Stage 4: Growing Your Business
Launch your business and make it operational
Turn your plans and ideas into something tangible.
Start business operations and tell the world that you are open for business.
Business growing 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.
[tabs slidertype=”left tabs”] [tabcontainer] [tabtext]Embrace technology[/tabtext] [tabtext]Diversification[/tabtext] [tabtext]Market extension[/tabtext] [tabtext]Partnerships[/tabtext] [tabtext]Marketing[/tabtext] [tabtext]Scaling[/tabtext] [tabtext]New product[/tabtext] [tabtext]Target big tenders[/tabtext] [tabtext]Specialization[/tabtext] [tabtext]Start selling online[/tabtext] [/tabcontainer] [tabcontent]
The world is dominated by technology and resisting it is futile. You have to embrace technology to survive, let alone to compete. It is no secret that technology is rapidly changing how businesses function day to day. With the ability to quickly produce, test and iterate, technology now plays a critical part in business.
In today’s world, countless technologies exist that help improve exposure, encourage communication and cater to specific needs. Above all, technology empowers you as a business owner to achieve your set objectives and allows you to be creative while maintaining a high level of productivity. In truth, technology has been lauded as a savior for many businesses.
How to embrace technology in your business
a) Cloud Computing
Cloud computing is the most talked-about development in technology. Over the years, it has developed an essential business component. Basically, cloud computing takes your data and files, and makes them instantly available online. It means you can share and access documents from anywhere in the world. You can as well collaborate and create communal calendars, for instance. It is very versatile and exceptional for work efficiency.
b) Communication Systems
As a business, there is no reason not to think globally. With technology, you can set up a conference call with Japan or South Africa within seconds. By using technology to expand your communications, you will be opening yourself up for new business opportunities. Thus, you can expand into new territories and easily build a global brand.
c) Analyzing Performance
In the past, it was much trickier to measure your company’s performance as well as the performance of your employees. With technology, you can measure every aspect of your business growth. Whether its website analytics, social media metrics or detailed sales figures, it’s better than ever. It’s like using a microscope to dig into the inner workings of the company. You can learn all about what’s working and what’s not.
d) Applications and mobile
We are quickly moving towards a mobile world. Internet access on mobile devices has now overtaken traditional computer access. Not only that, but many developing countries are skipping the computer entirely. They are going straight to mobile. This shift brings with it one crucial piece of technology, applications. In the future, all computing and mobile technology will revolve around applications.
e) Understanding your customer
It’s not just businesses that adopt and drive new technology. It’s also the customer. Technology in the consumer sector is also rising faster than ever before. There is a new iPhone every year, for example, and it can be hard to keep up. If you think back five years, tablets were only a small percentage of the market.
Ultimately, it doesn’t take long for new technology to ingrain itself into your customers’ lives. Make sure you are following the developments, trends and adopting what you can for your business. Put technology at the heart of your business and never stop evolving. If you don’t, you and your business could be at risk of being left behind.
How technology can help your business thrive
1. Increased productivity and efficiency
Automated business processes and operations are one of the major benefits of technology for business. Computers connected with high speed internet allow the workforce and authorities to collaborate and discuss business related things more efficiently than ever.
In this way, they can better handle various business related tasks and jobs even from distances and without travelling for the workplace. Technology has changed the way companies and organizations work to chase their business objectives and goals. With technology, you can accomplish assigned tasks and duties rapidly by using different devices, machines and equipment to increase the productivity and efficiency at work.
2. Effective communication
The benefits of technology in the field of business communication are also unavoidable. In this era of mobile devices, workers and employees and connected with each other any time to converse business related issues in real time to get things on track without waiting for hours.
Virtual meetings are increasingly implemented by businesses and companies to keep the business operations running even if others are out of town or country due to some reasons. You can hold video conferences and meetings with help of latest communication apps and high speed internet to communicate quickly and effectively. Also, you can provide competent customer services to build trust and it is only possible with help of the business technology.
3. Reduction of business costs
An increase in productivity due to implementation of technology in business is the best way to reduce business costs by having a few workers at the workplace. Technological advances play a vital role in reducing business costs and expenses in many ways.
For instance, as majority of the companies are using maintenance management software, properly maintained business assets are less likely to breakdown that can help the business to run its operations seamlessly without facing issues of asset failure. On another hand, latest communication solutions also reduce the business travelling costs as there will be no need to meet an oversees client face to face after travelling hundreds of miles due to the invention of video calling apps and software.
In this era of handheld devices, it is very easy to access business software and database, to add or obtain details. Employees can use their personal devices to complete several business related tasks even from their homes if they are authorized by the higher authorities to do so.
Again, most companies and organizations use their own networks to increase the business mobility as well as to let their employees work from home or any other location without visiting the workplace or office. In this way, your employees can accomplish assignments and tasks in time without facing troubles that can decrease the overall productivity and revenues of the business.
Most businesses of the modern era are subject to security threats and vandalism. Technology can be used to protect financial data, confidential executive decisions and other proprietary information that leads to competitive advantages. Simply put, technology helps businesses keep their ideas away from their competition. By having computers with passwords, a business can ensure that none of its forthcoming projects will be copied by the competition.
6. Competitive advantage
A business that has the technological capacity to research new opportunities stays a step ahead of its competition. For a business to survive, it must grow and acquire new opportunities. The internet allows a business to virtually travel into new markets without the cost of an executive jet or the risks of creating a factory abroad.
7. Improved customer relations
Companies that adopt techniques for using technology to communicate in the workplace leap ahead in terms of customer relations. Many businesses have adapted using live chats on their websites which can quickly and easily answer customers’ questions. Following that, video messaging applications like Google Hangouts are great tools that can help your business speak to customers internationally.
Again, developing a great app is another fantastic way to use technology to create a great customer relations base and communicate with customers. People who frequently use the services of a business will download the app and use it to contact them with comments, questions or improvements.
8. It is more versatile
In as much as you would send messages and to-do lists, business communication also includes sharing ideas. These can be presented in a range of different ways, the most popular being presentations. They are a great way to share business ideas using technology.
Generally, presentations involve plans for the development of the business or solutions for any problems. In truth, they have gone a long way since making them on PowerPoint on a PC. Nowadays, they can be presented in a range of alternative ways. One of the best is on an interactive display which is a great alternative to interactive whiteboards in a huddle room. This creates an intimate setting where those viewing the presentation can easily see the screen and work out what it details.
Interactive displays are touch-sensitive and can be drawn upon (with the right tool of course!), making them a fantastic way to communicate different messages.
In conclusion, no matter what industry you are in, in order for your business to thrive in today’s climate, technology and all the opportunities it can bring should not be ignored. Technology empowers you as a business owner to achieve your set objectives and allows you to be creative while maintaining a high level of productivity. [/tab] [tab]
Diversification is a technique that reduces risk by allocating investments among various financial instruments, industries and other categories. It aims to maximize returns by investing in different areas that would each react differently to the same event. In other words, it is a corporate strategy that a company implements to increase the market share and sales volume by introducing new products in new markets or industry, which is distinct from its core business.
Diversification is a business development strategy allowing a company to enter additional lines of business that are different from the current products, services and markets. In the current conditions of dynamic markets and strong competition, a successful instrument of risk management is to avoid focusing on a single product, service and/or their distribution to a single limited market.
When implemented wisely it contributes to keeping the company stable even in hard times since the economic downturn usually occurs simultaneously in all sectors and all markets. In truth, diversification of business activities brings competitive advantages allowing companies to reduce business risks. That is why it is a great tool for business development. However, its successful implementation requires profound knowledge and thorough preliminary assessment of the company and its environment.
Types of diversification
1. Vertically Integrated Diversification
Vertically Integrated Diversification is the form of diversification in which the firm intends to enter in the business which is associated with the firm’s present business. In this way, the firm stays in the same business and moves ahead or reverse in the chain and introduces new products so as to enter the new business for the firm.
In short, integration is a competitive strategy by which a company takes complete control over one or more stages in the production or distribution of a product. A company opts for vertical integration to ensure full control over the supply of the raw materials to manufacture its products. It may also employ vertical integration to take over the reins of distribution of its products.
