Stage 1: Business Design & Planning

Don’t just dive into business, take time to design your own masterpiece

Most people take starting a business for granted. You shouldn’t!

The success of any business is usually in the planning; both at the beginning and at regular intervals.

Business planning stage: Issues to address

Before you set out to run a business, there are issues that you need to research and decide on. Going through these may take you some time but it can save you a lot of pain in the future. The business planning stage helps you decide if your business has any real chance at success.

Business Environment Analysis

A business environment is a combination of internal and external factors that influence your company’s operating system. In business, internal and external environments can negatively or positively affect both your business’ operating and financial results. You have to know your competitors, market trends and whom you will be creating value for. Hence, business environmental analysis is the first move when designing any business.

Business environmental analysis is a strategic tool. It is a process that helps you identify internal and external elements which may affect your business’ performance. The analysis entails assessing the level of threats and opportunities. These evaluations will help you make strategic decisions that will give you competitive advantage in the long run. Below are methods of carrying out a business environment analysis:

a) SWOT Analysis

SWOT stands for strengths, weaknesses, opportunities and threats. SWOT analysis is a strategic method used to evaluate places (business locations), products, price and promotion strategies. This powerful strategic tool identifies the internal and external that may affect your future business.

The internal factors are the strengths and weaknesses of the evaluation. Examples of internal factors are financial resources, company’s location, employees, software systems, legal elements like patents and copyrights and business processes. The external factors are the opportunities and threats. These include the market, demographic and economic trends, relationships with suppliers and business partners as well as regulations.

Strengths

These are your strengths that can contribute to achieving your intended objectives. When formulating the strengths, it is important to approach these from an internal perspective as well as from the perspectives of the customer and the market. It is necessary to remain realistic in order to prevent that the organization or the project from being positioned too highly with respect to the market and the competition. To determine what they are, you should ask yourself the following questions:

  • What advantages do you want to offer to customers?
  • What do you want to do better than your competitors?
  •  Why would customers choose you over competitors?
  •  Which factors have a significant influence on the buying behavior of your customers?
Weaknesses

These are weaknesses that may have a negative effect on achieving your intended objectives. To determine what these weaknesses are, the following questions should be asked:

  • What could be improved by your business?
  • What should especially be avoided within the business?
  • What are customers likely to see as your weaknesses?
  • What factors make you lose customers or market share?
Opportunities

These are the opportunities that present themselves for the business. To determine what these opportunities are, the following questions should be asked:

  • What interesting trends should your business respond to?
  • What are the opportunities for the business?
Threats

These could be possible obstacles that can negatively influence the business from the market. To determine what these threats are, the following questions should be asked:

  • What possible obstacles or external risk can be identified for the business?
  • What is the financial situation of the business?
  • Can new technologies pose a threat to the business or project?
  • Do the identified weaknesses pose a threat for the project or business?
  • How can you meet the quality requirements of the market and how you can compete with other suppliers?

b) PESTEL – Political, Social, Economic, Technological, Ecological, & Legal factors

A PESTEL analysis is a framework or tool used to analyse and monitor the macro-environmental (external environment) factors that have an impact on a business. The result of which is used to identify threats and weaknesses which is used in a SWOT Analysis.

Political Factors

These are all about how and to what degree a government intervenes in the economy. This can include government policies, political stability or instability in overseas markets, foreign trade policy, tax policy, labour laws, environmental laws, trade restrictions and so on. Political factors often have an impact on organisations and how they do business. Your business needs to be able to respond to the current and anticipated future legislation and adjust your marketing policies accordingly.

Economic Factors

Economic factors have a significant impact on how you do business and also how profitable it will be. Factors include economic growth, interest rates, exchange rates, inflation, disposable income of consumers and businesses and so on. These factors can be further broken down into macro-economic and micro-economic factors.

Macro-economic factors deal with the management of demand in any given economy. Governments use interest rate control, taxation policy and government expenditure as their main mechanisms they use for this. Micro-economic factors are all about the way people spend their incomes.

Social Factors

These are also known as socio-cultural factors. They are the areas that involve the shared belief and attitudes of the population. These factors include population growth, age distribution, health consciousness and career attitudes. These factors are of particular interest as they have a direct effect on how you understand customers and what drives them.

Technological Factors

We all know how fast the technological landscape changes and how this impacts the way we market our products. Technological factors affect marketing and the management thereof in three distinct ways:

  • New ways of producing goods and services.
  • New ways of distributing goods and services.
  •  New ways of communicating with target markets.
Ecological Factors

Ecological factors have become important due to the increasing scarcity of raw materials, pollution targets, doing business as an ethical and sustainable company and carbon footprint targets set by governments. These are just some of the issues you might face in doing business. More and more consumers are demanding that the products they buy are sourced ethically and if possible from a sustainable source.

Legal Factors

Legal factors include health and safety, equal opportunities, advertising standards, consumer rights and laws, product labeling and product safety. You need to know what is and what is not legal in order to trade successfully.

Conclusively, business environment analysis is central to business growth, success and survival. Knowing your market niche structure, how well your competitors are doing and whom you will be creating value for is essential in designing your business. Competitive advantage is key in business.

Market Research

Starting a new business is easy. However, successfully growing it is not. You can have the greatest concept or business idea in the world, but there are so many other factors, all interconnected, that determine success or failure. Never ever has a business been able to succeed without conducting a thorough market research of its audience, products and services.

Generally, market research has always been a part of the key fundamentals of setting up and smoothly running a business. Specifically, market research helps you strengthen your position, minimize investment risk, identify potential threats and opportunities and facilitates strategic planning.

Primarily, market research is the process of assessing the viability of a new product or service. The process is carried out through techniques such as surveys, product testing and focus groups. Following that, market research helps you understand your customers, their preferences, to identify opportunities to grow and increase profits as well as to recognize and plan for economic shifts. In addition, it assists in monitoring competition in your market as well as reduce risks in your business decisions.

For instance, in July 2011, HP introduced its own TouchPad in an attempt to compete with the Apple’s iPad. Despite large scale press events and promotions, the HP TouchPad was a colossal failure and was discontinued almost immediately. The TouchPad’s operating system was a total failure compared to the Apple iPad. People were used to the Apple iPad with powerful video capability and impressive processing speeds.

As a result, the company suffered enormous loses. As if that was not enough, HP has continued to struggle to maintain its edge in the PC market. However, thorough marketing research helps you understand your customers’ preferences as well as monitoring competition with minimizes investment risks.

Below are step of the marketing research process:

i) Problem Identification

Identifying a problem is the first step in the research process. In many ways, research starts with problem identification. Once you approach the problem from a research angle, it is easier to find a solution. Thus, the problem needs to be understood, the cause diagnosed and solutions developed. You have to know what is lacking in your market niche so that you create a profit making business design. It is of no use to venture into a flooded business line of work.

ii) Method of Inquiry

This stage includes formulating an objective or theoretical framework, constructing analytical models, generating research questions and hypotheses. Also, it entails identifying characteristics or factors that can influence the research design. The stage is guided by discussions with management and industry experts, case studies and simulations, analysis of secondary data, qualitative research and pragmatic considerations.

iii) Formulation of the Research Design

This step involves the formulation of the research design which is the framework or blueprint for conducting the marketing research project. Specifically, it details the procedures necessary in obtaining the required information. Its purpose is to design a study that will test the hypotheses of interest, determine possible answers to the research questions and provide the information necessary for decision making.

Following that, conducting exploratory research, precisely defining the variables and designing appropriate scales to measure them are also components of the research design. However, the issue on how the data should be obtained from the respondents must be addressed. It is also necessary to design a questionnaire and a sampling plan to select respondents for the study.

iv) Data Collection

Generally, data collection involves manpower as in the case of personal interviewing (in-home, mall intercept, or computer-assisted personal interviewing), from an office by telephone (telephone or computer-assisted telephone interviewing), or through mail (traditional mail and mail panel surveys with pre-recruited households). Proper selection, training, supervision, and evaluation of candidates helps minimize data-collection errors.

v) Data Preparation and Analysis

This is the fifth step and it involves the editing, coding, transcription, and verification of data. Each questionnaire or observation form is inspected or edited and if necessary, corrected. Most importantly, analyzed data gives meaning to the information that have been collected.

vi) Report Preparation and Presentation

The entire project should be documented in a written report and the results and major findings must be presented. Following that, the findings must be in a comprehensible format so that they can be readily used in the decision making process. In addition, an oral presentation should be made to management using tables, figures, and graphs to enhance clarity and impact.

For these reasons, interviews with experts are more useful in conducting marketing research for industrial firms and for products of a technical nature, where it is relatively easy to identify and approach the experts. This method is also helpful in situations where little information is available from other sources, as in the case of radically new products.

Advantages of Market Research
a) It helps strengthen your business position

Knowledge is power. Market research helps you gain a better perspective and understanding of your market or target audience. As a result, it ensures that your firm stays ahead of the competition. In business, competitive advantage is central to success.

b) It minimizes any investment risk

This is a simple but vitally important and often a critical business consideration. Spending only a small proportion of your investment on researching and testing the market, product, concept or ideas is essential. It saves you from any investment risk. You will know if your product or service is valuable or not, your customer preferences and how well your competitors are doing.

c) It helps you identify potential threats and opportunities

Both primary research (fieldwork) and secondary research (desk research) can be utilized as an insurance policy against both obvious dangers on the road ahead. Coupling this with some qualitative research for deeper probing can highlight certain opportunities or warning signs that may otherwise have been missed. Thus, saving your business from loses before they are incurred.

d) It helps you discover your business’ and your competitor’s strengths and weaknesses

It’s vitally important to adopt an ‘eyes wide open’ approach to any market research project. However, it is often advised to work with a market research agency to ensure completely unbiased reporting. Furthermore, research findings help you adapt and learn from your own weaknesses whilst capitalizing on your new-found knowledge from competitor analysis to take advantage and forge ahead of the pack.

e) It facilitates strategic planning

In business, making decisions is very important. Your business success or failure is your responsibility. It all lies in the decisions that you make concerning your products, price and marketing techniques. Knowing your market niche and understanding the nature of your target audience will help you make the best decisions for your business.

f) It helps in spotting emerging trends

Staying ahead in business is often about being the first, being the best or doing something that no-one else has thought about. Regularly taking the ‘pulse’ of what’s hot and what’s not in your industry is a key discipline. Knowing what’s trending will help you offer the right products to the right people at the right time.

g) It assists your businesses to stay ahead of the competition

Generally, being the best demands a relentlessness to keep getting the basics right combined with a curiosity and willingness to innovate. Thus, knowing how to leverage the findings and insights you extract from market research, audience research and data research are the keys to both getting ahead and staying ahead.

h) It provides revenue projections

A market forecast is a core component of a market analysis projecting the future numbers, characteristics, and trends in your target market. Potential customers can then be divided into segments. You want to focus on the best market, which is not necessarily the largest one or the market with the highest growth. It will be the one that matches your own company profile.

i) It keeps you focused on customer needs and demands

You need to communicate on a regular basis your customers and potential customers through research. Put more effort on understanding your market through market research so that you can craft your products and services accordingly.

As a result, this will help you meet and/or exceed consumer needs. When used properly, marketing research should tell you what’s most selling and important to your consumers and help you to prioritize and maximize your time effectively. It can inform both your short-term and long-term marketing objectives, helping you feel focused in the long run.

In conclusion, market research plays a pivotal role both in setting up and smoothly running a business. Specifically, the process helps you to strengthen your position, minimize investment risk, identify potential threats and opportunities and facilitates strategic planning.

Your Ideal Customer

The most important activity as an entrepreneur is to clearly identify the very best customers for your product or service. The truth is, no matter how good your product or service is, no one will buy it if they believe they don’t need it. You cannot persuade anyone to buy what you are offering unless you clearly understand what it is your customers really want.

Most importantly, the ability to find a customer, sell your product or service to that customer and satisfy them so that they buy from you again should be the central focus of all your entrepreneurial activities. The greater clarity you have with regard to your ideal customer, the more focused and effective your marketing efforts will be.

An example is that of Readerest Company. In 2010, the American entrepreneur Rick Hopper, created a magnetic pocket filler that allows glass wearers to clip their spectacles to their shirts when not in use. Unlike glasses kept in a lose pocket, the clip prevents them from slipping and crashing to the floor when a person bends over. Rick identified his ideal customers and their problems and created a solution for them. As a result, they have made over $27 million in sales.

Primarily, once you have this knowledge, you can use it to persuade potential and existing customers that buying from you is in their best interests. Knowing who you are creating value for will save you a lot of investment risks. It helps you offer the right product or service to the right people at the right time. Thus, making profit.

Ultimately, there are 10 things you must know about your prospects when designing your business:

  • Who they are
  • What they do
  • Why they buy
  • When they buy
  • How they buy
  • How much money they have
  • What makes them feel good about buying
  • What they expect of you
  • What they think of you
  • What they think about your competitors

Advantages of knowing your ideal customer

1. It keeps you focused

Knowing your ideal customers tells you what’s most selling and important to your consumers. In addition, it helps you prioritize and maximize your time effectively. It can inform both your short-term and long-term marketing objectives, helping you feel focused in the long run.

2. It increases customer loyalty

A customer-centric business knows what its customers want and expect from them. In truth, the only person who can tell you best about what they want is one with the need. Following that, customers need and want businesses to keep their word, meaning they do the things they promise to do.

Therefore, a customer-centric business is honest and faces the facts. Understanding customer perceptions and aligning your practices with those expectations can dramatically increase customer satisfaction and therefore your sales and success.

3. It allows you to pursue the most lucrative growth opportunities

Everyone wants to grow their business, but we are not always clear on which is the right path to do so. Knowing your ideal customers can help you weigh and quantify opportunities to prioritize those with the highest revenue potential for your brand.

4. It keeps you relevant and future-oriented

Knowing your ideal customer enables you to make sure you are constantly adapting and evolving your products to meet long-term needs. While focusing on maximizing short-term results is easy, focusing too much on the short-run limits your brand’s longevity and relevancy in the future. If you aren’t keeping up with consumer, product and category disruptions, someone else will.

5. It improves your decision-making capabilities and reduces risk

Understanding your ideal customer can provide insightful information about your market, product, competition and more. It helps you make decisions with greater clarity and confidence.

6. To develop new, effective strategies

Based on the understanding of your ideal customer, you can make informed marketing decisions regarding the pricing of your products and services, the distribution and which marketing channels to use. The results of knowing your ideal customer will also help you to make informed decisions about your existing business activities.

In conclusion, the greater clarity you have with regard to your ideal customer, the more focused and effective your marketing efforts will be. Knowing who you are creating value for will save you a lot of investment risks. It helps you offer the right product or service to the right people at the right time. Thus, making profits.

