This article covers business examination. It is first steps to business development journey.
To begin business development, we need to examine our business condition. No the development plan that fits all condition. You already have the progress of business development, so you just fix the missing.
We start to examine:
your company profile
business model to serve your market and get profit
Your Company Profile Today
What is your company name
Company mission and mission
When your business start
Business type: Franchise or you build your own
Business type: retailer, producer, distributor?
Market segment you serve
products and services that you offer
percentage of the end user and business customer
the quantity of team company
Top 5 Important things in your business
your performance for your top 5 important things
Do you apply bookkeeping and accounting?
Your Profit Loss Financial Report in last 5 years
Your Balance Sheet in last 5 years
Cash flow statement
aged debtors listing
aged creditor listing
How often you update your financial status? daily, weekly, monthly, yearly
Do you have the business plan or business model canvas
Your Private Goal in Your Business
Your job, status, and role in the business
salary: fixed salary and variable salary
Your non-financial benefit in the business
why you enjoy or like your business
3 thing most
frustrated things in your business
Time spend in the business
time for production
Time for team building
Time for marketing
time for administration
Market and Products
Your Criteria to target customer segment
Who is the best customer? What are your criteria
customer segment that you target
products and services categories do you have
your competitor can and easy to imitate or not
your sales per categories products and products per annum
sales trend per categories products and products
do you regularly hear customer feedback about products, service
Why your customer buy (reason)? eg, quality, service, function, price.
Why your prospect does not buy (reason)
What is your value proposition
Major customer disappoint about your business
The quantity of Total customer
Total customer retention
Total customer repeat
Do you have customer lifetime value
Average how many
How many Competitor that your customer can access
How many businesses that offer replacement items
Comparison of your business and competitor in term turnover, brand, capital, cost, profit, skills, service etc.
Common competition basic in your industry
Your competitive advantage
Total income per annum
Total expenditure per annum
Gross Profit per annum
Fixed Cost per annum
Variable cost per annum
cash flow statement
Entry and Exit Barrier
skill to run the business (production, marketing, management)
license to run business
Attractiveness and main advantage of business
Cost for exit barrier
Difficulty to enter an alternative business
Difficulty to get material, supplier and qualified people
Customer Orientation level of team
Trust and service culture
Recruitment procedure and consideration
The main difficulty to recruit
Training and orientation for new employees
regular training for old and new employees
Written and clear job description
Key Performance Indicator of team training
Main training problem
Performance target for each member or team
The main indicator of the performance of each member, division, and team.
How to measure their performance
satisfaction level of the team member for their job and remuneration (salary)
How business give remuneration
How often to review remuneration
The non-financial reward for good performance for the team member
Profit share scheme and incentive for a team
What is the area of team participation in management? product development, market development, strategic management, finance management.
Choose customer segment is the second part of business development strategy. It is a powerful concept that makes your business more efficient. This article talks about the benefit of segmentation. I answer about what is segmentation, type of segmentation, how to segmentation.
Benefit of Segmentation
To get customer segment, we first do segmentation. That enables us to choose the best segment. Segmentation and targeting is a tool for reducing money/time and competitive strategy. Without segmentation, the business cannot measure their marketing cost, because too much.
Imagine you as a marketer want to sell diapers. You have limited budget and time. Do you offer the diapers to everyone? That is a bad idea, because of that exhaust unpredictable time and money. Cost almost unlimited.
Who will buy your products? Every one?
Not everyone needs diapers. It also applies to others products. Not everyone needs same pizza, clothes, and school. So, marketers identify distinct segments of buyers or segmentation. They identify demographic, psychographic, and behavioral differences between them. They also quantify the group of similar
They then decide which segment(s) present the greatest opportunities. For each of these target markets, the company develops a market offering that it positions in target buyers’ minds as delivering some key benefit(s).
Volvo develops its cars for the buyer who concerns mainly to safety. The company decides a positioning for them as the safest a customer can buy. Porsche targets buyers who seek pleasure and excitement in driving and want to make a statement about their wheels.
To sell diapers efficiently, we need to classify, and choose who most probable groups of customer that need diapers? You don’t sell it to everybody, but the only group that has baby and toddler. That is segmentation and targeting. Customer segment of diapers is family that have baby and toddler. That strategy reduces cost and time.
Another benefit of the segmentation is competition. Segmentation enables targeting. How to compete with another diapers products? There are several alternatives using segmentation.
First, go to a geographic area that you can compete or it has no diapers. Second, we break down diapers customer group to a more specific characteristic, for example, economic status.
Instead of competing to generic diapers, it is better to compete with a more specific customer that you can serve better. If you can serve high class better, that is the best choice for you to create products that suit the specific segment customer that you choose.
Usually, people think business idea is products. If we search business idea in search engine, that is about products and service. Usually, people check products idea, whether it is high competition or low competition. That is not enough.
Even you see some products is over service or high competition, it seems no opportunity. Segmentation helps us see the opportunity.
Segmentation is divide market based on need, want and demand. The concept assumes that customer differs in:
the products benefit that they want.
