpoint.
One concept to consider is to have inventory "just in time" for production. This keeps funds from being tied up unduly in large amounts of idle inventory yet allows a business to fill orders fast enough to meet customers' needs. This practice requires a clear understanding of when to stock up and how often, which may be difficult for start-up businesses. Other points of concern:
Vendor reliability: Small firms can become over dependent on suppliers who provide a key component or service. A serious glitch in the vendor's performance might put you out of business if you don't have a backup source. Ask a potential vendor for references you can check, and if you or an employee is particularly knowledgeable of the vendor's product, ask permission to visit their site and perform an audit, interviewing managers and workers and looking for shortcomings in quality or production performance.
Inventory control: An inaccurate inventory system could cause you to make an incorrect decision that threatens the health of the business. Take physical inventories as often as possible, and take steps to ensure that counts are accurate, such as secured storage areas and checking vendor invoices against supplies received.
Points to consider:
- What supplies (i.e. raw materials, products, energy) are needed?
- Are the needed supplies available? Identify suppliers locally, nationally, and globally.
- Which suppliers produce consistent quality product and deliver on time?
- What payment terms do they offer (e.g. C.O.D., 30 day, etc.)?
- How much of each component is needed?
- When is it needed?
- How much should you have in stock?
- What purchasing system will you use to track, order and replenish inventory?
- How much will the needed inventory cost?
- What is your optimal inventory? Have suppliers been identified
- Address any inventory shortages. Given inventory costs, can the product and service still be provided competitively?
Step 11: Choose Advisors & Services
The Concept:
Every business needs an accountant, an attorney, and other support roles.
What you need to know:
Entrepreneurs tend to think of themselves as being able to do it all themselves. But that's impossible—to focus on your customers, you've got to let professionals advise you on legal, financial, and other spheres that are probably outside your area of expertise. And that doesn't mean just engaging professional service providers for advice–meaningful input can come from mentors and other entrepreneurs.
When seeking advisors, consider those with some knowledge about your industry and business structure. Interview advisors the way you would interview a key staff member—spend some time talking to them to make sure you can communicate with them openly and honestly. If the advisory relationship is fee-based, you must understand the cost of the service.
Points to consider:
- Should your advisors be employees or third-party consultants?
- Do you understand how much their services will cost?
- Have each of your skill gaps been addressed with the obtaining of an advisor? These could include:
- Attorney
- Accounting Professiona
- Technology/Systems Advisor
- Insurance Advisor
- Banker
- Payroll Service Provider
- Marketing Professional
- Advisory Board Members
- Other (Industry-specific)