Value Proposition

Starting a business from the ground is a scary and intimidating notion. There are too many unknowns to take the plunge. However, being an entrepreneur means being a smart competitor because from the day you start your business, you are in a battle for the top spot in your niche. To emerge victorious, you either invent the niche or dethrone the current dominating companies in the market. More importantly, a unique value proposition distinguishes your business from competitors.

Generally, value proposition is an innovation, service or feature intended to make your company or product attractive to customers. It is a clear statement that explains how your product solves customers’ problems or improves their situation, delivers specific benefits and tells the ideal customer why they should buy from you and not from competitors.

Again, it is a promise of value to be delivered communicated or acknowledged. Hence, creating a unique value proposition is central to building a successful business.

Value proposition entails the questions: What problems do you want to solve with your product? What value do you want to deliver to customers and which customer needs do you want to satisfy? It is not mainly about the business idea or product but it’s about solving a problem and satisfying customer needs.

In addition, you have to consider whether the help you provide reduces risks, fulfills a basic need or if it satisfies an emotional need. The truth is, every business has a value proposition but what will make yours exceptional is having a unique one. The goal is not to be better than existing businesses but to be different.

In this modern world’s ultra-competitive marketplace, a critical factor in determining the success of a company is how good of a job it does at identifying, expressing and communicating a unique value proposition to potential customers. A company’s unique value proposition is a primary marketing tool.

Also, is a concise statement of the value that the company offers through its goods or services. Following that, the proposition is crafted to communicate the idea that consumers can receive the highest possible value or benefit from purchasing the company’s products and greater value or benefit than they can receive from the company’s products. A company’s value proposition is often included in its mission statement.

Most importantly, you need to give people a reason to choose your business or products than the already existing ones. To achieve this, don’t find customers for your products but find products for your customers. A unique value proposition has a plethora advantages which are a pivotal in the success of any business and these include an increase in usability or convenience, improvement in performance and it also lowers costs that a business can incur.

For instance, Uber Technologies is a peer-to-peer ride sharing, taxi cab, food delivery and transportation network company. Its value proposition is to offer a convenient, fast and effective way of transportation to its customers. Uber expertly highlights everything that the traditional taxis do not have and points out how its service is superior.

The value proposition of Uber is that with just one tap of the software, a car comes directly to you, the driver knows exactly where to go and the payment is completely cashless. This is what makes their business different from other taxis, hence success. Customers are allowed to pay with credit cards inside the taxi which serves time compared to the cash payments used by the traditional taxi systems. As a result, the use of Uber saw growth and profits compared to its competitors.

The following are the benefits of a value proposition:

Builds confidence

Having a strong and honed value proposition gives you, your team and your external stakeholders clarity. It allows you to progress without questioning and second-guessing your every move. Confidence comes from knowing that you are making a difference to the people you are serving and that your actions are aligned to delivering an overall remarkable experience. In fact, people want to feel as though they are valued members of a winning team on an inspired mission.

Improves customer understanding and engagement

The value proposition gives you the basis to engage with customers in a compelling manner by understanding how they view you and your products or services. The value proposition determines the factors that not only make a difference to your audience, but do so in aspects or ways that are meaningful to them. By grounding your solution in an understanding of your audience and their specific need, you can engage with them in a much more compelling and effective manner.

Gives direction

When your value proposition is not clear you risk developing something that may satisfy your needs but not those of your target customers. Basically, a value proposition gives you direction by defining your ideal target audience right up-front and then identifying and understanding a core need that you look to satisfy with your planned solution.

Creates focus

A robust value proposition gives you and your team focus by identifying the fundamental initiatives, activities and aspects of your business that will have the greatest impact on meeting your defined target audience’s needs. As if that’s not enough, it outlines what you must deliver to meet your defined audience’s needs and create an overall remarkable experience. If an activity or initiative isn’t consistent with your value proposition then you abandon that initiative.

Provides clarity of messaging

Specifically, if your company is a start-up without any brand recognition, there is need to paint a very clear picture as to why you are worth people’s time. Value proposition frames not only how you are creating value for your audience by addressing a core need, but critically why your solution is better than what they are currently doing or using, or versus whatever else is potentially out there that could use.

Therefore you should have a clearly defined consistent and engaging message that will relate to your audience.A unique value proposition is the greatest asset any business can use to gain competitive advantage.

Increases effectiveness of marketing

Value proposition directs your marketing efforts to concentrate on those activities that will generate the greatest results. By truly understanding your desired customers and their core need that you’re solving for, you are able to focus on the channels that are most relevant and will effectively communicate the benefits and advantages of your solution.

In conclusion, a unique value proposition will distinguish your business from its competitors. A value proposition these include an increase in usability or convenience, improvement in performance and it also lowers costs that a business can incur.

Form of Business Incorporation

When planning to start business, the first step is to register your business. However, you have to figure out what type of business you would want to incorporate under. Most importantly, it is important to consider the financial and economic advantages and disadvantages of the chosen business type.

Basically, incorporation is the legal process used to form a corporate entity or company. It is the process of obtaining legal authorization to conduct business within your chosen jurisdiction. Also, it is a legal obligation that ensures that a business is operating under the lawful obligations of its control. Following that, a corporation is a separate legal entity from its owners. It can sue and be sued in its own name.

Primarily, there are two types of companies in Zimbabwe which are the Private Limited Company (PLC) and the Private Business Corporation (PBC). Private Business Corporations are mainly meant for medium businesses. In addition, a PBC accommodates sole traders and has a maximum of 20 directors.

With a PBC, members are the same as shareholders and members are responsible for the day to day management of the company. After registering a PBC, you get company papers and a certificate of incorporation.

On the contrary, a PLC is meant for larger entities and has a maximum of 50 directors. Following that, with a PLC, shareholders are owners and can be different from the directors.

In addition, annual returns and meetings are compulsory for Private Limited Companies and directors are responsible for the day to day management of the company. Finally, after registering a PLC, you get a certificate, CR6, CR14, memorandum and articles of association.

For instance, in 2014, the Real Estate Agents Council blacklisted 28 real estate agents due to failure to comply with the council requirement of renewing membership. The companies include Avram and Becker, Batanai Properties and Kingsroad Real Estate just to mention but a few.

Knowing your form of business corporation means knowing what’s best for your business and it saves you from investment risks. More importantly helps make you solid decisions concerning your business activities and it keeps you compliant with the law.

Procedure for company registration in Zimbabwe

The procedure for company registration in Zimbabwe is divided into 2 stages. There is the name search and reservation stage and then there is the incorporation and registration stage. The procedure is basically the same whether you are registering a PBC or a PLC. The name search stage is the same for both company types so we shall list it the same for both.

Company registration steps:
Stage 1: Name search

A request is made to the Registrar of Companies office (also called the DCIP – Department of Companies & Intellectual Property) for a search to be made in the Register of Companies. The following is applicable at the name search stage:

  • The purpose of an application for reservation of name is to get the authority of the Registrar to use a particular name.
  • If the Registrar approves your application to reserve a name, he will reserve that name for you for a period of up to two months to enable you to register your company. He will not allow any other person to use that name during that period.
  • You are advised to give four names in your application so that if one name is not accepted, another one may be. You should list the names in order of preference.
  • The Registrar will not accept a name which is similar to that of another company or PBC, or is likely to mislead the public or is indecent.
  • The Registrar will give a written notice of whether any of your names were accepted or if they were rejected. This process takes 3 to 6 working days.
a) Reasons why names may be rejected
  • Your chosen name is too close to a registered company or PBC either when written down or when pronounced e.g. OK and Okay.
  • Your company name is likely to be offensive, blasphemous or indecent to any person or class of people.
  • Your company name is likely to deceive or mislead the public e.g. a company called Ministry of Computers.
  • Your company name suggests patronage of the Government or some other authority or organization.
  • Your company name is undesirable for any other reason.
Stage 2: Incorporation and Registration
a) Procedure for registration as a PBC (Private Business Corporation)

After your name has been successfully reserved, the documentation for the registration of the PBC must be submitted to the Registrar of Companies. This process involves the appointment of members (shareholders/ directors) of the PBC. Each member is assigned a percentage of ownership in the PBC. The total percentage for all members must add up to 100%.

The Registrar will then register the PBC and assign to it a registration number. The Registrar will put his seal, his stamp and his signature to the PBC Incorporation Statement to signify its authenticity. The PBC is also entered into the Company registry and becomes searchable in the Registrar’s database. This process takes 3 to 6 working days.

b) Procedure for registration as a PLC (Private Limited Company)

After your name has been successfully reserved, the memorandum and articles of association signed by the shareholders together with the CR6 and CR14 signed by either a director or secretary of the company are submitted to the Registrar of Companies. Each shareholder must sign in their own handwriting and specify the number of shares they have been allocated.

The Registrar will then register the PLC and assign to it a registration number. A certificate of Incorporation is also issued. The Registrar will put his seal, his stamp and his signature to the Certificate of Incorporation, Memorandum & Articles of Association and the CR6 & CR14 to signify their authenticity.

The PLC is also entered into the Company registry and becomes searchable in the Registrar’s database. This process takes 3 to 6 working days.

Here are the reasons why you should register your business:
a) To be more professional

First impressions are important. This is even more true in business. Professionalism is a strong work ethic that suggests that you place high value in doing a good job as well as respecting others and functioning with integrity.

Knowing the best form of business corporation for you and registering it makes your company legitimate as it shapes people’s perceptions about you. It depicts loyalty and seriousness in your business activities. In fact, it is also more professional to give your clients a business name for transactions instead of your own full name.

b) To protect and secure your business name

Registering your business name protects it from being used by other businesses. When you register a company, the name that you choose is reserved for you only.

However, you may not have plans to start operating right away but registering that name that you have always wanted ensures that it’s available to you when you are finally ready to launch your dream business. Once your company name has been incorporated and registered, you can further restrict its usage by registering it as a trade name or trademark. This ensures that no one else can legally use it.

c) To get access to funding

Trying to convince investors about something that doesn’t exist is definitely a challenge and trying to make them understand that you are trustworthy and equal to the task is complex. There is more to raising capital than just simply asking for money. Most investors want to invest in an established business with minimal risk and they want to be sure that they get returns for the risk they took.

Therefore, registering your business is a step forward. More importantly, lenders and investors will ask to see your business registration along with other application requirements before approving you a loan. As a registered company, your ability to attract customers and raise money for your business will be easier.

d) To limit personal liability

The advantage of having a corporate bank account is the separation of business funds from personal funds which is fundamental for any business owner that seeks to make progress with the business venture. As a sole trader or partnership, you will be legally responsible for all aspects of your business, including debts and loses. If u are to sell a defective product, make an error or suffer an injury during the course of your business, you will be personally liable.

As a result, you could lose all your personal assets such as your money, car and home. In fact, a company that is registered is a separate legal entity and it is an easy way to protect your personal assets from your business actions to be carried out. Hence, a business bank account is an important asset because it allows you to separate your personal activities from your business activities.

e) To gain trust

Registering your company plays a pivotal role in enhancing the perception of your business. It is easier for people to deal with registered entities for the purpose of business than individuals.

Usually, people who are interested in dealing with a particular corporate entity have the opportunity to conduct due diligence from the regulatory authorities as to the nature of the entity they want to deal with. Creditors, customers, suppliers and financiers are some of the categories of people for whom registration of a business would provide some form of security.

f) To minimize your tax liability

When doing business you have the option to do so as an individual or as a registered business. Ultimately, when you trade as an individual, you pay tax on the additional income you receive from your business. Unfortunately, you don’t get any tax deductions on the expenses you incur in running the business e.g. internet costs, telephone costs, transport, rents, etc.

These are all regarded as personal expenses more or less. One of the more appealing reasons for registering a business, as opposed to simply reporting your additional income, is the extra money you have left over. However, in Zimbabwe, businesses receive tax deductions for business-related expenses, including use of your car, a home office or a rented storefront, insurance, and more.

g) Business continuity

Everyone wants to invest their time and resources in something that will thrive and bring profits in the long run. As a result, registering your company before starting your business ensures long existence to your business even way before the business activities commence in the market.

Therefore, registering your company would mean that your company can continue without you. Also, customers are interested in knowing if your company has a future and if the company is able to continue serving them in your absence.

In conclusion, knowing the best form of business incorporation serves you from a lot of investment risks. If you are planning to trade with larger entities then a PLC is best while a PBC is best for smaller entities. Knowing which one is best for you is the first step when designing your business.

Vision, Mission & Core Values

Your business core values, vision and mission statements play an important role. Primarily, these three define the purpose of the organization and give a clear and effective guide for making decisions while ensuring that all the decisions made are properly aligned with what the organization hopes to achieve. Secondly, they help you to provide your stakeholders with a statement of the company’s purposes, goals and values.

Core Values

Core values are what supports the vision, shape the culture and reflect what your company values. They are the essence of your company’s identity, the principles, beliefs or philosophy of values. Most importantly, your core values educate clients and potential customers about what your company is about and clarify the identity of the company. Specifically, in this competitive world, having a set of specific core values that speak to the public is definitely a competitive advantage.

In addition, core values describe what the organization believes in and how it will behave. These values create a compass for the company and its employees. Ultimately, this compass guides decision-making and establishes a standard with which actions can be assessed against. They define the held beliefs and principles of the organizational culture.

Following that, core values are enduring, passionate and distinctive core beliefs and they are an essential part of developing your strategy. They are based on enduring tenets, guiding principles, to adhere to no matter what mountain you climb. Generally, your core values are part of your strategic foundation. They are the beliefs that guide the conduct, activities and goals of your organization. They establish why you do what you do and what you stand for.

Next, core values are deeply held convictions, priorities and underlying assumptions that influence the attitudes and behaviors of your company. Strong values account for why some organizations gain a reputation for such strategic traits as leadership, product innovation and total customer satisfaction. These never change.

Also, an organization’s values can dominate the kind of strategic moves it considers or rejects. When values and beliefs are deeply ingrained and widely shared by directors, managers and staff, they become a way of life within the organization and they mold the organizational strategy.