A classic example is that of the Carnegie Steel Company, which not only bought iron mines to ensure the supply of the raw material but also took over railroads to strengthen the distribution of the final product. The strategy helped Carnegie produce cheaper steel and empowered it in the marketplace.
Following that, this form of integration is divided into two categories namely upward vertical integration and backward vertical integration.
a) Forward Integration – it is a type of vertically integrated diversification, wherein the firm decides to move ahead in the value chain that is directly related to the firm’s existing business, so as to ease the distribution process.
b) Backward Integration – in this type of integration, the firm opts to move backwards in the value chain so as to create an effective supply of the goods by expanding the business and entering the business of suppliers.
2. Horizontally Integrated Diversification
In horizontal diversification, the firm acquires one or more businesses that are engaged in the similar business and at the equivalent level of production-marketing chain to enter into complementary goods, or taking over competitor’s products.
Basically, horizontal integration, is a company’s acquisition of a similar or a competitive business it may acquire. It may also merge with a takeover of another company to strengthen itself, to grow in size or capacity, to achieve economies of scale or product uniqueness, to reduce competition and risks, to increase markets, or to enter new markets. In addition, horizontal integration is divided into two parts namely related diversification and unrelated diversification.
a) Related Diversification – when a new business has some sort of connection with the existing business then it is known as related diversification. It includes the exchange of business assets by exploiting marketing skills, manufacturing skills, economies of scale, brand name, research and development. For instance, when a cloth manufacturing firm enters into the distribution of clothes.
b) Unrelated Diversification – when the new business has no relation to the value chain activities of the company. It includes investing in new product portfolios, concentrating on multiple products and minimizing risk by operating in various product markets as well as the implementation of new technologies.
3. Concentric Diversification
Concentric diversification is similar to related diversification, wherein the new business entered into by the firm is associated with the existing business by way of process, technology or market. The newly entered product is a spin-off from the already existing facilities. Hence, there are advantages of synergy with the existing operations.
In simpler terms, adding new, but related, products or services is widely called concentric diversification. The corporation’s lines of business still possess some “common thread” that serves to relate them in some manner. The point of commonality may be similar technology, customer usage, distribution, managerial skills or product similarity.
Concentric diversification occurs when the diversification is in some way related to, but clearly differentiated from the organization’s current business. The basic difference between a concentric diversification and a concentration strategy is that a concentric diversification strategy involves expansion into a related, but distinct area whereas concentration involves expansion of the current business.
4. Conglomerate Diversification
Conglomerate diversification is similar to unrelated diversification. There is no relationship between the new business or product and the existing business or product in any way. A firm’s use of diversification strategies is to reduce risk, use surplus cash, build corporate brand equity, increase customer base, exploit new opportunities, for effective capital utilization, to build shareholders’ wealth and get access to the new market.
Importance of diversification in business
a) Avoiding Downturns
A conservative reason to diversify is to avoid major repercussions when an industry or sector suffers a downturn. Some single-business or single-product organizations couldn’t survive a lengthy decline in their industry.
A fashion retailer often sells in multiple product categories, for instance, because fashion is so trendy and unpredictable. Being diversified protects the company against economic changes. Many fashion retailers also expand into new store formats, such as for children or babies, to diversify.
b) Competitive Defense
Another reason to diversify is that under-served locations or customers have available revenue for somebody in your industry to take advantage of. If your company doesn’t diversity and expand to fill the additional demand, competitors are likely to do so.
If you get in first, you can often increase your customer base or establish yourself as a top provider. Movie rental provider Blockbuster dissolved, in part, because it failed to protect itself against competitors moving into new DVD-by-mail and online-streaming formats.
c) Stabilizing Influence
Diversity also helps your company build stability. If you concentrate too heavily on a single industry or product, you risk volatility in revenue and resources as demand rises and falls.
Therefore, if your business stretches across many industries or categories, you may have more predictability. Advertising agencies often diversify clients to avoid major drops in revenue and having to cut significant staff if a single industry falters. Losing a client here or there is not as destabilizing if the company is diversified.
d) Company Risks
As important and valuable as diversification is, it does have drawbacks and risks. However, spreading out your business investments and costs saves you from investment risk in case your industry fails.
In conclusion, diversification is a concept every business needs. When you open new channels of products, locations and new partnerships, you increase your chances of long-term success and increasing profits. [/tab] [tab]
The adage that “bigger is better” is true and viable in business. Marketing expansion is a business growth strategy. It is a practice used to increase the market share for a given product or service and thus keep it in the maturity phase of the marketing product life cycle rather than going into decline. In other terms, it is the strategy that is related on how to make a product or service sustain in the market.
Generally, such kind of strategies take place in the maturity phase of the product life cycle to prevent the product from entering the decline phase. Market extension implies the production of more variety of products for a particular brand. While often confused with another term, market expansion, the two are different in the sense that market expansion is about widening a product’s reach geographically i.e. going international and going multi-state.
Again, market extension is usually mobilized by evolving consumer needs. For instance, company X was established and its product is white t-shirts. The business does well and there seems to be every indication that selling other colors of t-shirts will do good as well. Customers start asking for t-shirts with collar too, so company X begins manufacturing that as well. This is called a market extension.
Market Extension Strategies
It is easiest to retain a product in the market. Re-packaging is done to give a new and fresh look to the product. The package is done to change the perception of the consumers. For example, a product which was established in the 90’s can be re-packaged so as to connect with the new young generation who are more potential customers to them now.
The reason why most companies do not come with a product altogether is due to a strong brand already built. Product packaging plays an important role in consumer decisions. It communicates many things from what the product can do for your customers to your company’s values. Some even argue that the packaging is as important as the product itself because it’s a crucial marketing and communication tool for your business. Below are reasons why re-packaging is important:
a) It differentiates your brand from others
The truth is, there are thousands of products on the market vying for your customers’ attention. According to The Paper Worker, one-third of a consumer’s decision making is based solely on product packaging. To succeed, your brand packaging has to stand out and look different from your competitors. Not only should the design be relevant to the name of the product, it is also supposed to be eye catching.
b) Packaging color sways consumer purchase habits
The colors used in your product packaging plays a key role in consumer buying decisions. The human brain reacts to colors in different ways, so it is important to consider that.
For example, products with white packaging convey simplicity, safety and purity. Color experts cite that the more color added to a product’s package, the less sophisticated the product is. Other colors, like blue, convey many different meanings. A light sky blue color is considered more playful, while a dark navy is considered much more professional. In other words, it is important to study your target demographic before deciding on a color scheme for your product packaging.
c) It is a marketing tool
Your product’s packaging can be a helpful marketing tool through in-store advertising. Branded products are easily recognized, so designing packaging with your logo front and center helps consumers remember your product next time they are shopping.
Again, consider what your packaging is saying about your product and your brand. Is it good? Can it be better? It is also wise to think about what messages your product’s packaging is conveying to shoppers and consumers.
d) It creates brand recognition
All brands have one thing in common, they are memorable. Over the decades, brands like Coke have made minor changes to their packaging and stayed true to their original look. Keep in mind that recognizable brands should not change a thing because many successful brands that changed their logo, colors or packaging have seen a sort of backlash from shoppers after making a big change.
Rebranding is much more than repackaging. It includes changing the name, package and logo. The complete look and feel as well as the brand name is changed and is re-launched as a new product although content of the product is same as previous one or slightly changed. It is generally done to reach a new different audience altogether.
In short, rebranding is the process of changing the corporate image of an organization. It is a market strategy of giving a new name, symbol or change in design for an already-established brand. The idea behind rebranding is to create a different identity for a brand from its competitors in the market. There are two types of rebranding namely Proactive rebranding and Reactive rebranding.
Proactive rebranding is done when a company recognizes that there is an opportunity to grow, innovate and tap into new businesses or customers and to reconnect with its users. On the other hand, reactive rebranding is done in a situation when the existing brand has be discontinued or changed. Possible reasons for such an action could be mergers and acquisitions, legal issues, negative publicity such as fraud, aiming to beat the competition or to create your own niche.
Changing the prices of product is another strategy of extending your market. Giving discounts on products to attract the discount lovers or easy switchers can increase the sales of the product and help retain in market for a long period. Discounts are generally targeted to increase a customer base so that customers who previously aspired for the product but could not afford that will switch to this product now. Below are advantages of offering discounts:
- Attracting new and repeat customers.