Product specification that they want
Communication Channel which usually they use to get information that
influences their decision
Amount of cost or price they are able to buy
Time and location that they want to buy
Quantities that they want to buy.
That mean, even very high competition, if we divide market based on more specific need, we can find opportunity.
Not all customer needs the same benefit, specification, and price. So if you found the unsatisfactory big market, that is an opportunity to offer your products.
Segmentation also evaluate profit prospects
That is a benefit of segmentation.
What is Segmentation
Segmentation is dividing the market into several levels of interest and power to buy. The result is customer segment. That is a definition if you have existing products. If you have no products, you will decide the products later. First, you make segmentation. You divide market based on your ability to provide and purchase power of the market. You scan several markets, then you decide which segment that you can serve and potential.
The main category is end user (customer), trader or producer (business)? In a new term, B2C (business to customer) or B2B (business to business)?
Urban / rural
rate of usage
Readiness to purchase
We can target segment market to business to business.
Industry: Which industries categories that you target?
Company and business scale: What scale size companies should we serve?
Location geography: What geographical areas should we serve?
Technology. The technology that customer use triggers specific need: What customer technologies should we target on as segment market? What kind of technology that has a specific need that you want to serve.
User-specific machine or something needs specific need. The frequency of using something also has a specific need. It is segmentation. The user or nonuser status: Should we serve geek users, medium users, rare users, or nonusers?
Customer capabilities also have a specific need: Should we serve special customers based on their capability needing many or few services?
Purchasing-function organization: Some of the business organization rely their decision on purchasing on purchasing division. Another organization relies decision on purchasing at the boss. Where is the type of company that easy to accept your offer. Should we serve companies with a highly centralized or decentralized purchasing organization?
Power structure: Company has several types of dominance perspectives. The type is technology perspective, financial perspective, worker perspective, boss perspective, customer perspective. What perspective that dominated in a company? What kind of company that easies to accept your offer.
Consider your existing relationship. Maybe they can be your customer segment that easies to access and persuade.
Purchasing policies: Should we target companies that prefer specific term of payment.
Product criteria: Should we target companies that prioritize price? quality? Service?
Urgency: Should we serve companies that need fast or slow delivery or service?
Modularity: Should we target a company that tends to apply a certain application of the product. So they need specific function and price.
Retail or trader: Should we focus with or without minimum order?
Similarity: Should we target companies whose similar values to ours?
Attitude toward risk: Should we target risk taker company or not?
Long-term relationship to Supplier: Should we target companies that tend to maintain a long-term relationship?
Improving sustainable growth, independent and profitability is the goal of business development strategy. That is a long journey. It is a marathon, not a sprint running. So it is important to define actionable step by step business development program based on best practices. An internal team can create the strategy, but also they can ask the external consultant.
Business development is the creation of long-term value by identifying opportunity, threat, strength, and weakness. Then organization makes most suitable respond, so make the fit between customer segment, organization capability, and sustainability. It consists strategic planning, marketing planning, and standardization of organization.
This step by step procedure can apply to existing running business and also startup owner. It also helps what does a business development manager do.
Business development has several steps. I write steps in question style so the answer is progress and important steps to improve business development strategy. It is overview article about business development strategy, and I will break down later.
What are your business and its vision (business vision and mission)
Who is the customer that your business serve? (market segment)
What are your business model and competitive strategy? (business model)
How to Empower your team?
The way of thinking and procedures to deliver your value to the customer? (marketing plan)
How to make your business running without you? (systemize or business independence)
Creating business system consist organization, tool, and knowledge that support Best Offer? (organization, tool, and knowledge)
How to Measure daily business and adjust strategy? (Key Performance Indicator and Improvement)
First Business Development Strategy: Vision and Mission
Writing down vision, mission and goal are powerful, so it is first part of business development strategy. The writing combine imagination and reason. Dr. Gail Mattews found the amazing discovery that they who wrote their goal regularly achieved those achievements more.
So it is important to define the personal vision, mission, and goals of the business owners. The goal helps us and team to focus on the goal and eliminate distraction. It also empowers our motivation to reach our goals. Without a clear vision, mission, and goals, there is no hope.
To accomplish vision, mission, and goal, it is important to consider current financial and non-financial position of the business. It helps to find an easy way to reach goals and find which area that needs to fix and to improve. Identify position of business also important to identify strengths weaknesses opportunities and threats facing the business. It helps business to develops an action plan to make progress.
If you want to build a ship, do not drum up people to collect wood and do not assign them tasks and work, but rather teach them to long for the endless immensity of the sea.
Antoine de Saint-Exupery
Exupery said to find your vision ( find why to do) in a beautiful way. Usually, someone said about for something that bigger than yourself. Another word is vision and mission. But Exupery said in another word: endless immensity of the sea. That is visual. That gives us a clear distinction between task, goal, and outcome. Collect wood is a task. Create ship is a goal. And immensity of the sea is the desired outcome.
Imagine about a purpose more powerful than imagine about the task. Connect task to purpose, it drives passion.