Here are some guidelines in developing core values:
  • Keep the list of values to between five and seven – they need to be memorable to your staff.
  • Create phrases, but not paragraphs – one word is not enough to convey real meaning of a value.
  • Make these values specific, not generic – it takes more than one word to define specificity.
  • Values need to be shared – while you don’t need consensus from everyone in your organization, you do need agreement from senior leadership.
  • If it’s already stated in your mission, do not repeat it – some values-driven language may be part of your mission statement. That is fine but consider not repeating what you have covered elsewhere.
  • They should be realistic.
  • They should be unique.
  • They should be connected to your mission and vision statements.
  • They should set your identity in the market – core values educate clients and potential customers about what the company is about and clarify the identity of the company. Especially in this competitive world, having a set of specific core values that speak to the public is definitely a competitive advantage.
  • They should be timeless – core values are timeless and do not change. They are sustainable in the longer term and they don’t change in an economic downturn or in a change of strategy or with a new set of products.
Reasons why core values are important:
  • They determine your company distinctiveness – this is what makes you different from everyone else in your industry or field of work.
  • They dictate personal involvement and alignment – when you go to hire staff and employees, you want people who are in alignment with your values. You can always train them in skills but they must be in alignment with your core values.
  • They communicate what is important – what is important to you, the employees and the company can be clarified in your values for your clients and customers to see.
  • They influence overall behavior – core values influence how the staff acts at the workplace. Employees are supposed to leave their different personalities and behaviours outside work and follow the company’s core values.
  • They inspire people to action – people take positive action because they aspire to live up to those core values.
  • They contribute to the overall success of the organization.
  • They shape the organizational culture.

Vision

A vision statement describes your business as it would appear in a future successful state. When developing a vision statement, try to answer this question: ‘If the company were to achieve all of its strategic goals, what would it look like 10 years from now?’An effective vision statement is inspirational and aspirational.

Following that, it creates a mental image of the future state that the organization wishes to achieve. Most importantly, a vision statement should challenge and inspire both your internal and external stakeholders.

How to create a vision statement:
  • Inspire – It should be aspirational and inspirational.
  • Ideally, the statement should be one sentence in length and should not explain how the vision will be met.
  • Ask Yourself: What is unique about doing business with your brand? How would your customers describe your brand? Where do you want your company to be in five years?
  • Take into account differences in people – people are complex creatures with different preferences and understanding. Your core values must be clear and straight to the point.
Benefits of a company vision:
  • It is a unifying force – a clear vision statement acts as a unifying force and has a positive impact on organizational effectiveness. When personnel understand and buy-in to the organization’s vision statement, it brings them together. It focuses and aligns efforts so everyone is working towards the same understood goal.
  • It is a guide for decision making – a solid vision statement acts as a guide for employee actions and decision making.
  • It serves as a motivator and source of inspiration – the most significant benefit of a clear vision statement is that it can be motivating and inspiring. When an individual understands and aligns with the core values and vision of the organization, they are able to readily commit to, and engage in, the organization’s efforts. Engaged and inspired personnel can go a long way in helping the organization achieve its mission and goals.

Mission Statement

A mission statement explains your company’s reason for existence. Primarily, it describes the company, what it does and its overall intention. In addition, the mission statement supports the vision and serves to communicate purpose and direction to employees, customers, vendors and other stakeholders.

How to create a mission statement:
  • It should be simple – it should be simple, straightforward, articulate and consist of jargon-free language that is easy to grasp.
  • It should motivational – it should be motivational to both employees and customers.
  • Ask yourself the following questions: What are the specific market needs your company exists to address?What does your company do to address these needs? What are the guiding principles that define the company’s approach? Why would customers buy from you and not your competition?
  • It should describe the overall purpose of the organization.
  • Wording – when writing the mission statement, consider the company’s products, services, markets, values and concern for public image and maybe priorities of activities for survival.
  • It should set the tone for priorities – ensure that wording of the mission is to the extent that management and employees can infer some order of priorities in how products and services are delivered.
  • Be concise – when refining the mission, a useful exercise is to add or delete a word from the mission to realize the change in scope of the mission statement and assess how concise is its wording.
  • It should make you unique – your mission statement should include sufficient description that the statement clearly separates the mission of the organization from other organizations.

In conclusion, your company’s mission, vision and core values play a pivotal role in the survival and growth of your business and brand at large. These motivate, inspire and convince your prospects to buy from you other than your competitors. When well designed, they can positively shape people’s perceptions regarding your company.

Location

Positioning has always been an important element of setting up a business. Your success as a business depends on how well you are positioned to be found. Positioning includes various factors, from location, the price of your product or service to the message you use to promote the business, online and offline.

Generally, if your business address is far away from your target audience, especially if you sell offline, prospects may find it difficult to locate you. Conversely, if you choose a city centre location or one which is well-regarded as a business centre, prospects may be more inclined to convert. Hence, knowing the ideal location for your business will save you from colossal investment risks.

Overally, choosing a location for a new business is the most important decisions entrepreneurs make during the planning phase of launching ventures. Primarily, the location of your business can affect many aspects of how it operates, such as total sales and how costly it is to run. Even home-based businesses and online businesses can be affected by location-dependent rules and regulations.

An example is that of The Kraal Pizza and Grill restaurant located in Bulawayo. The family-style restaurant was established in 2010 but unfortunately shut down in March 2019. The restaurant was located in the outskirts of Bulawayo, far from the CBD.

Although, it was popular and known for its exceptional services, the geographical location hindered most people, especially those without cars, to go there. Ultimately, people preferred the restaurant’s competitors which are located in the CBD. Eventually, The Kraal Pizza and Grill began to make losses and it shut down.

Below are points to consider when choosing business:

Demographics

When choosing the ideal location of your business, you have to consider your prospects’ age, race, religion, gender, family size, ethnicity, income and education. Demographics can be segmented into several markets to help your business target its ideal consumers more accurately. With this type of segmentation, you can categorize the needs of your consumers.

More importantly, ensure that the demographics match your market and achieving your sales will be that much easier. Also, consider foot traffic. Is your business of such a nature that foot traffic will help sales? If so, you would need to find a location which meets these targets.

Also, keep in mind that your staff will probably come from the surrounding area. Are there enough people in these areas to meet your human resource needs and will staff have access to good schools, public transport and good amenities?

Transport costs

If your business isn’t a customer facing one, but rather a delivery based one, then location remains important. Delivery of goods costs money and with the rising cost of fuel, you need to make sure you are able to keep your transport costs down. A location which is more central to delivery areas would keep costs down and save valuable time. While it may not mean more money in your pocket, it does mean a lower expenditure and more savings.

Competition

A business’s location can affect the competition it faces from businesses that sell similar products and services. For instance, an upscale neighborhood in a major city might have dozens of ethnic food restaurants, while a small town might not have any businesses that sell ethnic food. Starting a business in an area with few direct competitors can increase the likelihood of attracting customers.

Investigate your competitors. Know who they are, how many they are, what they are doing so good as well as their weaknesses. Will they be your competition, and if so, will it be good competition? Being close to your competition is not necessarily a bad thing. You could catch customers looking for competitive pricing, as well as customers trying to find all they need in one area.

Security considerations

There are also security considerations to your choice of business address. Again, referring specifically to businesses started at home, choosing to list your home address for your business can lead to unsolicited mail to your house or even customers turning up unexpectedly.

Accessibility

Location is of utmost importance to businesses that sell goods or services directly to customers. For example, a card shop located in a popular mall is likely to attract more customers than a similar shop located in a run-down part of town. Location can also influence a business’s ability to market itself. A business with a storefront on a busy street is more likely to attract customers with signs and storefront displays than a business that is not in a busy area.

Operating Expenses

The location of a business can influence the total cost of operation. Renting a storefront on a popular street or in a highly trafficked mall is likely to be more expensive than opening a store in a small commercial district in a residential area. A business could be better off opening its doors in an area that is cheap, even if it results in fewer total sales.

Taxes and Regulations

The location of a business determines the state and local taxes that owners have to pay and the regulations they must follow. Income tax and sales tax rates vary from one area to another, which can have a significant impact on your business’ earnings. Government zoning laws can limit the size and construction specifications of buildings and the use of signs. State and local laws can also affect the types of permits and licenses necessary to operate a business.

Psychographics

The mindset of your customers or the aura of a particular region is also a factor to consider when choosing a location for your small business. For example; if you site your business in a region where tribalism thrives, then you are doomed if you are not a member of the tribe.

Another example is this; if you are in the pornographic industry, you will be making a grievous mistake to site your business within a region where the inhabitants are highly religious.

Distribution channels

If your business doesn’t deal directly with end users or final consumers, then it’s wise to put your distributive channel into consideration when choosing a location for your small business. The more you make it easier for your distributors to access your products, the better for your business.

Availability of raw materials

If you intend running a manufacturing or production business, then the nearness or availability of raw materials is a factor you must consider when choosing your business location. If your business is not sited close to these raw materials, then sourcing and transportation will reduce your profit margin.

In conclusion, your business location is directly linked to your business success. Your success as a business depends on how well you are positioned to be found. When you consider the above mentioned factors, your business will make profits and it will save you investment risks.

Revenue Model

A revenue model is the description of how a business will earn income, produce profits and generate a higher than average return on investment. It identifies which revenue source to pursue, what value to offer, how to price the value and who pays for the value. It is a key component of a company’s business model.

Primarily, it identifies what product or service will be created in order to generate revenues and the ways in which the product or service will be sold. Without a well-defined revenue model, that is, a clear plan of how to generate revenues, your business will be more likely to struggle due to costs which you will not be able to sustain.

By having a clear revenue model, your business can focus on a target audience, fund development plans for a product or service, establish marketing plans, begin a line of credit and raise capital. The type of revenue model that is available to a firm depends, in large part, on the activities the firm performs, and how it charges for those. These models include:

Production Model

In the production model, a business creates the product or service, sells it to customers who value and thus pay for it. An example would be a company that produces paper. The company sells it to either the direct public or to other businesses who pay for the paper. Thus generating revenue for the paper company.

Manufacturing Model

Manufacturing is the production of merchandise using labour, materials and equipment resulting in finished goods. In this model, revenue is generated by selling the finished goods. However, these goods may be sold to other manufacturers for the production of more complex products (such as aircraft, household appliances or automobiles), or sold to wholesalers, who in turn sell them to retailers.

Following that, retailers then sell them to end users and consumers. Also, manufactures may market directly to consumers, but generally do not, for the benefits of specialization.

Rental or Leasing Model

Renting is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership. Things that can be rented or leased include land, buildings, vehicles, tools, equipment, furniture to mention but a few.

Advertising Model

The advertising model is often used by media businesses which use their platforms where content is provided to the customer as an advertising space. Possible examples are newspapers and magazines which generate revenue through the various adverts encountered in their issues. Internet businesses which often provide services also have advertising spaces on their platforms.

Examples include Google and Taobao. Mobile applications also use this specific revenue model to generate revenues. By incorporating some ad space, many popular apps such as Twitter and Instagram have strengthened their mobile revenue potential after previously having no real revenue stream.

Sponsored Ranking Model

The sponsored ranking model is a variant of the advertising model. The sponsored ranking model is mainly used by search engine platforms like Google and IT-services platforms where users are offered free search functionality in return for sponsored results in front of other search results. The sponsor is often paying per click, per view or as a subscription model.

Commission Model

The commission model is similar to the markup model as it is used when a business charges a fee for a transaction that it mediates between two parties. Brokerage companies or auction companies often use it as they provide a service as intermediaries and generate revenue through commissions on the sales of either stock or products.

Fee-for-service Model

In the fee-for-service model, unlike in the subscription model, the business only charges customers for the amount of service or product they use. Many phone companies provide pay as you go services whereby the customer only pays for the number of minutes he actually uses.

Licensing Model

With the licensing model, the business that owns a particular content retains copyright while selling licenses to third parties. Software publishers sell licenses to use their programs rather than straight-out sell copies of the program. Also, media companies obtain their revenues in this manner, as do patent holders of particular technologies.

Software Licensing Model

Rather than selling units of software, software publishers generally sell the right to use their software through a limited license which defines what the purchaser can and cannot do with it.

Shareware Model

In the shareware model, users are encouraged to make and share copies of a software product, which helps distribute it. Payment may be left entirely up to the goodwill of the customer or be optional with an occasional reminder.

Sometimes, the software may be designed to stop working after a trial period unless the user pays a license fee or be crippled so that key features don’t work. However, sometimes it may be a free feature-limited ‘lite’ version with a more advanced version available for a fee.

Markup Model

In the markup model, unlike with previous models, the business buys a product or service and increases its price before reselling it to customers. This model characterizes wholesalers and retailers, who buy products from manufacturers, mark up their prices, and resell them to end customers.

Wholesale Model

Wholesaling, jobbing, or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional, or other professional business users; or to other wholesalers and related subordinated services. In general, it is the sale of goods to anyone other than the end-consumer. Wholesaling can be implemented online via electronic transactions.

Retail Model

Retail is the process of selling consumer goods or services to customers through multiple channels of distribution to earn a profit. Demand is identified and then satisfied through a supply chain. Attempts are made to increase demand through advertising.

Brick and Mortar Retail Model

Conventional retail or brick and mortar retail is selling products from a physical sales outlet or store.

Mail Order Model

The mail order revenue model and distribution method entails sending goods by mail delivery. The buyer places an order for the desired products with the merchant through some remote method such as by telephone call or web site.

Then, the products are delivered to the customer, typically to a home address, but occasionally the orders are delivered to a nearby retail location for the customer to pick up. Some merchants also allow the goods to be shipped directly to a third party consumer, which is an effective way for someone to buy a gift for an out-of-town recipient.

E-tail Model

E-tail is on-line retail. Retail is the process of selling consumer goods and/or services directly to end-consumers to earn a profit. Demand is created through promotion, and by satisfying consumers’ wants and needs effectively (which generates word-of-mouth-advertising).

In the 21st century, an increasing amount of retailing is e-tailing, done online using electronic payment and delivery via a courier or postal mail. Via e-tail, the customer can shop and order through the internet and the merchandise is dropped at the customer’s doorstep. This format is ideal for customers who do not want to travel to retail stores and are interested in home shopping.

The online retailer may handle the merchandise directly, or use the drop shipping technique in which they accept the payment for the product but the customer receives the product directly from the manufacturer or a wholesaler.

Subscription Model

In the subscription model, the business provides a product or service to a customer who in return pays a pre-determined fee at contracted periods of time to the business. The customer will be required to pay the fee until the contract with the business is terminated or expires, even if he is not using the product or service but is still adhering to the contract. Possible examples are flat-rate cellular services, magazines and newspapers.

In conclusion, revenue models are central to business success. They identify what product or service will be created in order to generate revenues and the ways in which the product or service will be sold. Without a well-defined revenue model your business will be more likely to struggle. By having a clear revenue model, your business can focus on a target audience, fund development plans for a product or service, establish marketing plans, begin a line of credit and raise capital.

Employment Model

An employment model is about the appropriate type of employment that will best suit the nature of your company. Primarily, a good employment model results in lower absenteeism and improved work relationships. As a result, employees will be ready and willing to make a long-term commitment to your company.