- To increase sales across the board.
- To free up room in your store.
- To boost your reputation.
- To meet sales goals.
4. Expanding to a new market
It is a costly affair and involves high risk. Since the motive is to tap the untapped market, new promotions and other strategies are also to be taken care of which is a costly affair. However, sometimes, it works well and helps to earn more profits.
Advantages of market extension
a) Attracting new customers
One of the best reasons for business extension is to reach out to a new group of customers. Although you already have a well-mined customer base, there is always the opportunity to add new customers when you expand, especially if that expansion of business involves the introduction of new products and services.
For example, let’s say you own a comic book shop that has gained success selling all types of graphic novels and monthly-serialized comic books. You can decide to expand by offering a space within your store where noted artists will display their original works for customers to buy.
Following that, you can now tap into a new market of customers who are primarily interested in artwork rather than just in reading comics. You retain your old customer base while appealing to a new set of buyers who are art collectors.
b) Increased income
Expanding your business increases your ability to turn larger profits in the long term. Initially, the expansion requires capital purchases and loans that consume resources in the short term. However, the added production ability or location increases long-term cash flow. For example, if you own a car dealership and purchase more land on which to sell cars, that initial purchase is costly. The added sales volume eventually pays for that land purchase and increases net income at the end of the year.
c) Established multiple revenue streams
One of the greatest advantages of business growth is the fact that extension typically gives you the opportunity to offer a diverse range of products and services. In doing so, you are able to diversify your revenue stream, which means that you are not exclusively reliant on selling one core product or service.
For example, let’s say you own a bakery and decide that you want to expand by adding a small restaurant on premises that offers breakfast and lunch. You are now inoculating your business from a downward trend in bakery sales by offsetting those losses with the restaurant earnings, helping to ensure that your business will survive if the demand for baked goods decreases.
d) Economies of scale
Economies of scale refer to the cost advantage experienced by a firm when it increases its level of output. The advantage arises due to the inverse relationship between per-unit fixed cost and the quantity produced. The greater the quantity of output produced, the lower the per-unit fixed cost. In fact, economies of scale are another of the benefits of extending into new markets because when your business grows, vendors and suppliers are much more incentivized to provide you with discounts because you will be ordering in larger quantities.
In most instances, the more you order from your suppliers the bigger the discount. That means that you will be paying less to get more of the supplies and products you need from your suppliers, which also means more of your money can go into building your company to become even more profitable.
e) Brand recognition
The advantages of business growth are not just limited to revenue diversification. Another benefit of extending into new markets is the opportunity for greater brand recognition. Branding is all about making sure that your targeted audience associates specific qualities, ideas and characteristics with your product or service.
Primarily, branding is largely achieved through outreach marketing that focuses on social media channels where your audience gathers. When you extend your business, you also expand the possibilities of reaching a wider audience by implementing marketing strategies that help grow your company’s awareness among prospective and existing customers. Bigger companies have the advantage in branding because they are able to leverage their resources towards advertising and marketing in very specific ways.
Therefore, the axiom that “bigger is better” is true as it relates to branding simply because audiences are more likely to pay attention to larger companies when they consider what to buy. The statement does not necessarily mean that your business has to be a huge corporation, but becoming a bigger fish in the small pond of your industry will provide you with greater branding opportunities.
f) Funding opportunities
Successfully extending your business can put it in a positive position for gaining necessary funds. This funding can be a lifeline for your business during the process of expansion and once the expansion has happened, you can fall back on it. A business with a firm financial position and improved market share can generally receive financing with little or no trouble.
In conclusion, market extension, like any other business operation, has pros and cons. When extending, it is important that your business is successful, not only on sales but also on profitability levels. Since the purpose of extending a business is to increase profits, you should regularly review the investment return from business extension. Most importantly, you should have a defined reason to extend. [/tab] [tab]
There is no better approach to solving challenges than the famous axiom “two heads are better than one.” Whether it’s about creating internal partnerships between colleagues, to larger partnerships between businesses, harnessing the strengths and abilities of others from different corners of your ecosystem is one of the most strategic ways for businesses to scale their innovation and solve complex challenges.
In today’s fast-paced environment, a “do-it-alone” approach is not the best strategy for growth. Companies that initially grew organically need to look for new ways to drive collaborative innovation that delivers on what their customers need today and in the future. Collaboration and strategic partnerships are fundamental to improving business outcomes.
Primarily, a business partnership is a specific kind of legal relationship formed by the agreement between two or more individuals to carry on a business as co-owners. It is a business with multiple owners, each of whom has invested in the business. Some partnerships include individuals who work in the business, while other partnerships may include partners who have limited participation and also limited liability for the debts and lawsuits against the business.
Contrary to a corporation, a partnership is not a separate entity from the individual owners. It is similar to a sole proprietor or independent contractor business because in both of these businesses the business is not separate from the owners, for liability purposes. Most importantly, there are factors to consider before starting a partnership:
- Business alignment – you and your partner should have similar brand values.
- Location – take into consideration whether the potential partner in close proximity to your business and whether time zones and long distance travel can strain the partnership.
- Complementary products – your products and services should be similar and/or complementary.
- Ability to deliver – both you and your partner should benefit from the relationship. Be sure the business is successful and mature enough to partner with you.
- Target audience – the business must have the same customer profile as yours.
Types of partnerships
a) General Partnership
A general partnership is a business arrangement by which two or more individuals agree to share in all assets, profits, financial and legal liabilities of a jointly-owned business structure. Such partners agree to unlimited liability, which means either of their personal assets may be liable to the partnership’s obligations. In a general partnership, all the partners’ assets can be taken in a lawsuit or be targeted to settle debts should the partnership become insolvent.
In fact, any partner may be sued for the entirety of a partnership’s business debts. This potential liability from an unlimited liability arrangement is therefore not capped and can be paid off through the seizure of an owner’s personal assets. Furthermore, partners are responsible for their own tax liabilities including money earned from the partnership on their personal income tax returns, as taxes do not flow through the general partnership itself.
Again, in a general partnership, each partner has an equal right to participate in the management and control of the business. The partners have the option of resolving disagreements by majority rule or by developing a voting or other dispute resolution system. Some partnerships provide for certain electees to manage the partnership like a company board. However, many do not. One reason for forming a general partnership is freedom from bureaucracy associated with other business structures, such as corporations.
Generally, partnerships typically dissolve when one of the partners dies, becomes disabled or exits the partnership. Provisions may be written into an agreement that provides directives for moving forward during these situations. For example, the agreement may stipulate that the deceased partner’s interest is transferred to the surviving partners or a successor.
b) Limited Partnerships
A Limited Partnership is composed of one or more general partners and one or more limited partner(s). The general partners manage the business and share fully in its profits and losses. Limited partners share in the profits of the business but their losses are limited to the extent of their investment.
Also, limited partners are usually not involved in the day-to-day operations of the business. There are four characteristics that distinguish a limited partnership from a general partnership:
- It is operated by a single general partner with unlimited liability, supported by other “limited partners”.
- The single general partner gets a bigger share of the earnings in exchange for increased contributions and risk.
- The limited partners contribute capital but cannot be involved in the company’s management.
- The liability of the limited partners is capped by the amount of capital they contribute.
In addition, as in a general partnership, income can be allocated each year among the partners in a way that minimizes taxes. If the limited partnership meets the number of criteria related to limited liability, centralized management, duration and transferability of ownership, it can enjoy the benefits of pass-through taxation, otherwise it will be taxed as a corporation.
Again, the limited partner interest is considered as security by law. It can be transferred to a third party, but general partners and limited partners have the right of first refusal. Due to its nature as security, there is an advantage of targeting sophisticated or accredited investors, defined as those having a net worth greater than $1 million or an income greater than $200 thousand for the past two years.
Advantages of partnerships
1. Attracting new customers and expand market coverage
Perhaps the most popular reason for entering into a strategic partnership is access to new markets and customers. By forming a strategic partnership, companies can service larger territories without investing in additional infrastructures or expanding their distribution network.
For example, a coffee delivery service could partner with an office supply company to deliver office supplies on their regular route in exchange for a presence in the office supply company’s physical stores. Both companies are exposed to potential new customers and expand their territories without having to add stores or additional routes.
Ultimately, this arrangement can also add value to both customer sets. Visitors to the store can save time by not having to visit a coffee shop and business owners get their office supplies automatically replenished by a company that is coming to the place of business on a regular basis anyway.
2. Enhanced brand awareness
Coffee giant Starbucks aggressively forms alliances with places like medical facilities, airports and other locations to provide coffee service to their customers. Visitors recognize the added value and appreciate the convenience of having brands they recognize readily available. The Starbucks strategy has increased their overall brand awareness and many local and regional companies can easily develop a similar strategy.
There are many ways service companies can offer mutually beneficial services to customers of, say, a local movie theater. For example, a mobile car washing service can place a prominent advertisement in the lobby suggesting that movie patrons text them for a “wash while they watch.” The car washing services then offers all movie employees a free wash or discount on services for helping the car wash extend their brand.
3. Broadened product and service offerings
If you already have a loyal customer base and would like to broaden your product line you may benefit by aligning yourself with a company that offers complimentary products. A good example might be a company which provides computer service partnering with a company who offers audio visual services.
Each business has its own set of products, suppliers and systems, and they may have very similar customer bases. Sales and service personnel likely understand both technologies. By pooling their resources and cross training sales and service personnel they may be able to enhance their product lines with minimal investment in additional inventories or people.
4. To shore up perceived weakness
If your business is new to an area and you do not have a strong local presence, customers will likely wonder about whether or not they can trust you to do what you promise. By aligning yourself with an established company who already has the trust of its customers, you may shorten your time to market.
For instance, if you are new to, say, a local lawn care service, you may want to align yourself with a proven landscaping business which, for whatever reason, no longer provides lawn care service. They may focus on the more profitable landscape design opportunities and be happy to refer your lawn care business in exchange for you promising to refer all landscape opportunities to them. This is a true win-win situation where you garner new business and your customers will immediately trust you because you are associated with a company that has already proven themselves in the local community.
5. Greater borrowing capacity
The more partners there are, the more money there may be available from their combined resources to invest into the business, which can help to fuel growth. Together, their borrowing capacity is also likely to be greater.
6. High caliber employees
As a sole trader, while you can employ staff, it’s not really possible to bring someone on board to manage the business alongside you. Employees will always believe you will be the one running the business and good people may be demotivated if they feel, as far as their own career is concerned, there’s “nowhere to go”.
By contrast, it’s usually possible to admit a new partner into a general partnership. Good staff may be attracted to the business with the incentive that they could become a partner, either when they join or at some point in the future.
7. Better decision making
Compared with operating on your own, in a partnership the business benefits from the unique perspective brought by each partner. In business, very often two heads really are better than one, with the combined conclusion of debating a situation far better than what each partner could have achieved individually.
8. Access to knowledge, skills and contacts
Each partner will bring their own knowledge, skills, experience and contacts to the business, potentially giving it a better chance of success than any of the partners trading individually. Partners can share out tasks, with each specializing in areas they are best at and enjoy the most.
Consequently, so if one partner has a financial background, they could focus on maintaining the company books, while another may have previously worked extensively in sales and therefore take ownership of that side of the business. As a sole trader, by contrast, you will have to do all of this by yourself (or manage someone you employ to do some of it).
Disadvantages of partnerships
- The liability of the partners for the debts of the business is unlimited.
- There is a risk of disagreements and fiction among partners and management.
- Each partner is an agent of the partnership and is liable for actions by other partners.
- If partners join or leave, you will probably have to value all the partnership assets and this can be costly.
- Perceived lack of prestige.
- Profits are shared.
- Limits on business development.
In conclusion, every business operation is a risk, whether as a sole trader or in partnerships. With its pros and cons, in a business partnership your business is easy to establish and start-up costs are low, more capital is available, there is limited external regulation and it’s easy to change your legal structure later if circumstances change. [/tab] [tab]
Marketing is the most important activity in business because it has a direct effect on profitability and sales. It cannot be isolated from any business operation. Marketing is a business’ overall game plan for reaching people and turning them into customers of the product or service that the business provides. Marketing strategies contains the company’s value proposition, key marketing messages, information on the target customer and other high-level elements.
Effective sales and marketing lies at the heart of successful business growth. Promotional and advertising campaigns and deciding on the most appropriate media and creative execution, can build awareness, generate leads, acquire new customers and make your business stand out. Following that, product, price, place and promotion are the P’s of marketing. The Four P’s collectively make up the essential mix a company needs to market a product or service.
- Product – a product refers to an item or items the business plans to offer to customers. The product should seek to fulfill an absence in the market, or fulfill consumer demand for a greater amount of a product already available.
Before they can prepare an appropriate campaign, marketers need to understand what product is being sold, how it stands out from its competitors, whether the product can also be paired with a secondary product or product line and whether there are substitute products in the market.
- Price – price refers to how much the company will sell the product for. When establishing price, companies must give considerations to the unit cost price, marketing costs and distribution expenses. Companies must also consider the price of competing products in the marketplace and whether their proposed price point is sufficient to represent a reasonable alternative for consumers.
- Place – it refers to the distribution of the product. Key considerations include whether the company will sell the product through a physical storefront, online or through both distribution channels. When it’s sold in a storefront, what kind of product placement does it get? When it’s sold online, what kind of digital product placement of sorts does it get?
- Promotion – it refers to the integrated marketing communications campaign. Promotion includes a variety of activities, such as advertising, selling, sales promotions, public relations, direct marketing, sponsorship and guerilla marketing.
Promotions will vary depending on what stage of product life cycle the product is in. Marketers understand that consumers associate a product’s price and distribution with its quality and take this into account when devising the overall marketing strategy.
Types of marketing strategies
1. Paid Advertising
Paid advertising is any kind of advertising that you have to pay for, versus owned or earned advertising. With paid advertising, marketers pay the owner of ad space in exchange for use of that space. The price paid for the ad space is often settled through a bidding process between marketers and the ad space owner.
This includes multiple approaches for marketing. It entails traditional approaches like TVCs and print media advertising. Also, one of the most well-known marketing approach is internet marketing. It includes various methods like PPC (Pay per click) and paid advertising.
2. Cause Advertising
Cause marketing links the services and products of a company to a social cause or issue. It is also well known as cause related marketing.
3. Relationship Marketing
This type of marketing is basically focused on customer building. Enhancing existing relationships with customers and improving customer loyalty.
4. Undercover marketing
This type of marketing strategy focuses on marketing the product while customers remain unaware of the marketing strategy. It is also known as stealth marketing.
5. Word of mouth
It totally relies on what impression you leave on people. It is traditionally the most important type of marketing strategy. Being heard is important in business world. When you give quality services to customers, it is likely that they will promote you.
6. Internet marketing
It is also known as cloud marketing. It usually happens over the internet. All the marketing items are shared on the internet and promoted on various platforms via multiple approaches.
7. Transactional marketing
Selling is particularly the most challenging work. Even for the largest retailers, selling are always tough especially when there are high volume targets. However with the new marketing strategies, selling isn’t as difficult as it was.
In transactional marketing, the retailers encourage customers to buy with shopping coupons, discounts and huge events. It enhances the chances of sales and motivates the target audience to buy the promoted products.
8. Diversity marketing
It caters diverse audience by customizing and integrating different marketing strategies. It covers different aspects like cultural, beliefs, attitudes, views and other specific needs.
Advantages of marketing
a) Enhanced brand recognition
One of the most notable functions of marketing is creation and promotion of corporate brands. The success of the merger and subsequent success of the company is due largely to brand recognition. To stay competitive, companies have to reach out to as many consumers as possible through as many channels as possible.
In fact, consumers have to know who to buy from. A brand is instantly recognizable through a variety of factors, which may include a slogan, name, symbol or reputation.
b) New product ideas
In today’s technologically advanced global market, consumers shop until they find products that are innovative. Marketing provides the advantage of showing customers the latest and greatest a business has to offer. Companies that have taken advantage of marketing in big ways include companies such as Apple, which is always showing off the latest and greatest new technological electronic or computer gadget to come to market. This can result in a big boon in sales. Customers are going to buy innovative products. Marketers have to work diligently to offer products that consumers want and then advertise them.
c) Increased sales
Marketing brings increased sales when managed correctly. This typically comes in the way of high rates of customer traffic. This may come from Internet traffic generated by various means, including from email campaigns, traffic that comes from business blogs, social media forums, product launches online or from marketing efforts offline.