Below are types of employees:

Full-time employees

Full time employees are the most common type of employees. Particularly, they are offered permanent positions with a salary or hourly wage. There is no set minimum number of hours for full-time employees. However, most employers recognize full-time work as 35+ hours per week. Examples of full-time employees include receptionists and all types of managers.

Basically, hours of work are defined as each hour for which an employee is paid or entitled to payment, for the performance of duties for the employer. Also, they are each hour for which an employee is paid, or entitled to payment by the employer for a period of time during which no duties are performed due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence.

Part-time employees

A part-time worker works fewer contracted hours than a full-time employee. However, they also hold permanent positions. Following that, the number of hours they are scheduled to work per week should be clearly visible within the contract but they may have the option to work overtime, if and when desired.

Benefits of part-time employment include a more flexible schedule for the employee, allowing individuals to fit their work around other commitments, and the opportunity for people to try out new roles without having to give up vast amounts of your time. Most waiters and waitresses are an example of part-time employees.

Fixed-term employees

Fixed-term employees last for a specific amount of time, which has been set and agreed in advance. In some instances, fixed-term employees may not have an exact time-frame, but will instead end when a specific task has been completed or fulfilled.

Depending on the role, and an individual’s performance, fixed-term contacts can sometimes lead to longer term positions. Examples include students on industrial attachment and drivers for a specific event such as weddings.

Temporary employees

Similar to fixed-term, temporary employees are offered a contract that is not expected to become permanent. Usually they would have some form of end date included. However, these may be subject to change. As such, temporary workers may have their contracts extended in line with demand and availability. Temporary teachers are a common example in Zimbabwe.

Agency employees

Agency staff have their contracts agreed and managed by a recruitment consultancy or employment agency. They usually work on a temporary basis and the length of their contract depends on demands of the employer as well as their availability. The Valcol Group company offers such services majoring in I.T experts and secretaries.

Freelancers and contractors

When working with freelancers or contracted basis, contracts may vary from position to position. However, individuals working in this way are generally considered self-employed. Contracts may include start and end dates, or the salary may be based on set projects or pieces of work, meaning the contract effectively ends upon delivery.

Freelance and contract workers may also not be entitled to the same rights as more permanent members of staff, although they do get to manage their own schedule and negotiate their own terms. Most graphic designers are freelancers.

Zero hour employees

Zero hour employees are also known as casual employees. These employees specify that an employee works only when required by their employer. The employer is under no obligation to provide a set amount of hours to work. Similarly, the employee does not have to accept any work that is offered to them.

Individuals on a zero hour contract may also seek employment elsewhere. In fact, their contract would not be valid if it prevented them from looking for, or accepting, work from another employer.

Probation employees

Employers can put their employees on a probation period (also known as a probationary period) to assess if employees are suitable for the role and business. However, the employer decides on the length of the probation period. It can range from a few weeks to a few months at the start of employment.

Specifically, while on probation, employees continue to receive the same entitlements as someone who isn’t in a probation period. If hired on a full-time or part-time basis, an employee on probation is entitled to access their paid leave entitlements such as annual leave and sick leave.

Following that, if an employee doesn’t pass their probation, they are still entitled to receive notice when employment ends and have their unused accumulated annual leave hours paid out.

In conclusion, knowing the best employment for your business will save you a lot of hustles. A proper employment model will help you hire the right people for your company. Also, it will save you a lot of money because you will know the exact type of employee to hire, the period they should work for you as well as the ideal wage to give them.

Marketing Plan

A marketing plan is a roadmap for introducing and delivering your product or service to potential customers. It is a business document outlining your marketing strategy and tactics. Primarily, it is drafted for a specific period of time and covers a variety of marketing-related details such as costs, goals and action steps.

A marketing plan doesn’t need to be long and it doesn’t have to cost a lot of money to complete. However, a marketing plan requires a lot of research and effort. Putting in the work to create it can help ensure your company’s success in the long run.

Moreover, unlike your business plan, a marketing plan is not a static document. It needs to change and evolve as your business grows and as new and changing marketing trends develop. Especially in today’s changing world, you need to keep up-to-date on the best ways to reach and engage your market.

An effective marketing plan will help you understand the market which you are targeting and the competition in that space. Also, it helps you understand the impact and the results of marketing decisions and provide direction for future initiatives. Although marketing plans can vary depending on the industry, type of products or services and the goals you want to achieve, there are certain essential elements that your plan should include.

Elements that your marketing plan should include:

Situational Analysis

Your situation analysis details the context for your marketing efforts. In this section, you will take a close look at the internal and external factors that will influence your marketing strategy. Many companies do a SWOT analysis, which combines the external and internal analysis to summarize your strengths, weaknesses, opportunities and threats.

Business Objectives

An effective marketing plan will help support your overall business strategies and goals. In order to reach this sort of alignment, you must be clear on what these business objectives are and which aspects of them they can affect.

Marketing Goals

These goals will tie into the overall business objectives but will only focus on the portions of the business that marketing can influence. For instance, if an overall objective of a company is to increase revenue from repeat business by a certain percentage in the next year, then the related marketing goal might be to get a certain amount of customers to sign up for a rewards program each month.

Target Market

The concept of target markets is one of the most basic, yet most important aspects of marketing. It is unrealistic to think that you can attract everyone, so you need to identify your ideal customers. What do they like? What don’t they like? How old are they? Where can you find them? Getting specific about your target market and segmenting it into even smaller groups for specific promotions can help you decide where to commit resources and what kinds of tactics and messages to use.

Strategies

Strategies are the approaches you want to take to achieve your marketing goals. For instance, if you are trying to get a certain amount of people to sign up for a customer rewards program each month, your strategy may be to introduce new customers to the rewards program with personalized invites that highlight rewards that they may be interested in.

Tactics

These are the specific actions you will take to execute the strategies that you set. If you introduce new customers to the rewards program with personalized invites, then one tactic you could use is sending out emails that address each new customer by name and let them know about some specific rewards that they can get, along with a link to easily sign up for the program.

Messaging Guidelines

The right messaging can help establish your brand’s position in the market, help it stand out from competitors, demonstrate value to potential customers and reach specific audiences. You can set some general messaging guidelines in your overall plan, then use them as a starting point to craft more specific messages for each campaign and different segments of your target market.

Budget

You must know what you can spend on your marketing campaigns and how much money your company is willing to put into different types of marketing efforts. It will help you to be focused.

Tracking and Evaluation

This section of your plan should include plans and procedures for tracking each type of marketing activity you are using. Generally, tracking helps monitor the effectiveness of each marketing activity and is especially helpful with your overall program evaluation. If you are not tracking and measuring your efforts then you are not marketing effectively.

Benefits of a Marketing Plan

The importance of a detailed marketing plan can’t be overstated. A marketing plan:

  • Gives clarity about who your market is – it’s easier to find clients and customers if you know who they are.
  • Helps you craft marketing messages that will generate results – marketing is about knowing what your product or service can do to help a target market. Your marketing messages need to speak directly your targeted audience.
  • Provides focus and direction – your choices for marketing are vast including email, social media, advertising, guest blogging and direct mail, publicity. With so many marketing choices, you need a plan for determining the best course of action for your business.
  • Creates alignment – the biggest advantage of a marketing plan is building a bridge between the vision of the organization and the marketing and sales of products and services. At the strategic (upper management) level, your business has a mission and vision. This mission and vision must translate from the executive team to all internal and external stakeholders. This is called alignment or having all stakeholders (along with the organization) on the same page. Particularly, marketing plans are useful in aligning the vision with the brand and ensuring that what is communicated to potential customers is accurate and meaningful to the core target market.
  • Helps brand building – with a strong research-oriented understanding of the market and alignment across the business in terms of vision and mission, you can build a brand that represents the vision while addressing core needs in the market. Through associating the organization’s competitive advantages with a given need in the marketplace, you can build a brand within a target markets.
  • Mitigates risks – in nearly all contexts, planning is a great tool for avoiding risks. The simplest way to avoid making a mistake is considering all potential options, weighing the opportunity costs and selecting the option with the lowest risk and/or the highest return (the optimal risk/return ratio). Thus, marketing plans enable the research required to consider the risks and returns of various segments, equipping the organization with the knowledge to mitigate risk and capture opportunities.

In conclusion, a proper and well designed marketing plan will introduce and deliver your product or service to potential customers. It helps you outline your marketing strategy and tactics. Finally, a marketing plan will save you from investment risks. After all, failing to prepare is preparing to fail.

Budget (Startup Costs)

Have you ever wondered why most startups fail? The most global characteristic of startups is that they are always short on funds, whether it’s for resources, advertising, marketing or even manufacturing their products/services. Specifically, most startups fail because of their failure to draft a budget before they commence trading. With little scope for investment, startups often lack a continuous cash flow.

Primarily, a budget is a plan that outlines your business’ financial and operational goals. It is an approximate estimation of your startup costs. Startup costs are basically expenses incurred before your business starts running. Following that, a budget is an action plan that helps your business allocate resources, evaluate performance and formulate plans. Ultimately, a budget is an essential part of a business plan when starting a new business.

Also, once a business is established, budgeting becomes a regular task that should normally occur on a quarterly and/or annual basis, where the past quarter or year’s budget is reviewed and budget projections are made for the next three or even five quarters or years.

Next, a budget ensures that you will always have enough money for the things you need and the things that are important to you. Most importantly, a budget or spending plan will also keep you out of debt or help you work your way out of debt if you are currently in debt. Thus, business budgeting is one of the most powerful financial tools available to any small-business owner as it enables you to control your cash flow instead of having it control you.

The basic process of planning a budget involves listing the business’s fixed and variable costs on a monthly basis and then deciding on the allocation of funds to reflect the business’s goals. Businesses often use special types of budgets to assess specific areas of operation. A cash flow budget, for instance, projects your business’s cash inflows and outflows over a certain period of time. Its main use is to predict your business’s ability to take in more cash than it pays out.

Reasons why your business need a budget

Without a budget, you may not know how your business is performing. A budget provides an accurate picture of expenditures and revenues and should drive important business decisions such as whether to:

  • Increase marketing
  • Cut expenses
  • Hire staff
  • Purchase equipment
  • Improve efficiencies in other ways

Following that, a comprehensive budget will also be a definite requirement for obtaining business loans from financial institutions or seeking equity funding from investors. Trying to convince investors about something that doesn’t exist is definitely a challenge and trying to make them understand that you are trustworthy and equal to the task is complex.

There is more to raising capital than just simply asking for money. Most investors want to invest in an established business with minimal risk and they want to be sure that they get returns for the risk they took and having a well-structured budget is a step forward. To overcome the challenge of raising capital, you must develop the ability to sell your idea and vision to potential investors.

Budget Expenses

Most businesses have fixed costs that are independent of sales revenue, such as:

  • Building or office eases or mortgage costs
  • Loan payments (if using debt financing)
  • Insurance
  • Vehicle leases (or loan payments if the vehicle is purchased)
  • Equipment (machinery, tools, computers, etc.)
  • Payroll (if employees are on salary)
  • Utilities such as landline phone and internet charges
  • Variable costs increase or decrease according to the level of business activity. Examples include:
  • Contractors’wages or commissions (for salespeople)
  • Utility costs that increase with activity – for example, electricity, gas, or water usage
  • Raw materials
  • Shipping and delivery costs
  • Advertising (can be fixed or variable)
  • Maintenance and repair of equipment

How to create a business budget

a) Step 1 – Plan for ‘day one’ of your business startup

Begin by determining what your business “day one” will be like, in order to open the doors (or take your website live) and begin accepting customers. Generally, a “day one” start-up budget can be broken down into four categories (depending on your situation, some of the categories may not apply to your business.) The categories are:

  • Facilities costs for your business location – rental or purchase of a store, office, warehouse, etc. If you are working from home, you probably won’t have location costs. Facilities costs include lease security deposits, tenant improvements, and signage.
  • Fixed assets (sometimes called capital expenditures), for furniture, equipment, vehicles needed to set up your location and start your business. These assets include computers and machinery, and anything for your office that is needed to set up your business.
  • Materials and supplies, like office supplies, advertising and promotion materials. You will need an initial supply of these to get started.
  • Other costs, like the initial attorney and accounting set-up fees, Licenses and permits, insurance deposits, and fees to set up your business type. In your listing of these startup costs, include items you are contributing to the business, like a computer and office furniture. Note these items so you can get credit for them as collateral.
b) Step 2 – Estimate monthly fixed and variable expenses

Gather information on your fixed expenses each month. These are expenses that don’t change and aren’t dependent on the number of customers you have. Here is a list of the most common monthly fixed expenses:

  • Rent
  • Utilities
  • Phones (business phones and cell phones
  • Credit card processing – monthly fees (transaction fees are variable)
  • Website service fees
  • Equipment Lease Payments
  • Office Supplies
  • Dues/Subscriptions
  • Advertising, Publicity, and Promotion commitments, like social media, online ads
  • Business insurance
  • Professional fees (legal and accounting)
  • Employee Pay/Benefits
  • Misc. Expenses
  • Business Loan Payment

Then add variable expenses. These are expenses that will change with the number of customers you work with every month. These might include:

  • Commissions on sales
  • Production costs
  • Raw materials
  • The wholesale price of goods to be re-sold
  • Packaging and shipping costs.
c) Step 3 – Estimate monthly sales

This is probably the most difficult part of a budget because you don’t know what sales will be for a new company. You might want to do three different sales projections:

The best case scenario is the one in which you show your most optimistic estimate for first-year sales. Worst case scenario is when you show your least optimistic scenario, with very little sales during the first six months to a year. The likely scenario is somewhere in between. Also, the likely scenario would be the one to show your lender.

It is important to include a calculation of collections percentage.To be realistic in your budgeting, you must assume that not all sales will be collected. Depending on the type of business you have and the way customers pay, you might have a greater or smaller collections percentage.

Following that, include a collections percentage along with your estimate of sales for each month. For example, if you estimate sales in Month One to be $50,000 and your collection percentage is 85%, show your cash for the month to be $42,500.

Next, calculate the variable costs of sales for each month based on sales for the month. For example, if your estimated sales for a month are 2,500 units and your variable costs are $5.50 per unit, total variable costs for the month would be $13,750.

Lastly, add monthly variable costs to monthly fixed costs to get total monthly costs (expenses). You might want to calculate your break-even point to include with your budget.

d) Step 4 – Create a cash flow statement

Combine total costs with total sales and collections for each month. The monthly totals will look something like this:

Monthly sales $50,000Collected $42,500Total fixed costs $26,900Total variable costs $13,750Total cash balance $2,150

The $2,150 represents your total cash balance for the month, not your profit. By changing your sales figures using the three scenarios above, you can see the result in your cash balance at the end of each month. This cash balance can give you information about your cash needs and how much you might need to borrow for working capital.

In conclusion, draft your business budget before trading. Your budget will help your business allocate resources, evaluate performance and formulate plans. That way, you will keep you out of debt and it will enable you to allocate resources, evaluate performance and formulate plans accurately.

Business environment analysis

 

A business environment is a combination of internal and external factors that influence your company’s operating system. In business, internal and external environments can negatively or positively affect both your business’ operating and financial results. You have to know your competitors, market trends and whom you will be creating value for. Hence, business environmental analysis is the first move when designing any business.

Business environmental analysis is a strategic tool. It is a process that helps you identify internal and external elements which may affect your business’ performance. The analysis entails assessing the level of threats and opportunities. These evaluations will help you make strategic decisions that will give you competitive advantage in the long run. Below are methods of carrying out a business environment analysis:

a) SWOT Analysis

SWOT stands for strengths, weaknesses, opportunities and threats. SWOT analysis is a strategic method used to evaluate places (business locations), products, price and promotion strategies. This powerful strategic tool identifies the internal and external that may affect your future business.

The internal factors are the strengths and weaknesses of the evaluation. Examples of internal factors are financial resources, company’s location, employees, software systems, legal elements like patents and copyrights and business processes. The external factors are the opportunities and threats. These include the market, demographic and economic trends, relationships with suppliers and business partners as well as regulations.

Strengths

These are your strengths that can contribute to achieving your intended objectives. When formulating the strengths, it is important to approach these from an internal perspective as well as from the perspectives of the customer and the market. It is necessary to remain realistic in order to prevent that the organization or the project from being positioned too highly with respect to the market and the competition. To determine what they are, you should ask yourself the following questions:

  • What advantages do you want to offer to customers?
  • What do you want to do better than your competitors?
  •  Why would customers choose you over competitors?
  •  Which factors have a significant influence on the buying behavior of your customers?
Weaknesses

These are weaknesses that may have a negative effect on achieving your intended objectives. To determine what these weaknesses are, the following questions should be asked:

  • What could be improved by your business?
  • What should especially be avoided within the business?
  • What are customers likely to see as your weaknesses?
  • What factors make you lose customers or market share?
Opportunities

These are the opportunities that present themselves for the business. To determine what these opportunities are, the following questions should be asked:

  • What interesting trends should your business respond to?
  • What are the opportunities for the business?
Threats

These could be possible obstacles that can negatively influence the business from the market. To determine what these threats are, the following questions should be asked:

  • What possible obstacles or external risk can be identified for the business?
  • What is the financial situation of the business?
  • Can new technologies pose a threat to the business or project?
  • Do the identified weaknesses pose a threat for the project or business?
  • How can you meet the quality requirements of the market and how you can compete with other suppliers?

b) PESTEL – Political, Social, Economic, Technological, Ecological, & Legal factors

A PESTEL analysis is a framework or tool used to analyse and monitor the macro-environmental (external environment) factors that have an impact on a business. The result of which is used to identify threats and weaknesses which is used in a SWOT Analysis.

Political Factors

These are all about how and to what degree a government intervenes in the economy. This can include government policies, political stability or instability in overseas markets, foreign trade policy, tax policy, labour laws, environmental laws, trade restrictions and so on. Political factors often have an impact on organisations and how they do business. Your business needs to be able to respond to the current and anticipated future legislation and adjust your marketing policies accordingly.

Economic Factors

Economic factors have a significant impact on how you do business and also how profitable it will be. Factors include economic growth, interest rates, exchange rates, inflation, disposable income of consumers and businesses and so on. These factors can be further broken down into macro-economic and micro-economic factors.

Macro-economic factors deal with the management of demand in any given economy. Governments use interest rate control, taxation policy and government expenditure as their main mechanisms they use for this. Micro-economic factors are all about the way people spend their incomes.

Social Factors

These are also known as socio-cultural factors. They are the areas that involve the shared belief and attitudes of the population. These factors include population growth, age distribution, health consciousness and career attitudes. These factors are of particular interest as they have a direct effect on how you understand customers and what drives them.

Technological Factors

We all know how fast the technological landscape changes and how this impacts the way we market our products. Technological factors affect marketing and the management thereof in three distinct ways:

  • New ways of producing goods and services.
  • New ways of distributing goods and services.
  •  New ways of communicating with target markets.
Ecological Factors

Ecological factors have become important due to the increasing scarcity of raw materials, pollution targets, doing business as an ethical and sustainable company and carbon footprint targets set by governments. These are just some of the issues you might face in doing business. More and more consumers are demanding that the products they buy are sourced ethically and if possible from a sustainable source.

Legal Factors

Legal factors include health and safety, equal opportunities, advertising standards, consumer rights and laws, product labeling and product safety. You need to know what is and what is not legal in order to trade successfully.

Conclusively, business environment analysis is central to business growth, success and survival. Knowing your market niche structure, how well your competitors are doing and whom you will be creating value for is essential in designing your business. Competitive advantage is key in business.

Market research

Starting a new business is easy. However, successfully growing it is not. You can have the greatest concept or business idea in the world, but there are so many other factors, all interconnected, that determine success or failure. Never ever has a business been able to succeed without conducting a thorough market research of its audience, products and services.

Generally, market research has always been a part of the key fundamentals of setting up and smoothly running a business. Specifically, market research helps you strengthen your position, minimize investment risk, identify potential threats and opportunities and facilitates strategic planning.

Primarily, market research is the process of assessing the viability of a new product or service. The process is carried out through techniques such as surveys, product testing and focus groups. Following that, market research helps you understand your customers, their preferences, to identify opportunities to grow and increase profits as well as to recognize and plan for economic shifts. In addition, it assists in monitoring competition in your market as well as reduce risks in your business decisions.

For instance, in July 2011, HP introduced its own TouchPad in an attempt to compete with the Apple’s iPad. Despite large scale press events and promotions, the HP TouchPad was a colossal failure and was discontinued almost immediately. The TouchPad’s operating system was a total failure compared to the Apple iPad. People were used to the Apple iPad with powerful video capability and impressive processing speeds.

As a result, the company suffered enormous loses. As if that was not enough, HP has continued to struggle to maintain its edge in the PC market. However, thorough marketing research helps you understand your customers’ preferences as well as monitoring competition with minimizes investment risks.

Below are step of the marketing research process:

i) Problem Identification

Identifying a problem is the first step in the research process. In many ways, research starts with problem identification. Once you approach the problem from a research angle, it is easier to find a solution. Thus, the problem needs to be understood, the cause diagnosed and solutions developed. You have to know what is lacking in your market niche so that you create a profit making business design. It is of no use to venture into a flooded business line of work.

ii) Method of Inquiry

This stage includes formulating an objective or theoretical framework, constructing analytical models, generating research questions and hypotheses. Also, it entails identifying characteristics or factors that can influence the research design. The stage is guided by discussions with management and industry experts, case studies and simulations, analysis of secondary data, qualitative research and pragmatic considerations.

iii) Formulation of the Research Design

This step involves the formulation of the research design which is the framework or blueprint for conducting the marketing research project. Specifically, it details the procedures necessary in obtaining the required information. Its purpose is to design a study that will test the hypotheses of interest, determine possible answers to the research questions and provide the information necessary for decision making.

Following that, conducting exploratory research, precisely defining the variables and designing appropriate scales to measure them are also components of the research design. However, the issue on how the data should be obtained from the respondents must be addressed. It is also necessary to design a questionnaire and a sampling plan to select respondents for the study.

iv) Data Collection

Generally, data collection involves manpower as in the case of personal interviewing (in-home, mall intercept, or computer-assisted personal interviewing), from an office by telephone (telephone or computer-assisted telephone interviewing), or through mail (traditional mail and mail panel surveys with pre-recruited households). Proper selection, training, supervision, and evaluation of candidates helps minimize data-collection errors.

v) Data Preparation and Analysis

This is the fifth step and it involves the editing, coding, transcription, and verification of data. Each questionnaire or observation form is inspected or edited and if necessary, corrected. Most importantly, analyzed data gives meaning to the information that have been collected.

vi) Report Preparation and Presentation

The entire project should be documented in a written report and the results and major findings must be presented. Following that, the findings must be in a comprehensible format so that they can be readily used in the decision making process. In addition, an oral presentation should be made to management using tables, figures, and graphs to enhance clarity and impact.

For these reasons, interviews with experts are more useful in conducting marketing research for industrial firms and for products of a technical nature, where it is relatively easy to identify and approach the experts. This method is also helpful in situations where little information is available from other sources, as in the case of radically new products.

Advantages of Market Research
a) It helps strengthen your business position

Knowledge is power. Market research helps you gain a better perspective and understanding of your market or target audience. As a result, it ensures that your firm stays ahead of the competition. In business, competitive advantage is central to success.

b) It minimizes any investment risk

This is a simple but vitally important and often a critical business consideration. Spending only a small proportion of your investment on researching and testing the market, product, concept or ideas is essential. It saves you from any investment risk. You will know if your product or service is valuable or not, your customer preferences and how well your competitors are doing.

c) It helps you identify potential threats and opportunities

Both primary research (fieldwork) and secondary research (desk research) can be utilized as an insurance policy against both obvious dangers on the road ahead. Coupling this with some qualitative research for deeper probing can highlight certain opportunities or warning signs that may otherwise have been missed. Thus, saving your business from loses before they are incurred.

d) It helps you discover your business’ and your competitor’s strengths and weaknesses

It’s vitally important to adopt an ‘eyes wide open’ approach to any market research project. However, it is often advised to work with a market research agency to ensure completely unbiased reporting. Furthermore, research findings help you adapt and learn from your own weaknesses whilst capitalizing on your new-found knowledge from competitor analysis to take advantage and forge ahead of the pack.

e) It facilitates strategic planning

In business, making decisions is very important. Your business success or failure is your responsibility. It all lies in the decisions that you make concerning your products, price and marketing techniques. Knowing your market niche and understanding the nature of your target audience will help you make the best decisions for your business.

f) It helps in spotting emerging trends

Staying ahead in business is often about being the first, being the best or doing something that no-one else has thought about. Regularly taking the ‘pulse’ of what’s hot and what’s not in your industry is a key discipline. Knowing what’s trending will help you offer the right products to the right people at the right time.

g) It assists your businesses to stay ahead of the competition

Generally, being the best demands a relentlessness to keep getting the basics right combined with a curiosity and willingness to innovate. Thus, knowing how to leverage the findings and insights you extract from market research, audience research and data research are the keys to both getting ahead and staying ahead.

h) It provides revenue projections

A market forecast is a core component of a market analysis projecting the future numbers, characteristics, and trends in your target market. Potential customers can then be divided into segments. You want to focus on the best market, which is not necessarily the largest one or the market with the highest growth. It will be the one that matches your own company profile.

i) It keeps you focused on customer needs and demands

You need to communicate on a regular basis your customers and potential customers through research. Put more effort on understanding your market through market research so that you can craft your products and services accordingly.

As a result, this will help you meet and/or exceed consumer needs. When used properly, marketing research should tell you what’s most selling and important to your consumers and help you to prioritize and maximize your time effectively. It can inform both your short-term and long-term marketing objectives, helping you feel focused in the long run.

In conclusion, market research plays a pivotal role both in setting up and smoothly running a business. Specifically, the process helps you to strengthen your position, minimize investment risk, identify potential threats and opportunities and facilitates strategic planning.

Your ideal customer

The most important activity as an entrepreneur is to clearly identify the very best customers for your product or service. The truth is, no matter how good your product or service is, no one will buy it if they believe they don’t need it. You cannot persuade anyone to buy what you are offering unless you clearly understand what it is your customers really want.

Most importantly, the ability to find a customer, sell your product or service to that customer and satisfy them so that they buy from you again should be the central focus of all your entrepreneurial activities. The greater clarity you have with regard to your ideal customer, the more focused and effective your marketing efforts will be.

An example is that of Readerest Company. In 2010, the American entrepreneur Rick Hopper, created a magnetic pocket filler that allows glass wearers to clip their spectacles to their shirts when not in use. Unlike glasses kept in a lose pocket, the clip prevents them from slipping and crashing to the floor when a person bends over. Rick identified his ideal customers and their problems and created a solution for them. As a result, they have made over $27 million in sales.

Primarily, once you have this knowledge, you can use it to persuade potential and existing customers that buying from you is in their best interests. Knowing who you are creating value for will save you a lot of investment risks. It helps you offer the right product or service to the right people at the right time. Thus, making profit.

Ultimately, there are 10 things you must know about your prospects when designing your business:

  • Who they are
  • What they do
  • Why they buy
  • When they buy
  • How they buy
  • How much money they have
  • What makes them feel good about buying
  • What they expect of you
  • What they think of you
  • What they think about your competitors

Advantages of knowing your ideal customer

1. It keeps you focused

Knowing your ideal customers tells you what’s most selling and important to your consumers. In addition, it helps you prioritize and maximize your time effectively. It can inform both your short-term and long-term marketing objectives, helping you feel focused in the long run.

2. It increases customer loyalty

A customer-centric business knows what its customers want and expect from them. In truth, the only person who can tell you best about what they want is one with the need. Following that, customers need and want businesses to keep their word, meaning they do the things they promise to do.

Therefore, a customer-centric business is honest and faces the facts. Understanding customer perceptions and aligning your practices with those expectations can dramatically increase customer satisfaction and therefore your sales and success.

3. It allows you to pursue the most lucrative growth opportunities

Everyone wants to grow their business, but we are not always clear on which is the right path to do so. Knowing your ideal customers can help you weigh and quantify opportunities to prioritize those with the highest revenue potential for your brand.

4. It keeps you relevant and future-oriented

Knowing your ideal customer enables you to make sure you are constantly adapting and evolving your products to meet long-term needs. While focusing on maximizing short-term results is easy, focusing too much on the short-run limits your brand’s longevity and relevancy in the future. If you aren’t keeping up with consumer, product and category disruptions, someone else will.

5. It improves your decision-making capabilities and reduces risk

Understanding your ideal customer can provide insightful information about your market, product, competition and more. It helps you make decisions with greater clarity and confidence.

6. To develop new, effective strategies

Based on the understanding of your ideal customer, you can make informed marketing decisions regarding the pricing of your products and services, the distribution and which marketing channels to use. The results of knowing your ideal customer will also help you to make informed decisions about your existing business activities.

In conclusion, the greater clarity you have with regard to your ideal customer, the more focused and effective your marketing efforts will be. Knowing who you are creating value for will save you a lot of investment risks. It helps you offer the right product or service to the right people at the right time. Thus, making profits.

 

Value proposition

Starting a business from the ground is a scary and intimidating notion. There are too many unknowns to take the plunge. However, being an entrepreneur means being a smart competitor because from the day you start your business, you are in a battle for the top spot in your niche. To emerge victorious, you either invent the niche or dethrone the current dominating companies in the market. More importantly, a unique value proposition distinguishes your business from competitors.