These may include retailers that work to promote services that feature selected products during certain seasons. Coupons or other special discount offers are another way that marketers offer advantages to organizations by increasing sales and the bottom line by improving consumer interest in products.
d) Cost savings
As sales peak and brand awareness increases, marketing efforts result in cost savings as marketing expenses begin to decline. An in-house marketing team is always less expensive than hiring a marketing or advertising agency to handle marketing and promotional activities. Marketing agencies may offer certain perks and advantages, but with time these efforts can become expensive.
Fortunately, even external marketing agencies can be cost-effective if managed effectively. If this is an organization’s only option, packaged plans may help reduce the cost associated with ad campaigns.
In conclusion, with the right marketing techniques, you can enhance your brand imagine, have new product ideas, increase your sales and save money. Ultimately, effective sales and marketing lies at the heart of successful business growth. [/tab] [tab]
Generally, the definition of a successful company is associated with its growth. It entails the increasing revenue as a result of being in business. It can also refer to other aspects of the enterprise that are growing, like its number of employees, the amount of offices and how many clients it serves because these things are almost always linked to growth of revenue. Thus scaling and growth work hand in hand or sometimes interchangeable.
Primarily, the key difference with growth is that scaling is achieved by increasing revenue without incurring significant costs. While adding customers and revenue exponentially, costs should only increase incrementally, if at all. A great example of a company that’s successfully figured out how to scale is Google, which in recent years has been adding customers (either paying business clients or ad-supported free users), while being able to keep costs at a minimum.
In truth, scaling is one of the most difficult challenges a business owner will ever face. The greatest myth is that scaling goes in only one direction: up. Most people think they are going to either remain static or grow. The truth is that it depends on how your business is performing and pivoting, and scaling is not always a company wide initiative. The difference between growth and scaling becomes most clear when a company isn’t a startup anymore, but is not a large corporation yet, either.
At this critical stage, the business will have to decide between growing at a regular rate or switching over to efficient scaling of the business. If you want a shot at making a lasting impact on the industry and perhaps even society as a whole, it has to be done without accumulating a high amount of overhead. It is also important to realize that your business won’t just become successful based on sheer size alone.
There are competitors out there and they are working just as hard to scale. That is why you will need to stay competitive. Staying in the race is all about being smart in the way you do business, creating a place where your employees love to work and implementing the latest technologies to supercharge the workings of your company. As an entrepreneur, being ahead is key.
In business, the path to success is not found in simply growing but in scaling your business. To effectively scale your business you must be achieving exponential growth while keeping your costs fairly low. However, truth be told, scaling a business requires a whole new level of skills and systems that many entrepreneurs cannot fully anticipate. For this reason, some business advisers caution against scaling too quickly.
Steps to scaling your business
a) Commit to grow
Most entrepreneurs want their businesses to grow but many do not dream of their business growing past a certain point. Many entrepreneurs lack the fortitude and ambition to scale when they are in the startup phase of their business. If scaling your business is a priority, then you must develop a plan and action steps for how this will be achieved.
As an entrepreneur, your dream should stretch beyond building a business to support a certain lifestyle. You need to create realistic growth targets and develop plans and concrete actions of how growth will be achieved.
b) Build broad management skill-set
If you take a hands-on approach to your business, it may be very hard for you think about scaling operations as part of scaling your business. This is because, in order to scale your business, you have to find ways to automate your processes.
In business, flexibility and growth do not necessarily go hand-in-hand. Look at investing in IT support systems and ways you can delegate responsibility for certain necessary tasks. Most importantly, it takes more than a founder to build a successful business. As such, entrepreneurs are advised to build a team with broad and complementary skills.
c) Identify your competitive edge
You have to know what sets your business apart from your competitors. In order to scale your business, you need to clearly understand what sets you apart in the eyes of your customers. You also need to understand the core strengths of your business so you can invest in focused growth.
d) Build your network
In truth, developing your network is key to succeeding in business. Yes, you also have to continue to develop your skills and clearly understand the value and expertise that you offer your customers. However, building the right connections is key to effectively scaling your business and long-term growth. The growth mindset needs to extend to partnerships with people and organizations outside the business.
As an entrepreneur, you should build a network of partners, such as service providers, sales channel partners, suppliers and customers (who may, for example, be willing to help with market information). Many of these engagements could take the form of formal alliances between the entrepreneurial firms and established companies.
e) Articulate competitive strength
Many entrepreneurs fail to look at their business through the eyes of their customers, with research suggesting that some founders build a distorted self-perception based on their own definition of the quality of their interactions with the customer.
As such, if you are aspiring to grow your company, you need to develop a clear articulation of their company’s competitive strength in the eyes of the customers and how this strength is related to internal processes and knowledge. This needs to drive an identification of the relevant growth path in a way that allows scaling without leading into a complexity trap.
Advantages of business scaling
a) Unit cost
A company that is scalable experiences declining unit costs as it grows. For example, producing one million bicycles is typically cheaper per unit than producing one thousand. As such, it is often impossible for small firms to directly compete on price with larger producers. Smaller companies may avoid direct price competition by producing a niche product that the larger producer doesn’t offer.
In some cases, the value of a product or service grows as sales increase. A nightclub that is filled with people may be more valuable to customers than a nightclub that is empty. It is easier to find support and complementary products for a popular product as opposed to an obscure one.
A scalable business can drive down the costs of providing a service as it grows. For example, a large cloud infrastructure company can build more efficient data centers and push suppliers for cheaper prices due to its scale.
d) Brand awareness
Customers are more likely to purchase a product that they know. Beyond that, customers are more likely to purchase a product simply because its brand name sounds familiar. This allows your sales to increase as your brand gains recognition and awareness in the market. Brand awareness is often one of the benefits of achieving scale.
Operational costs typically decline as a percentage of revenue as you grow. In some cases, large firms have operational issues due to factors such as legacy systems, excessively complicated processes and resistance to change.
In conclusion, companies scale their business when their revenue increases while their operating costs remain low. With scaling, you can have predictable revenue, subscription-based services, diverse income streams, high consumer retention rates and create a value ladder of products to offer for your customer. [/tab] [tab]
In business, it is important to stay in touch with the changing consumer needs and demands. We live in an evolving world and changes are the order of the day. Therefore, there is a need in business to introduce new products when customer needs change.
However, a product launch will not guarantee the success of a product. A good launch cannot overcome a flawed product. However, if you develop a competitive product that meets a need and is a solution of value and you can create a believable and ownable position in the market, then you are ready to invest in a product launch strategy and plan. Often times, new products are launched:
- To block competition.
- To fragment the market.
- To defend against competition.
- To help reposition the organization.
- To better the needs of existing consumers.
- To better the needs of future markets.
- To meet the demands of a new segment.
- To increase profitability.
- To deliver growth for the organization.
- To meet internal goals.
- To enter high-growth markets.
- To help implement the strategy of the organization.
- To take advantage of excess capacity.
- To take advantage of a new resource.
What to consider before launching a new product
a) Study your competition
It is important to carry out a SWOT (strengths, weaknesses, opportunities and threats) analysis. You have to start by taking a serious look at your competitors. Make a list of the businesses that offer products or services similar to the one you plan to launch. Even if you think your new product or service is entirely unique and without existing competition, it is important to put yourself in your prospective customers’ shoes and imagine what they might buy in lieu of what you plan to offer.
Once you decide whom your competitors will be, review their marketing materials, including their advertisements, brochures and websites. Evaluate how your new product or service will stand up against what is already being offered, in what ways will you excel and which companies or their offerings pose the greatest threats to your success.
b) Target the ideal customer
To successfully launch your new product or service with minimum financial outlay, it is essential to focus exclusively on the prospects you believe are most likely to purchase from you. These may be customers who are currently buying something similar and will appreciate the additional features your new product or service provides.
In fact, your best prospects have a perceived need for what you offer, can afford to buy it and have demonstrated a willingness to do so, probably by purchasing from your competition. Bear in mind, it is always easier to fill a need than to create one.
c) Create a unique value proposition
At this stage, you should have a clear understanding of what you must offer in order to stand apart from your competition and who will want to take advantage of your offer. Ask yourself why customers will want to buy from you versus the vast field of competitors out there. What benefits and features will you provide that your prospective customers will value most? The bottom line is that your product or service “bundle” should be unique and meet the needs and desires of your best prospects.
d) Define your marketing strategy and tactics
Next, choose your sales and marketing channels. Will you market online, via catalog or through dealers, for example? Generally, multi-channel marketers achieve the greatest success because customers who can shop when and however they like tend to spend more and shop more often.
Suppose your strategy is to market a low-cost workout device to people who cannot afford gym memberships or high-priced home equipment. You might choose traditional direct marketing plus online sales as your primary channels and employ tactics including direct-response TV spots and online ads and e-mail solicitations that link to your website.
e) Test your concept and marketing approach
With all the money it takes to bring a new product or service to market, it is not logical to rush headlong into the launch phase prior to testing. It is best to examine your product or service bundle plus your marketing message and your marketing materials.
Depending on what you plan to market and your budget, you can use formal focus groups (or simply host roundtable discussions with members of the target audience), employ online research or mall intercept studies or distribute your product to a select group of users for testing. Only after testing is complete, should you proceed to the final creation of your marketing tools and materials.
f) Roll out your campaign
Public relations often plays a vital role in the launch of a product or service. You can use media relations tactics to place articles and win interviews, get coverage by allowing key press to review your product, hold a launch event or use grassroots marketing to build buzz.
However, no matter what publicity route you choose, first make sure your product or service is completely ready and available for purchase in order to maximize returns from the coverage you receive. Also, your other marketing efforts should follow closely on the heels of your press roll out. Monitor the results from all media and in the first weeks and months, be prepared to adjust your campaign to take advantage of what is working best.
g) Know your product’s lifecycle
The campaign you use during the introduction and education phase of your product or service launch will need to be updated as your product or service matures. If you are monitoring your marketing results carefully, you will begin to see diminishing returns that will indicate when it’s time to revise the product or service itself, alter your media message, or even phase out this particular offering and lay the groundwork for the launch of your next great idea.
Advantages of launching a new product
a) Company and product attention
A product launch generates attention for your company. When you issue a press release that gets published, people read about your new product and, at the same time, learn about or get introduced to your company. People often click through to your website when reading the story online to learn more about the product.
Also, potential customers might read up on your company, especially if it is relatively unknown. This attention can lead to a larger customer base and more sales for both the new product and your other company products.
b) Increased revenue
When you launch a new product successfully and it sells well, it can cover the development and launch costs, hence, generating a profit for your company. If the product is evergreen, something that people will need or use for a long time, the revenue stream that begins with the product launch can be consistent for many years.
c) Enhancing company reputation
If your newly launched product sells well or fills an unaddressed consumer need, particularly one ignored by other companies, your company can become an industry leader with a reputation for developing industry-changing products and bringing them to market. When consumers or target customers trust your company, your next product launch is likely to sell well initially, based on the success of your previous product and your overall company reputation.
d) New business relationships
A product launch can generate new partnerships or business relationships. If your company is a startup, a successful product launch can lead to larger companies making offers to acquire your company. Others might want to invest in your company, based on your new product, or might want to form a business relationship to sell your product to more people in a revenue-sharing model.
e) Employee motivation and retention
Newness makes the job interesting. A new product launch encompasses new goals, new ways of doing things and new lines of cooperation and communication among employees. When you convey to employees that yours is a growing, dynamic company that launches new products, you are more likely to retain employees who want to grow with you.
In conclusion, when you launch a new product for your small business, you open up new possibilities that can help your company not only to survive, but grow. A product launch is an exciting and profitable exercise which helps you gain maximum attention and interest in your latest product, while attracting new customers in abundance. [/tab][tab]
Target Big Tenders
A tender is an offer to perform work, supply goods, services or products at a fixed price. The tendering process is generally utilized for procurement or contracts involving substantial amounts of money.
Generally speaking, it is government departments, offices, agencies, private sector companies and businesses that put requests out on tenders. By so doing, they basically ask the public for price offers to supply required products or services. In essence, a tender is a type of transaction model used by large organizations, government bodies, companies and NGOs in order to find contractors for particular projects or procurement.
In other words, it is a bidding process utilized by both public and private organizations. Most organizations use Requests for Tender (RTF) to invite bids for large projects, procurement or contracts from all qualified suppliers or firms in a given industry.
Once the tenderer accepts a tender, it is binding to both the tenderer and the person or company who won the tender. Therefore, the person or company has to provide the goods or services in the manner agreed to and at the price offered. In turn, the tenderer must pay the agreed price on the agreed deadline.
Characteristics of tenders
- All potential contractors and suppliers must submit their bids within the deadline decided by the client.
- The bid must include all the required and relevant details about the materials to be used, the expected cost of the project, etc.
- After the deadline has passed, all bids are evaluated by the client on the basis of a set of predetermined criteria such as price and quality.
- The tendering process begins with an invitation to tender or a request for tender (RTF).
- It ends with the public evaluation process, following which one of the firms that submitted a bid wins the project or contract.
- Before they are floated by the client, tenders are extensively advertised in a variety of media, to allow all interested suppliers an opportunity to bid for the project.
Most importantly, there are many things that you as a small business owner must remember when you respond to a tender. In truth, sometimes responding to a tender can be overwhelming. Therefore, there are things to remember when you tender:
- Attend all briefing sessions. They are a place where you find out the what, why and how of responding to a tender.
- Read the tender document carefully and thoroughly. Each tender document is different. Make sure your read every last word so that you respond correctly to the specific tender.
- Be on time. Ensure that you deliver your tender response on time because if you are late with your tender response you will be disqualified.
- Use an index in your tender response. The Evaluation Committee members do not want to page around struggling to find specific information in your tender response.
- Complete all documents.
- Ensure that you attach all the necessary compulsory documents.
- Keep your tender response neat and tidy.
Steps in the bid process
- Register your interest
Follow the instructions in the bid document to register your interest with the purchasing agency. This important step will help keep you up to date on any bid information sessions.
2. Attend briefing sessions
If you registered through a bid website, monitor the website for updates about bids. Attend any bid briefing session offered. These are valuable opportunities to ask questions and make contact with influential people.
3. Develop your bid response strategy
If you are bidding for a high-value bid, plan your carefully and consider the requirements and resources involved. For instance, ask yourself:
- How much will it cost to prepare the bid?
- What information do we need to gather?
- What resources will we need to fulfill the contract?
- Who will manage the bid project?
- How will we plan the workload, assign the work required or schedule meetings?
- Who is our competition and what are our chances of winning?
- What is our plan for marketing our products and services and pitching our business?
4. Review recent awarded contracts
If you are unclear about any requirements in the bid request, contact the bid coordinator to seek clarification.
5. Write a compelling bid
Prepare your bid response. This includes planning, drafting and refining it. Make sure that you see the response forms provided and answer all questions.
6. Understand payment terms
When putting together your bid response, make sure you are aware of the payment schedule specified.
7. Provide References
Provide references who know your business and can attest to your work. Give references clear information about the bid request so that they know what points to emphasize in their requests.
8. Check and submit your bid
Make sure you check your personal proposal carefully before submitting it. Use a checklist to make sure your bid meets all the requirements.
9. Present your bid
Bid panels responsible for high-value contracts may request a formal presentation from bidders. If you need to present your offer to an evaluation panel, stay focused on the key messages in your proposal. Most importantly, prepare. Plan your presentation carefully, rehearse and if you don’t feel you are a good presenter, get some coaching in presenting skills.
10. Request a debriefing
You can request a debriefing on the bid after the process, especially if your bid is unsuccessful. Feedback from the evaluation committee can be extremely useful in understanding how your offering can be improved and can assist you in preparing for your next bid. Look for ways to improve your next bid.
Advantages of the tender process
- All bids are evaluated on the basis of certain predetermined criteria, such as price, quality and value for money. In other words, there is little room for nepotism or favoritism of any kind.