Generally, value proposition is an innovation, service or feature intended to make your company or product attractive to customers. It is a clear statement that explains how your product solves customers’ problems or improves their situation, delivers specific benefits and tells the ideal customer why they should buy from you and not from competitors.

Again, it is a promise of value to be delivered communicated or acknowledged. Hence, creating a unique value proposition is central to building a successful business.

Value proposition entails the questions: What problems do you want to solve with your product? What value do you want to deliver to customers and which customer needs do you want to satisfy? It is not mainly about the business idea or product but it’s about solving a problem and satisfying customer needs.

In addition, you have to consider whether the help you provide reduces risks, fulfills a basic need or if it satisfies an emotional need. The truth is, every business has a value proposition but what will make yours exceptional is having a unique one. The goal is not to be better than existing businesses but to be different.

In this modern world’s ultra-competitive marketplace, a critical factor in determining the success of a company is how good of a job it does at identifying, expressing and communicating a unique value proposition to potential customers. A company’s unique value proposition is a primary marketing tool.

Also, is a concise statement of the value that the company offers through its goods or services. Following that, the proposition is crafted to communicate the idea that consumers can receive the highest possible value or benefit from purchasing the company’s products and greater value or benefit than they can receive from the company’s products. A company’s value proposition is often included in its mission statement.

Most importantly, you need to give people a reason to choose your business or products than the already existing ones. To achieve this, don’t find customers for your products but find products for your customers. A unique value proposition has a plethora advantages which are a pivotal in the success of any business and these include an increase in usability or convenience, improvement in performance and it also lowers costs that a business can incur.

For instance, Uber Technologies is a peer-to-peer ride sharing, taxi cab, food delivery and transportation network company. Its value proposition is to offer a convenient, fast and effective way of transportation to its customers. Uber expertly highlights everything that the traditional taxis do not have and points out how its service is superior.

The value proposition of Uber is that with just one tap of the software, a car comes directly to you, the driver knows exactly where to go and the payment is completely cashless. This is what makes their business different from other taxis, hence success. Customers are allowed to pay with credit cards inside the taxi which serves time compared to the cash payments used by the traditional taxi systems. As a result, the use of Uber saw growth and profits compared to its competitors.

The following are the benefits of a value proposition:

Builds confidence

Having a strong and honed value proposition gives you, your team and your external stakeholders clarity. It allows you to progress without questioning and second-guessing your every move. Confidence comes from knowing that you are making a difference to the people you are serving and that your actions are aligned to delivering an overall remarkable experience. In fact, people want to feel as though they are valued members of a winning team on an inspired mission.

Improves customer understanding and engagement

The value proposition gives you the basis to engage with customers in a compelling manner by understanding how they view you and your products or services. The value proposition determines the factors that not only make a difference to your audience, but do so in aspects or ways that are meaningful to them. By grounding your solution in an understanding of your audience and their specific need, you can engage with them in a much more compelling and effective manner.

Gives direction

When your value proposition is not clear you risk developing something that may satisfy your needs but not those of your target customers. Basically, a value proposition gives you direction by defining your ideal target audience right up-front and then identifying and understanding a core need that you look to satisfy with your planned solution.

Creates focus

A robust value proposition gives you and your team focus by identifying the fundamental initiatives, activities and aspects of your business that will have the greatest impact on meeting your defined target audience’s needs. As if that’s not enough, it outlines what you must deliver to meet your defined audience’s needs and create an overall remarkable experience. If an activity or initiative isn’t consistent with your value proposition then you abandon that initiative.

Provides clarity of messaging

Specifically, if your company is a start-up without any brand recognition, there is need to paint a very clear picture as to why you are worth people’s time. Value proposition frames not only how you are creating value for your audience by addressing a core need, but critically why your solution is better than what they are currently doing or using, or versus whatever else is potentially out there that could use.

Therefore you should have a clearly defined consistent and engaging message that will relate to your audience.A unique value proposition is the greatest asset any business can use to gain competitive advantage.

Increases effectiveness of marketing

Value proposition directs your marketing efforts to concentrate on those activities that will generate the greatest results. By truly understanding your desired customers and their core need that you’re solving for, you are able to focus on the channels that are most relevant and will effectively communicate the benefits and advantages of your solution.

In conclusion, a unique value proposition will distinguish your business from its competitors. A value proposition these include an increase in usability or convenience, improvement in performance and it also lowers costs that a business can incur.

Choose form of business incorporation

When planning to start business, the first step is to register your business. However, you have to figure out what type of business you would want to incorporate under. Most importantly, it is important to consider the financial and economic advantages and disadvantages of the chosen business type.

Basically, incorporation is the legal process used to form a corporate entity or company. It is the process of obtaining legal authorization to conduct business within your chosen jurisdiction. Also, it is a legal obligation that ensures that a business is operating under the lawful obligations of its control. Following that, a corporation is a separate legal entity from its owners. It can sue and be sued in its own name.

Primarily, there are two types of companies in Zimbabwe which are the Private Limited Company (PLC) and the Private Business Corporation (PBC). Private Business Corporations are mainly meant for medium businesses. In addition, a PBC accommodates sole traders and has a maximum of 20 directors.

With a PBC, members are the same as shareholders and members are responsible for the day to day management of the company. After registering a PBC, you get company papers and a certificate of incorporation.

On the contrary, a PLC is meant for larger entities and has a maximum of 50 directors. Following that, with a PLC, shareholders are owners and can be different from the directors.

In addition, annual returns and meetings are compulsory for Private Limited Companies and directors are responsible for the day to day management of the company. Finally, after registering a PLC, you get a certificate, CR6, CR14, memorandum and articles of association.

For instance, in 2014, the Real Estate Agents Council blacklisted 28 real estate agents due to failure to comply with the council requirement of renewing membership. The companies include Avram and Becker, Batanai Properties and Kingsroad Real Estate just to mention but a few.

Knowing your form of business corporation means knowing what’s best for your business and it saves you from investment risks. More importantly helps make you solid decisions concerning your business activities and it keeps you compliant with the law.

Procedure for company registration in Zimbabwe

The procedure for company registration in Zimbabwe is divided into 2 stages. There is the name search and reservation stage and then there is the incorporation and registration stage. The procedure is basically the same whether you are registering a PBC or a PLC. The name search stage is the same for both company types so we shall list it the same for both.

Company registration steps:
Stage 1: Name search

A request is made to the Registrar of Companies office (also called the DCIP – Department of Companies & Intellectual Property) for a search to be made in the Register of Companies. The following is applicable at the name search stage:

  • The purpose of an application for reservation of name is to get the authority of the Registrar to use a particular name.
  • If the Registrar approves your application to reserve a name, he will reserve that name for you for a period of up to two months to enable you to register your company. He will not allow any other person to use that name during that period.
  • You are advised to give four names in your application so that if one name is not accepted, another one may be. You should list the names in order of preference.
  • The Registrar will not accept a name which is similar to that of another company or PBC, or is likely to mislead the public or is indecent.
  • The Registrar will give a written notice of whether any of your names were accepted or if they were rejected. This process takes 3 to 6 working days.
a) Reasons why names may be rejected
  • Your chosen name is too close to a registered company or PBC either when written down or when pronounced e.g. OK and Okay.
  • Your company name is likely to be offensive, blasphemous or indecent to any person or class of people.
  • Your company name is likely to deceive or mislead the public e.g. a company called Ministry of Computers.
  • Your company name suggests patronage of the Government or some other authority or organization.
  • Your company name is undesirable for any other reason.
Stage 2: Incorporation and Registration
a) Procedure for registration as a PBC (Private Business Corporation)

After your name has been successfully reserved, the documentation for the registration of the PBC must be submitted to the Registrar of Companies. This process involves the appointment of members (shareholders/ directors) of the PBC. Each member is assigned a percentage of ownership in the PBC. The total percentage for all members must add up to 100%.

The Registrar will then register the PBC and assign to it a registration number. The Registrar will put his seal, his stamp and his signature to the PBC Incorporation Statement to signify its authenticity. The PBC is also entered into the Company registry and becomes searchable in the Registrar’s database. This process takes 3 to 6 working days.

b) Procedure for registration as a PLC (Private Limited Company)

After your name has been successfully reserved, the memorandum and articles of association signed by the shareholders together with the CR6 and CR14 signed by either a director or secretary of the company are submitted to the Registrar of Companies. Each shareholder must sign in their own handwriting and specify the number of shares they have been allocated.

The Registrar will then register the PLC and assign to it a registration number. A certificate of Incorporation is also issued. The Registrar will put his seal, his stamp and his signature to the Certificate of Incorporation, Memorandum & Articles of Association and the CR6 & CR14 to signify their authenticity.

The PLC is also entered into the Company registry and becomes searchable in the Registrar’s database. This process takes 3 to 6 working days.

Here are the reasons why you should register your business:
a) To be more professional

First impressions are important. This is even more true in business. Professionalism is a strong work ethic that suggests that you place high value in doing a good job as well as respecting others and functioning with integrity.

Knowing the best form of business corporation for you and registering it makes your company legitimate as it shapes people’s perceptions about you. It depicts loyalty and seriousness in your business activities. In fact, it is also more professional to give your clients a business name for transactions instead of your own full name.

b) To protect and secure your business name

Registering your business name protects it from being used by other businesses. When you register a company, the name that you choose is reserved for you only.

However, you may not have plans to start operating right away but registering that name that you have always wanted ensures that it’s available to you when you are finally ready to launch your dream business. Once your company name has been incorporated and registered, you can further restrict its usage by registering it as a trade name or trademark. This ensures that no one else can legally use it.

c) To get access to funding

Trying to convince investors about something that doesn’t exist is definitely a challenge and trying to make them understand that you are trustworthy and equal to the task is complex. There is more to raising capital than just simply asking for money. Most investors want to invest in an established business with minimal risk and they want to be sure that they get returns for the risk they took.

Therefore, registering your business is a step forward. More importantly, lenders and investors will ask to see your business registration along with other application requirements before approving you a loan. As a registered company, your ability to attract customers and raise money for your business will be easier.

d) To limit personal liability

The advantage of having a corporate bank account is the separation of business funds from personal funds which is fundamental for any business owner that seeks to make progress with the business venture. As a sole trader or partnership, you will be legally responsible for all aspects of your business, including debts and loses. If u are to sell a defective product, make an error or suffer an injury during the course of your business, you will be personally liable.

As a result, you could lose all your personal assets such as your money, car and home. In fact, a company that is registered is a separate legal entity and it is an easy way to protect your personal assets from your business actions to be carried out. Hence, a business bank account is an important asset because it allows you to separate your personal activities from your business activities.

e) To gain trust

Registering your company plays a pivotal role in enhancing the perception of your business. It is easier for people to deal with registered entities for the purpose of business than individuals.

Usually, people who are interested in dealing with a particular corporate entity have the opportunity to conduct due diligence from the regulatory authorities as to the nature of the entity they want to deal with. Creditors, customers, suppliers and financiers are some of the categories of people for whom registration of a business would provide some form of security.

f) To minimize your tax liability

When doing business you have the option to do so as an individual or as a registered business. Ultimately, when you trade as an individual, you pay tax on the additional income you receive from your business. Unfortunately, you don’t get any tax deductions on the expenses you incur in running the business e.g. internet costs, telephone costs, transport, rents, etc.

These are all regarded as personal expenses more or less. One of the more appealing reasons for registering a business, as opposed to simply reporting your additional income, is the extra money you have left over. However, in Zimbabwe, businesses receive tax deductions for business-related expenses, including use of your car, a home office or a rented storefront, insurance, and more.

g) Business continuity

Everyone wants to invest their time and resources in something that will thrive and bring profits in the long run. As a result, registering your company before starting your business ensures long existence to your business even way before the business activities commence in the market.

Therefore, registering your company would mean that your company can continue without you. Also, customers are interested in knowing if your company has a future and if the company is able to continue serving them in your absence.

In conclusion, knowing the best form of business incorporation serves you from a lot of investment risks. If you are planning to trade with larger entities then a PLC is best while a PBC is best for smaller entities. Knowing which one is best for you is the first step when designing your business.

Vision, mission and core values

Your business core values, vision and mission statements play an important role. Primarily, these three define the purpose of the organization and give a clear and effective guide for making decisions while ensuring that all the decisions made are properly aligned with what the organization hopes to achieve. Secondly, they help you to provide your stakeholders with a statement of the company’s purposes, goals and values.

Core Values

Core values are what supports the vision, shape the culture and reflect what your company values. They are the essence of your company’s identity, the principles, beliefs or philosophy of values. Most importantly, your core values educate clients and potential customers about what your company is about and clarify the identity of the company. Specifically, in this competitive world, having a set of specific core values that speak to the public is definitely a competitive advantage.

In addition, core values describe what the organization believes in and how it will behave. These values create a compass for the company and its employees. Ultimately, this compass guides decision-making and establishes a standard with which actions can be assessed against. They define the held beliefs and principles of the organizational culture.

Following that, core values are enduring, passionate and distinctive core beliefs and they are an essential part of developing your strategy. They are based on enduring tenets, guiding principles, to adhere to no matter what mountain you climb. Generally, your core values are part of your strategic foundation. They are the beliefs that guide the conduct, activities and goals of your organization. They establish why you do what you do and what you stand for.

Next, core values are deeply held convictions, priorities and underlying assumptions that influence the attitudes and behaviors of your company. Strong values account for why some organizations gain a reputation for such strategic traits as leadership, product innovation and total customer satisfaction. These never change.

Also, an organization’s values can dominate the kind of strategic moves it considers or rejects. When values and beliefs are deeply ingrained and widely shared by directors, managers and staff, they become a way of life within the organization and they mold the organizational strategy.

Here are some guidelines in developing core values:
  • Keep the list of values to between five and seven – they need to be memorable to your staff.
  • Create phrases, but not paragraphs – one word is not enough to convey real meaning of a value.
  • Make these values specific, not generic – it takes more than one word to define specificity.
  • Values need to be shared – while you don’t need consensus from everyone in your organization, you do need agreement from senior leadership.
  • If it’s already stated in your mission, do not repeat it – some values-driven language may be part of your mission statement. That is fine but consider not repeating what you have covered elsewhere.
  • They should be realistic.
  • They should be unique.
  • They should be connected to your mission and vision statements.
  • They should set your identity in the market – core values educate clients and potential customers about what the company is about and clarify the identity of the company. Especially in this competitive world, having a set of specific core values that speak to the public is definitely a competitive advantage.
  • They should be timeless – core values are timeless and do not change. They are sustainable in the longer term and they don’t change in an economic downturn or in a change of strategy or with a new set of products.
Reasons why core values are important:
  • They determine your company distinctiveness – this is what makes you different from everyone else in your industry or field of work.
  • They dictate personal involvement and alignment – when you go to hire staff and employees, you want people who are in alignment with your values. You can always train them in skills but they must be in alignment with your core values.
  • They communicate what is important – what is important to you, the employees and the company can be clarified in your values for your clients and customers to see.
  • They influence overall behavior – core values influence how the staff acts at the workplace. Employees are supposed to leave their different personalities and behaviours outside work and follow the company’s core values.
  • They inspire people to action – people take positive action because they aspire to live up to those core values.
  • They contribute to the overall success of the organization.
  • They shape the organizational culture.