- Value for money – tenders offer the greatest value for the amount of money spent. This allows the company, establishment or organization to save money without having to compromise on quality. Therefore, despite being quite time consuming, tendering is, in my opinion, a profitable long-term process from an organization’s point of view.
- Encourages Competition – the process of tendering helps promote a competitive market. This is because a number of potential contractors, firms or suppliers get a chance to bid for every project. The entire process encourages healthy competition as selection depends on quality, price and innovation.
- Easier entry – the system makes it easier and simpler for new firms to enter the market or even a particular industry. Contracts under this system are awarded on the basis of predetermined, objective criteria. As a result, even a firm that is a new entrant to the market, having no connections or contacts in the industry, can win a prestigious and lucrative contract by providing the highest value for the client’s money.
Advantages of targeting big tenders
- The procurement market is worth $30 billion, meaning there’s a lot of work out there for you and a lot to gain from being part it.
- Tendering is a great way to ensure your company name stands out in a crowded marketplace.
- By bidding and winning a contract from the government, a council or a private organization, you can gain national recognition after a single completed contract.
- Having tendering knowledge and skills is essential for any business owner wanting to transform and grow their business, it requires constant evaluation and innovation.
- Most government contracts can extend for up to 2 to 5 years or more, meaning ongoing revenue and long-term stability for your business, instead of worrying about when the next project will come through.
- Tendering is suitable for all types of organizations, both large and small, with both reaping hugely advantageous benefits.
In conclusion, tendering is a great way to ensure that your company name stands out in a crowded marketplace. The truth is, competition will always be there and there is a need to be smarter than your competitors in your market niche.
We live in an era where everything is scanned so minutely that any error will not go unnoticed. As a result, specialization has gained prominent importance and all companies all over the world are focusing on it.
Specialization, in simple words, means doing the same thing over and over until one becomes expert in doing that particular task. It is a method of production whereby an entity focuses on the production of a limited scope of goods to gain a greater degree of efficiency.
Primarily, this strategy is developed in order to gain maximum productivity, expertise and leadership in the targeted field. Businesses specialize to get a better return on investment.
In addition, specialization is the opposite of diversification, a process whereby a company spreads from its core activity into new areas. The dilemma comes when you to choose between diversification and specialization. Diversifying can help boost your business while specialization in a particular area can also reap great reward.
As a business owner, growing your business and leading it to success is naturally your number one priority. Whatever your business, regardless of sector, choosing how to grow your company can sometimes be overwhelming and ensuring you make the right decisions can be challenging. The key is knowing what your business does very well. What does it do so great that customers are prepared to pay for?
In truth, the more peripheral work you accept, the harder to be known for your core value offering. By concentrating your efforts around your particular specialization, you increase your business branding in that market. It’s better to be a big fish in a small pond.
Most importantly, understanding your customer needs should help you in your specialization strategy. Market and consumer research is key to understanding where your business will succeed. Choosing to specialize gives your business the opportunity to position itself as the “go-to” provider for your service.
Offering specialist knowledge allows you to build a loyal customer base. Keeping up to date with the latest trends in your sector is key if you specialize as it enables you to give valuable insight to your customers. Looking ahead and auditing your success to date will help you see if it can be sustained and whether there are points in the year for you to capitalize upon.
Advantages of specialization
a) Increased productivity
Employees who specialize in a skill are apt to be able to focus better, work easier and produce more of the same product. If your business is broken down into several different jobs instead of having employees complete two or more tasks, they will complete one task during their shifts. Specialized employees provide you with quality over quantity and they become quicker at producing those good.
The advantage of specialization is becoming an expert which makes it easy to tell people what you do and what you know. You will be the go-to person and become known within your organization as the person who can provide solutions for particular issues.
An employee who performs the same task repeatedly by specializing in it is less likely to make a mistake. They are familiar with the pitfalls and issues that a non-specialist performing that task would not know. For instance, someone who makes deliveries to the same places every day will know the roads and potential traffic issues better than someone who doesn’t drive that route all the time.
c) It cultivates solidarity
The biggest advantage of specialization is that employees feel a certain camaraderie with others in their department or skill set. It ushers in a feeling of “we are all in this together!” that bolsters morale and, in turn, improves performance. Even if an employee is a lone specialist in what they do, it still brings a feeling of immense pride.
d) It saves money
Training one person to do a particular job saves money and time in training. Transferring or moving employees from a task they are skilled in to a task they are not means potentially wasting a lot of resources. The advantage of specializing in a task is that there is a virtual guarantee of not having to spend money to perform the same task over again because the specialist knows it very well.
e) Time management
Time wasted is money wasted. Training multiple people to do many tasks can result in all of them being at least okay at doing it, whereas a few people specializing in the same task means it will be done more quickly and with greater ease.
Disadvantages of specialization
Repetitive routine runs the risk of monotony, and boredom often leads to complacency, so much so that mistakes can happen. New tasks and routines engage the brain and body, forcing a concentrated focus.
The disadvantage of specialization means taking the chance that complacency could lead to missteps, which can cost the company money and compromise safety. People like variety, and if their jobs become the same process over and over again, they become tedious, empty and unsatisfying.
If an employee who specializes in a task or procedure is not available when it must be done as soon as possible, then someone who is not as adept at it must take over. A non-specialist performing a specialist’s job can lead to problems. This is a huge disadvantage of specialization. Taking the time to teach a newbie the ropes in an emergency results in a loss of time and money.
When employees specialize in just one aspect of the company’s goal they may not feel connected to the whole process. An innate satisfaction comes from understanding an entire procedure. Specialization can lead to a feeling of isolation, of being divided from the whole. A decline in work ethic is the danger here.
d) Workers may eventually be replaced by machinery
Advantages commonly attributed to automation include higher production rates and increased productivity, more efficient use of materials, better product quality, improved safety, shorter workweeks for labor and reduced factory lead times.
Despite the claims of high quality guaranteed by automated systems, automated equipment require high capital expenditure to invest in. Also, with automation, a higher level of maintenance is needed than with a manually operated machine and automation has a generally lower degree of flexibility in terms of the possible products as compared with a manual system. Even flexible automation is less flexible than humans, the most versatile machines of all.
In conclusion, specialization allows an organization and its workers to focus on the production of a limited scope of goods to gain a greater degree of efficiency. This business strategy guarantees maximum productivity, quality expertise and leadership in the targeted field. In fact, business specialization ushers in a better return on investment.
Start Selling Online
It is no new news that serious businesses are rapidly accelerating by strongly making their presence felt online. The world is moving online and the buyer’s decision-making process has changed drastically in recent years. Buyers are conducting extensive research online before ever speaking to a sales person.
Also, buyers are making more direct purchases online and via their smartphones. Thus, never stepping foot into traditional brick-and-mortar locations.Primarily, online selling is a form of electronic commerce which allows sellers to directly sell goods or services to a buyer over the Internet using a web browser.
However, it works best if you have well-defined products or services that can be sold without human involvement in the sales process, fixed prices for all types of potential customers as well as products or services that can be delivered within a predictable lead time. Online selling helps your business become more profitable and more successful.
In truth, online retail is growing by leaps and bounds. Customers are becoming more comfortable with the online shopping process and also have greater access to technology. The convenience of shopping online is attractive to modern consumers.
If your business is not online, you are missing out on a huge opportunity. Increased convenience, flexibility, low startup costs and the chance to reach a global audience are just a few of the benefits of online selling.
Considerations when building your e-commerce presence
- Create a user focused experience. Provide product details and information in a clear and concise manner. It is important to help users through online buying experience where they are unable to touch or try-on the products.
- Use reviews and trust seals. Research shows that 5% of shoppers’ buying decisions are influenced by reviews.
- Make sure information is readily available and there are no surprises such as unexpected shipping costs. 28% of shoppers will abandon their shopping cart if presented with unexpected costs.
- Allow guest check out and ensure checkout is secure. Many shoppers will abandon a cart if they are required to create a new user account or have security concerns.
- Make customers feel good about their purchase. Be helpful and personalize experience.
- Gather feedback and data that will help you to constantly improve the customer experience.
- Make sure your e-commerce is mobile friendly.
- Be fluid and evolve.