Vision

A vision statement describes your business as it would appear in a future successful state. When developing a vision statement, try to answer this question: ‘If the company were to achieve all of its strategic goals, what would it look like 10 years from now?’An effective vision statement is inspirational and aspirational.

Following that, it creates a mental image of the future state that the organization wishes to achieve. Most importantly, a vision statement should challenge and inspire both your internal and external stakeholders.

How to create a vision statement:
  • Inspire – It should be aspirational and inspirational.
  • Ideally, the statement should be one sentence in length and should not explain how the vision will be met.
  • Ask Yourself: What is unique about doing business with your brand? How would your customers describe your brand? Where do you want your company to be in five years?
  • Take into account differences in people – people are complex creatures with different preferences and understanding. Your core values must be clear and straight to the point.
Benefits of a company vision:
  • It is a unifying force – a clear vision statement acts as a unifying force and has a positive impact on organizational effectiveness. When personnel understand and buy-in to the organization’s vision statement, it brings them together. It focuses and aligns efforts so everyone is working towards the same understood goal.
  • It is a guide for decision making – a solid vision statement acts as a guide for employee actions and decision making.
  • It serves as a motivator and source of inspiration – the most significant benefit of a clear vision statement is that it can be motivating and inspiring. When an individual understands and aligns with the core values and vision of the organization, they are able to readily commit to, and engage in, the organization’s efforts. Engaged and inspired personnel can go a long way in helping the organization achieve its mission and goals.

Mission Statement

A mission statement explains your company’s reason for existence. Primarily, it describes the company, what it does and its overall intention. In addition, the mission statement supports the vision and serves to communicate purpose and direction to employees, customers, vendors and other stakeholders.

How to create a mission statement:
  • It should be simple – it should be simple, straightforward, articulate and consist of jargon-free language that is easy to grasp.
  • It should motivational – it should be motivational to both employees and customers.
  • Ask yourself the following questions: What are the specific market needs your company exists to address?What does your company do to address these needs? What are the guiding principles that define the company’s approach? Why would customers buy from you and not your competition?
  • It should describe the overall purpose of the organization.
  • Wording – when writing the mission statement, consider the company’s products, services, markets, values and concern for public image and maybe priorities of activities for survival.
  • It should set the tone for priorities – ensure that wording of the mission is to the extent that management and employees can infer some order of priorities in how products and services are delivered.
  • Be concise – when refining the mission, a useful exercise is to add or delete a word from the mission to realize the change in scope of the mission statement and assess how concise is its wording.
  • It should make you unique – your mission statement should include sufficient description that the statement clearly separates the mission of the organization from other organizations.

In conclusion, your company’s mission, vision and core values play a pivotal role in the survival and growth of your business and brand at large. These motivate, inspire and convince your prospects to buy from you other than your competitors. When well designed, they can positively shape people’s perceptions regarding your company.

Location

Positioning has always been an important element of setting up a business. Your success as a business depends on how well you are positioned to be found. Positioning includes various factors, from location, the price of your product or service to the message you use to promote the business, online and offline.

Generally, if your business address is far away from your target audience, especially if you sell offline, prospects may find it difficult to locate you. Conversely, if you choose a city centre location or one which is well-regarded as a business centre, prospects may be more inclined to convert. Hence, knowing the ideal location for your business will save you from colossal investment risks.

Overally, choosing a location for a new business is the most important decisions entrepreneurs make during the planning phase of launching ventures. Primarily, the location of your business can affect many aspects of how it operates, such as total sales and how costly it is to run. Even home-based businesses and online businesses can be affected by location-dependent rules and regulations.

An example is that of The Kraal Pizza and Grill restaurant located in Bulawayo. The family-style restaurant was established in 2010 but unfortunately shut down in March 2019. The restaurant was located in the outskirts of Bulawayo, far from the CBD.

Although, it was popular and known for its exceptional services, the geographical location hindered most people, especially those without cars, to go there. Ultimately, people preferred the restaurant’s competitors which are located in the CBD. Eventually, The Kraal Pizza and Grill began to make losses and it shut down.

Below are points to consider when choosing business:

Demographics

When choosing the ideal location of your business, you have to consider your prospects’ age, race, religion, gender, family size, ethnicity, income and education. Demographics can be segmented into several markets to help your business target its ideal consumers more accurately. With this type of segmentation, you can categorize the needs of your consumers.

More importantly, ensure that the demographics match your market and achieving your sales will be that much easier. Also, consider foot traffic. Is your business of such a nature that foot traffic will help sales? If so, you would need to find a location which meets these targets.

Also, keep in mind that your staff will probably come from the surrounding area. Are there enough people in these areas to meet your human resource needs and will staff have access to good schools, public transport and good amenities?

Transport costs

If your business isn’t a customer facing one, but rather a delivery based one, then location remains important. Delivery of goods costs money and with the rising cost of fuel, you need to make sure you are able to keep your transport costs down. A location which is more central to delivery areas would keep costs down and save valuable time. While it may not mean more money in your pocket, it does mean a lower expenditure and more savings.

Competition

A business’s location can affect the competition it faces from businesses that sell similar products and services. For instance, an upscale neighborhood in a major city might have dozens of ethnic food restaurants, while a small town might not have any businesses that sell ethnic food. Starting a business in an area with few direct competitors can increase the likelihood of attracting customers.

Investigate your competitors. Know who they are, how many they are, what they are doing so good as well as their weaknesses. Will they be your competition, and if so, will it be good competition? Being close to your competition is not necessarily a bad thing. You could catch customers looking for competitive pricing, as well as customers trying to find all they need in one area.

Security considerations

There are also security considerations to your choice of business address. Again, referring specifically to businesses started at home, choosing to list your home address for your business can lead to unsolicited mail to your house or even customers turning up unexpectedly.

Accessibility

Location is of utmost importance to businesses that sell goods or services directly to customers. For example, a card shop located in a popular mall is likely to attract more customers than a similar shop located in a run-down part of town. Location can also influence a business’s ability to market itself. A business with a storefront on a busy street is more likely to attract customers with signs and storefront displays than a business that is not in a busy area.

Operating Expenses

The location of a business can influence the total cost of operation. Renting a storefront on a popular street or in a highly trafficked mall is likely to be more expensive than opening a store in a small commercial district in a residential area. A business could be better off opening its doors in an area that is cheap, even if it results in fewer total sales.

Taxes and Regulations

The location of a business determines the state and local taxes that owners have to pay and the regulations they must follow. Income tax and sales tax rates vary from one area to another, which can have a significant impact on your business’ earnings. Government zoning laws can limit the size and construction specifications of buildings and the use of signs. State and local laws can also affect the types of permits and licenses necessary to operate a business.

Psychographics

The mindset of your customers or the aura of a particular region is also a factor to consider when choosing a location for your small business. For example; if you site your business in a region where tribalism thrives, then you are doomed if you are not a member of the tribe.

Another example is this; if you are in the pornographic industry, you will be making a grievous mistake to site your business within a region where the inhabitants are highly religious.

Distribution channels

If your business doesn’t deal directly with end users or final consumers, then it’s wise to put your distributive channel into consideration when choosing a location for your small business. The more you make it easier for your distributors to access your products, the better for your business.

Availability of raw materials

If you intend running a manufacturing or production business, then the nearness or availability of raw materials is a factor you must consider when choosing your business location. If your business is not sited close to these raw materials, then sourcing and transportation will reduce your profit margin.

In conclusion, your business location is directly linked to your business success. Your success as a business depends on how well you are positioned to be found. When you consider the above mentioned factors, your business will make profits and it will save you investment risks.

Revenue model

A revenue model is the description of how a business will earn income, produce profits and generate a higher than average return on investment. It identifies which revenue source to pursue, what value to offer, how to price the value and who pays for the value. It is a key component of a company’s business model.

Primarily, it identifies what product or service will be created in order to generate revenues and the ways in which the product or service will be sold. Without a well-defined revenue model, that is, a clear plan of how to generate revenues, your business will be more likely to struggle due to costs which you will not be able to sustain.

By having a clear revenue model, your business can focus on a target audience, fund development plans for a product or service, establish marketing plans, begin a line of credit and raise capital. The type of revenue model that is available to a firm depends, in large part, on the activities the firm performs, and how it charges for those. These models include:

Production Model

In the production model, a business creates the product or service, sells it to customers who value and thus pay for it. An example would be a company that produces paper. The company sells it to either the direct public or to other businesses who pay for the paper. Thus generating revenue for the paper company.

Manufacturing Model

Manufacturing is the production of merchandise using labour, materials and equipment resulting in finished goods. In this model, revenue is generated by selling the finished goods. However, these goods may be sold to other manufacturers for the production of more complex products (such as aircraft, household appliances or automobiles), or sold to wholesalers, who in turn sell them to retailers.

Following that, retailers then sell them to end users and consumers. Also, manufactures may market directly to consumers, but generally do not, for the benefits of specialization.

Rental or Leasing Model

Renting is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership. Things that can be rented or leased include land, buildings, vehicles, tools, equipment, furniture to mention but a few.

Advertising Model

The advertising model is often used by media businesses which use their platforms where content is provided to the customer as an advertising space. Possible examples are newspapers and magazines which generate revenue through the various adverts encountered in their issues. Internet businesses which often provide services also have advertising spaces on their platforms.

Examples include Google and Taobao. Mobile applications also use this specific revenue model to generate revenues. By incorporating some ad space, many popular apps such as Twitter and Instagram have strengthened their mobile revenue potential after previously having no real revenue stream.

Sponsored Ranking Model

The sponsored ranking model is a variant of the advertising model. The sponsored ranking model is mainly used by search engine platforms like Google and IT-services platforms where users are offered free search functionality in return for sponsored results in front of other search results. The sponsor is often paying per click, per view or as a subscription model.

Commission Model

The commission model is similar to the markup model as it is used when a business charges a fee for a transaction that it mediates between two parties. Brokerage companies or auction companies often use it as they provide a service as intermediaries and generate revenue through commissions on the sales of either stock or products.

Fee-for-service Model

In the fee-for-service model, unlike in the subscription model, the business only charges customers for the amount of service or product they use. Many phone companies provide pay as you go services whereby the customer only pays for the number of minutes he actually uses.

Licensing Model

With the licensing model, the business that owns a particular content retains copyright while selling licenses to third parties. Software publishers sell licenses to use their programs rather than straight-out sell copies of the program. Also, media companies obtain their revenues in this manner, as do patent holders of particular technologies.

Software Licensing Model

Rather than selling units of software, software publishers generally sell the right to use their software through a limited license which defines what the purchaser can and cannot do with it.

Shareware Model

In the shareware model, users are encouraged to make and share copies of a software product, which helps distribute it. Payment may be left entirely up to the goodwill of the customer or be optional with an occasional reminder.

Sometimes, the software may be designed to stop working after a trial period unless the user pays a license fee or be crippled so that key features don’t work. However, sometimes it may be a free feature-limited ‘lite’ version with a more advanced version available for a fee.

Markup Model

In the markup model, unlike with previous models, the business buys a product or service and increases its price before reselling it to customers. This model characterizes wholesalers and retailers, who buy products from manufacturers, mark up their prices, and resell them to end customers.

Wholesale Model

Wholesaling, jobbing, or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional, or other professional business users; or to other wholesalers and related subordinated services. In general, it is the sale of goods to anyone other than the end-consumer. Wholesaling can be implemented online via electronic transactions.

Retail Model

Retail is the process of selling consumer goods or services to customers through multiple channels of distribution to earn a profit. Demand is identified and then satisfied through a supply chain. Attempts are made to increase demand through advertising.

Brick and Mortar Retail Model

Conventional retail or brick and mortar retail is selling products from a physical sales outlet or store.

Mail Order Model

The mail order revenue model and distribution method entails sending goods by mail delivery. The buyer places an order for the desired products with the merchant through some remote method such as by telephone call or web site.

Then, the products are delivered to the customer, typically to a home address, but occasionally the orders are delivered to a nearby retail location for the customer to pick up. Some merchants also allow the goods to be shipped directly to a third party consumer, which is an effective way for someone to buy a gift for an out-of-town recipient.

E-tail Model

E-tail is on-line retail. Retail is the process of selling consumer goods and/or services directly to end-consumers to earn a profit. Demand is created through promotion, and by satisfying consumers’ wants and needs effectively (which generates word-of-mouth-advertising).

In the 21st century, an increasing amount of retailing is e-tailing, done online using electronic payment and delivery via a courier or postal mail. Via e-tail, the customer can shop and order through the internet and the merchandise is dropped at the customer’s doorstep. This format is ideal for customers who do not want to travel to retail stores and are interested in home shopping.

The online retailer may handle the merchandise directly, or use the drop shipping technique in which they accept the payment for the product but the customer receives the product directly from the manufacturer or a wholesaler.

Subscription Model

In the subscription model, the business provides a product or service to a customer who in return pays a pre-determined fee at contracted periods of time to the business. The customer will be required to pay the fee until the contract with the business is terminated or expires, even if he is not using the product or service but is still adhering to the contract. Possible examples are flat-rate cellular services, magazines and newspapers.

In conclusion, revenue models are central to business success. They identify what product or service will be created in order to generate revenues and the ways in which the product or service will be sold. Without a well-defined revenue model your business will be more likely to struggle. By having a clear revenue model, your business can focus on a target audience, fund development plans for a product or service, establish marketing plans, begin a line of credit and raise capital.

Employment model

An employment model is about the appropriate type of employment that will best suit the nature of your company. Primarily, a good employment model results in lower absenteeism and improved work relationships. As a result, employees will be ready and willing to make a long-term commitment to your company.

Below are types of employees:

Full-time employees

Full time employees are the most common type of employees. Particularly, they are offered permanent positions with a salary or hourly wage. There is no set minimum number of hours for full-time employees. However, most employers recognize full-time work as 35+ hours per week. Examples of full-time employees include receptionists and all types of managers.

Basically, hours of work are defined as each hour for which an employee is paid or entitled to payment, for the performance of duties for the employer. Also, they are each hour for which an employee is paid, or entitled to payment by the employer for a period of time during which no duties are performed due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence.

Part-time employees

A part-time worker works fewer contracted hours than a full-time employee. However, they also hold permanent positions. Following that, the number of hours they are scheduled to work per week should be clearly visible within the contract but they may have the option to work overtime, if and when desired.

Benefits of part-time employment include a more flexible schedule for the employee, allowing individuals to fit their work around other commitments, and the opportunity for people to try out new roles without having to give up vast amounts of your time. Most waiters and waitresses are an example of part-time employees.

Fixed-term employees

Fixed-term employees last for a specific amount of time, which has been set and agreed in advance. In some instances, fixed-term employees may not have an exact time-frame, but will instead end when a specific task has been completed or fulfilled.

Depending on the role, and an individual’s performance, fixed-term contacts can sometimes lead to longer term positions. Examples include students on industrial attachment and drivers for a specific event such as weddings.

Temporary employees

Similar to fixed-term, temporary employees are offered a contract that is not expected to become permanent. Usually they would have some form of end date included. However, these may be subject to change. As such, temporary workers may have their contracts extended in line with demand and availability. Temporary teachers are a common example in Zimbabwe.

Agency employees

Agency staff have their contracts agreed and managed by a recruitment consultancy or employment agency. They usually work on a temporary basis and the length of their contract depends on demands of the employer as well as their availability. The Valcol Group company offers such services majoring in I.T experts and secretaries.

Freelancers and contractors

When working with freelancers or contracted basis, contracts may vary from position to position. However, individuals working in this way are generally considered self-employed. Contracts may include start and end dates, or the salary may be based on set projects or pieces of work, meaning the contract effectively ends upon delivery.

Freelance and contract workers may also not be entitled to the same rights as more permanent members of staff, although they do get to manage their own schedule and negotiate their own terms. Most graphic designers are freelancers.

Zero hour employees

Zero hour employees are also known as casual employees. These employees specify that an employee works only when required by their employer. The employer is under no obligation to provide a set amount of hours to work. Similarly, the employee does not have to accept any work that is offered to them.

Individuals on a zero hour contract may also seek employment elsewhere. In fact, their contract would not be valid if it prevented them from looking for, or accepting, work from another employer.

Probation employees

Employers can put their employees on a probation period (also known as a probationary period) to assess if employees are suitable for the role and business. However, the employer decides on the length of the probation period. It can range from a few weeks to a few months at the start of employment.

Specifically, while on probation, employees continue to receive the same entitlements as someone who isn’t in a probation period. If hired on a full-time or part-time basis, an employee on probation is entitled to access their paid leave entitlements such as annual leave and sick leave.

Following that, if an employee doesn’t pass their probation, they are still entitled to receive notice when employment ends and have their unused accumulated annual leave hours paid out.

In conclusion, knowing the best employment for your business will save you a lot of hustles. A proper employment model will help you hire the right people for your company. Also, it will save you a lot of money because you will know the exact type of employee to hire, the period they should work for you as well as the ideal wage to give them.

Marketing plan

A marketing plan is a roadmap for introducing and delivering your product or service to potential customers. It is a business document outlining your marketing strategy and tactics. Primarily, it is drafted for a specific period of time and covers a variety of marketing-related details such as costs, goals and action steps.

A marketing plan doesn’t need to be long and it doesn’t have to cost a lot of money to complete. However, a marketing plan requires a lot of research and effort. Putting in the work to create it can help ensure your company’s success in the long run.

Moreover, unlike your business plan, a marketing plan is not a static document. It needs to change and evolve as your business grows and as new and changing marketing trends develop. Especially in today’s changing world, you need to keep up-to-date on the best ways to reach and engage your market.

An effective marketing plan will help you understand the market which you are targeting and the competition in that space. Also, it helps you understand the impact and the results of marketing decisions and provide direction for future initiatives. Although marketing plans can vary depending on the industry, type of products or services and the goals you want to achieve, there are certain essential elements that your plan should include.

Elements that your marketing plan should include:

Situational Analysis

Your situation analysis details the context for your marketing efforts. In this section, you will take a close look at the internal and external factors that will influence your marketing strategy. Many companies do a SWOT analysis, which combines the external and internal analysis to summarize your strengths, weaknesses, opportunities and threats.

Business Objectives

An effective marketing plan will help support your overall business strategies and goals. In order to reach this sort of alignment, you must be clear on what these business objectives are and which aspects of them they can affect.

Marketing Goals

These goals will tie into the overall business objectives but will only focus on the portions of the business that marketing can influence. For instance, if an overall objective of a company is to increase revenue from repeat business by a certain percentage in the next year, then the related marketing goal might be to get a certain amount of customers to sign up for a rewards program each month.

Target Market

The concept of target markets is one of the most basic, yet most important aspects of marketing. It is unrealistic to think that you can attract everyone, so you need to identify your ideal customers. What do they like? What don’t they like? How old are they? Where can you find them? Getting specific about your target market and segmenting it into even smaller groups for specific promotions can help you decide where to commit resources and what kinds of tactics and messages to use.

Strategies

Strategies are the approaches you want to take to achieve your marketing goals. For instance, if you are trying to get a certain amount of people to sign up for a customer rewards program each month, your strategy may be to introduce new customers to the rewards program with personalized invites that highlight rewards that they may be interested in.

Tactics

These are the specific actions you will take to execute the strategies that you set. If you introduce new customers to the rewards program with personalized invites, then one tactic you could use is sending out emails that address each new customer by name and let them know about some specific rewards that they can get, along with a link to easily sign up for the program.

Messaging Guidelines

The right messaging can help establish your brand’s position in the market, help it stand out from competitors, demonstrate value to potential customers and reach specific audiences. You can set some general messaging guidelines in your overall plan, then use them as a starting point to craft more specific messages for each campaign and different segments of your target market.

Budget

You must know what you can spend on your marketing campaigns and how much money your company is willing to put into different types of marketing efforts. It will help you to be focused.

Tracking and Evaluation

This section of your plan should include plans and procedures for tracking each type of marketing activity you are using. Generally, tracking helps monitor the effectiveness of each marketing activity and is especially helpful with your overall program evaluation. If you are not tracking and measuring your efforts then you are not marketing effectively.

Benefits of a Marketing Plan

The importance of a detailed marketing plan can’t be overstated. A marketing plan:

  • Gives clarity about who your market is – it’s easier to find clients and customers if you know who they are.
  • Helps you craft marketing messages that will generate results – marketing is about knowing what your product or service can do to help a target market. Your marketing messages need to speak directly your targeted audience.
  • Provides focus and direction – your choices for marketing are vast including email, social media, advertising, guest blogging and direct mail, publicity. With so many marketing choices, you need a plan for determining the best course of action for your business.
  • Creates alignment – the biggest advantage of a marketing plan is building a bridge between the vision of the organization and the marketing and sales of products and services. At the strategic (upper management) level, your business has a mission and vision. This mission and vision must translate from the executive team to all internal and external stakeholders. This is called alignment or having all stakeholders (along with the organization) on the same page. Particularly, marketing plans are useful in aligning the vision with the brand and ensuring that what is communicated to potential customers is accurate and meaningful to the core target market.
  • Helps brand building – with a strong research-oriented understanding of the market and alignment across the business in terms of vision and mission, you can build a brand that represents the vision while addressing core needs in the market. Through associating the organization’s competitive advantages with a given need in the marketplace, you can build a brand within a target markets.
  • Mitigates risks – in nearly all contexts, planning is a great tool for avoiding risks. The simplest way to avoid making a mistake is considering all potential options, weighing the opportunity costs and selecting the option with the lowest risk and/or the highest return (the optimal risk/return ratio). Thus, marketing plans enable the research required to consider the risks and returns of various segments, equipping the organization with the knowledge to mitigate risk and capture opportunities.

In conclusion, a proper and well designed marketing plan will introduce and deliver your product or service to potential customers. It helps you outline your marketing strategy and tactics. Finally, a marketing plan will save you from investment risks. After all, failing to prepare is preparing to fail.

Budget (startup costs)

Have you ever wondered why most startups fail? The most global characteristic of startups is that they are always short on funds, whether it’s for resources, advertising, marketing or even manufacturing their products/services. Specifically, most startups fail because of their failure to draft a budget before they commence trading. With little scope for investment, startups often lack a continuous cash flow.

Primarily, a budget is a plan that outlines your business’ financial and operational goals. It is an approximate estimation of your startup costs. Startup costs are basically expenses incurred before your business starts running. Following that, a budget is an action plan that helps your business allocate resources, evaluate performance and formulate plans. Ultimately, a budget is an essential part of a business plan when starting a new business.

Also, once a business is established, budgeting becomes a regular task that should normally occur on a quarterly and/or annual basis, where the past quarter or year’s budget is reviewed and budget projections are made for the next three or even five quarters or years.

Next, a budget ensures that you will always have enough money for the things you need and the things that are important to you. Most importantly, a budget or spending plan will also keep you out of debt or help you work your way out of debt if you are currently in debt. Thus, business budgeting is one of the most powerful financial tools available to any small-business owner as it enables you to control your cash flow instead of having it control you.

The basic process of planning a budget involves listing the business’s fixed and variable costs on a monthly basis and then deciding on the allocation of funds to reflect the business’s goals. Businesses often use special types of budgets to assess specific areas of operation. A cash flow budget, for instance, projects your business’s cash inflows and outflows over a certain period of time. Its main use is to predict your business’s ability to take in more cash than it pays out.

Reasons why your business need a budget

Without a budget, you may not know how your business is performing. A budget provides an accurate picture of expenditures and revenues and should drive important business decisions such as whether to:

  • Increase marketing
  • Cut expenses
  • Hire staff
  • Purchase equipment
  • Improve efficiencies in other ways

Following that, a comprehensive budget will also be a definite requirement for obtaining business loans from financial institutions or seeking equity funding from investors. Trying to convince investors about something that doesn’t exist is definitely a challenge and trying to make them understand that you are trustworthy and equal to the task is complex.

There is more to raising capital than just simply asking for money. Most investors want to invest in an established business with minimal risk and they want to be sure that they get returns for the risk they took and having a well-structured budget is a step forward. To overcome the challenge of raising capital, you must develop the ability to sell your idea and vision to potential investors.

Budget Expenses

Most businesses have fixed costs that are independent of sales revenue, such as:

  • Building or office eases or mortgage costs
  • Loan payments (if using debt financing)
  • Insurance
  • Vehicle leases (or loan payments if the vehicle is purchased)
  • Equipment (machinery, tools, computers, etc.)
  • Payroll (if employees are on salary)
  • Utilities such as landline phone and internet charges
  • Variable costs increase or decrease according to the level of business activity. Examples include:
  • Contractors’wages or commissions (for salespeople)
  • Utility costs that increase with activity – for example, electricity, gas, or water usage
  • Raw materials
  • Shipping and delivery costs
  • Advertising (can be fixed or variable)
  • Maintenance and repair of equipment

How to create a business budget

a) Step 1 – Plan for ‘day one’ of your business startup

Begin by determining what your business “day one” will be like, in order to open the doors (or take your website live) and begin accepting customers. Generally, a “day one” start-up budget can be broken down into four categories (depending on your situation, some of the categories may not apply to your business.) The categories are:

  • Facilities costs for your business location – rental or purchase of a store, office, warehouse, etc. If you are working from home, you probably won’t have location costs. Facilities costs include lease security deposits, tenant improvements, and signage.
  • Fixed assets (sometimes called capital expenditures), for furniture, equipment, vehicles needed to set up your location and start your business. These assets include computers and machinery, and anything for your office that is needed to set up your business.
  • Materials and supplies, like office supplies, advertising and promotion materials. You will need an initial supply of these to get started.
  • Other costs, like the initial attorney and accounting set-up fees, Licenses and permits, insurance deposits, and fees to set up your business type. In your listing of these startup costs, include items you are contributing to the business, like a computer and office furniture. Note these items so you can get credit for them as collateral.
b) Step 2 – Estimate monthly fixed and variable expenses

Gather information on your fixed expenses each month. These are expenses that don’t change and aren’t dependent on the number of customers you have. Here is a list of the most common monthly fixed expenses:

  • Rent
  • Utilities
  • Phones (business phones and cell phones
  • Credit card processing – monthly fees (transaction fees are variable)
  • Website service fees
  • Equipment Lease Payments
  • Office Supplies
  • Dues/Subscriptions
  • Advertising, Publicity, and Promotion commitments, like social media, online ads
  • Business insurance
  • Professional fees (legal and accounting)
  • Employee Pay/Benefits
  • Misc. Expenses
  • Business Loan Payment

Then add variable expenses. These are expenses that will change with the number of customers you work with every month. These might include:

  • Commissions on sales
  • Production costs
  • Raw materials
  • The wholesale price of goods to be re-sold
  • Packaging and shipping costs.
c) Step 3 – Estimate monthly sales

This is probably the most difficult part of a budget because you don’t know what sales will be for a new company. You might want to do three different sales projections:

The best case scenario is the one in which you show your most optimistic estimate for first-year sales. Worst case scenario is when you show your least optimistic scenario, with very little sales during the first six months to a year. The likely scenario is somewhere in between. Also, the likely scenario would be the one to show your lender.

It is important to include a calculation of collections percentage.To be realistic in your budgeting, you must assume that not all sales will be collected. Depending on the type of business you have and the way customers pay, you might have a greater or smaller collections percentage.

Following that, include a collections percentage along with your estimate of sales for each month. For example, if you estimate sales in Month One to be $50,000 and your collection percentage is 85%, show your cash for the month to be $42,500.

Next, calculate the variable costs of sales for each month based on sales for the month. For example, if your estimated sales for a month are 2,500 units and your variable costs are $5.50 per unit, total variable costs for the month would be $13,750.

Lastly, add monthly variable costs to monthly fixed costs to get total monthly costs (expenses). You might want to calculate your break-even point to include with your budget.

d) Step 4 – Create a cash flow statement

Combine total costs with total sales and collections for each month. The monthly totals will look something like this:

Monthly sales $50,000

Collected $42,500

Total fixed costs $26,900

Total variable costs $13,750

Total cash balance $2,150

The $2,150 represents your total cash balance for the month, not your profit. By changing your sales figures using the three scenarios above, you can see the result in your cash balance at the end of each month. This cash balance can give you information about your cash needs and how much you might need to borrow for working capital.

In conclusion, draft your business budget before trading. Your budget will help your business allocate resources, evaluate performance and formulate plans. That way, you will keep you out of debt and it will enable you to allocate resources, evaluate performance and formulate plans accurately.

Do you need a business coach to help you with the planning stage?

Our friendly business consultants can help you come up with a plan for your business.