Benefits of selling online
a) Higher reach
E-commerce provides new channels for you to reach more customers. Whether you are just starting out or an existing seller, there are always new customers to serve. Building a successful online business means you are reaching out to a wide variety and number of audiences. It has a higher potential for increasing sales.
With an online store, your profits are no longer limited by the number of customers that can physically visit your brick and mortar location. You can sell across towns, states, and even across borders, removing all geographical limitations. Thus, your online store also allows you to cater to shoppers who find it more convenient to browse and buy at times when retail locations are not traditionally open.
In addition, online shopping can save time for both the buyer and retailer, reducing phone calls about availability, specifications, hours of operation or other information easily found on company and product pages. An e-commerce system provides real time data and analytics about your products and your customers.
With e-commerce, you can see how people interact with the site, what products interest them, what they left in their cart and how much the average purchase was. Valuable metrics that allow you to make adjustments to meet your customer’s needs.
Even if your product(s) do not appear ideal for online sales, an e-commerce presence will help buyers discover your business. Shoppers are spending more time researching online than ever before. Sixty-four percent of buyers spend 10 minutes or more researching before buying. They are online searching for products your business might sell.
By having your items listed online in an e-commerce system you improve your chances of appearing in search engine results pages. That research could draw local buyers to your brick-and-mortar location or entice them to call, and best of all, your website is always selling.
An e-commerce site is open 24/7/365 with virtually none of the overhead of a brick-and-mortar location. Existing brick and mortar sellers can be limited by their location. Customers must travel to visit your store. With e-commerce, you can sell to customers anywhere, anytime. This allows you to serve customers internationally.
b) Reduction of operational costs
When you start a physical store, you must rent or purchase space and pay for things like property insurance, zoning permits, signage permits, decorations, utilities and so on. These costs are out of reach for many entrepreneurs. An online shop, by comparison, requires less money.
After you register your business and make a plan, you can set up your website within hours. All you need is a domain name and hosting. Next, you can either download a ready-made website template or hire a web designer.
If you are planning to sell goods or services online, you can purchase an e-commerce theme. These templates provide everything you need to get started, including a digital storefront, built-in payment systems, contact forms and more.
As mentioned earlier, with an online business, you do not have to worry about rent, utilities or building permits. Again, there is no need to hire shop assistants and department managers. Customers will have access to your products around the clock. Once an order is placed, the system will take care of the rest.
c) Easy scaling of your business
If you have a physical store that performs well, you may need to rent more space to accommodate more customers and products. A larger facility will involve higher costs.
The ability to scale your business easily is one of the key benefits of online selling. As your e-commerce store grows, you can upgrade your hosting plan to get more space and keep up with the increase in traffic.
Most hosting providers sell different plans, from basic to premium packages. Depending on your needs and budget, you can start with a basic plan and upgrade later on. This process takes just a few minutes and costs next to nothing compared to a physical store.
d) Increased brand awareness
The truth is, customers research online first, whether they buy online or in-store. Therefore, having an online presence helps makes sure that potential customers find your product information and are able to locate your shop. When they do a product search online, it is important to be listed among the top results. This increases your brand awareness as you are always available to and one step ahead of your customers.
e) Provision of more information
An online presence allows you to provide more information about your products and services to your customers. This is because a branded site specifically gives sellers a place to provide key content to customers.
Key product content includes in-depth product descriptions, product comparisons, in-store inventory availability, and pricing. This information helps a customer make their purchasing decision both in-store or online.
Next, your e-commerce site can also provide more information about your business or how to use your products. Web-pages can be dedicated to your brand’s story and how your products are made. Blog posts and videos can also provide helpful content about the use of your products or services.
For example, food companies provide recipes and tips to consumers on their website. This type of content creates a story for your brand while providing an overall better customer experience. In a competitive market, this type of information sets you apart from other sellers.
f) Personalized Online Experience
One of the main advantages of online selling is website personalization. Of course you can personalize a physical store, but it could never offer the same features like an online shop. A website allows you to collect customer data and then segment your email lists based on buyers’ location, purchase history, product preferences and other criteria.
Furthermore, you can launch online advertisements targeting customers who visited your store and abandoned their shopping cart. Also, you can display your bestsellers, as well as products related to those that a customer has already bought.
For example, if a buyer is looking at high heel sandals, you can set your website to display similar products. This can lead to more page views, higher traffic and increased sales.
In conclusion, many businesses can run pilot e-commerce sites without significant investment. However, creating a fully automated online shop tailored to meet your precise requirements could be expensive. Whatever form of online shop you choose, it is important to take a strategic view. If you launch a website that disappoints your customers or is overwhelmed by traffic, you risk damaging your reputation and losing sales.
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Embrace technology to achieve increased productivity and lower cost structures as a result of automation. Technology has important effects on your business operations. No matter the size of your business, technology has both tangible and intangible benefits that will help you make money and produce the results your customers demand. Technological infrastructure affects the culture, efficiency and relationships of a business.
Communication with customers
In today’s busy business environment, it is necessary for employees to interact with clients quickly and clearly. Social media and your website allow customers to find answers to their questions after hours. Also, your website will allow your business to move products over a large geographic area. When customers use technology to interact with your business, the business benefits because better communication creates a stronger public image.
Efficiency of operations
Technology also helps a business understand its cash flow needs and preserve precious resources such as time. For example, Quickbooks assists in keeping track of all basic transactions, such as sales receipts, invoices, and checks. With proper technology in place such as Skype, you can save time and money by holding meetings over the Internet instead of at corporate headquarters.
Technology eliminates the need for double or triple entry systems and reduces the need to file large amounts of paperwork. Now, contracts and customer information can be stored in virtual data warehouses and accessed in minutes, which cuts down on the need to purchase or rent storage space.
A business that has the technological capacity to research new opportunities will stay a step ahead of its competition. For a business to survive, it must grow and acquire new opportunities. The Internet allows a business to virtually travel into new markets without the cost of travelling.
Expand into markets or products that are not related to your current business. You will be offering a product or service that is completely new and is being introduced into a new market. An example of diversification is Econet Wireless. It began as a telecommunications company, later expanding into mobile money services, insurance, education, and agriculture amongst other services. There are two types of diversification
Related Diversification: The organisation stays within a market they have familiarity with.
Unrelated Diversification: The organisation moves into a market or industry they have no experience with. This is considered a high risk strategy.
Offer your products or services to a wider section of an existing market or into a new demographic, psychographic or geographic market. There are several examples of firms that target a new market with existing products. They include leading Zimbabwean firms like Nash paints and Nyaradzo funeral services, which have entered international markets for expansion. These companies continue to expand their brands across new regional markets. That’s the perfect example of market extension. For a smaller enterprise, this strategy entails expanding from a current market to another market where its product does not currently compete, for example, Eat n’ Lick expanding into Plumtree.
Develop successful, long term, strategic relationships between your company and your customers and suppliers. By forming strategic partnerships with other businesses that offer complementary products and services, you can cultivate a mutually beneficial relationship that will help both of your businesses grow.
You need to know the type of partnerships that make sense for the growth of your business growth before you form a partnership. There are three situations in which you can align your company with other organizations to achieve business growth.
Partner with other businesses who can help promote what you sell and you’ll cast a wider net. Promotional partners are the people who send potential customers to your website, launch, or exhibition event to sign up and eventually buy. Having promotional partners will help you cast a wider net. Here’s an example of how this can work effectively in your business.
If you have a launch event you’re using to promote your new products, you want to have as many people in attendance and on the list to appreciate your products as possible. If you choose a new partner who has a list size of 15,000 to help you promote your launch event, chances are you’ll receive about 20% of that list signed up. 3,000 people register, but then only 1,000 will actually attend. Of those in attendance, 30 will become customers. If you sell your product for $100, you’ll get $3,000 of new revenue plus 1,000 new leads from your promotional partner.
Distributors want to get your products into as many hands as possible. They do the heavy lifting for you to increase sales. It’s a win-win. You have a distributor eager to sell your product to their already in-tune audience, while you bring in more sales, customers, and profits from their hard work. Here are a few examples of popular distributors you might have heard of who are doing this for their partners already:
- Cocacola has a Bottlers’ Agreement with Delta Beverages.
- Brands Africa distributes RedBull products.
- Gary Thompson & Associates endorses Steward Bank.
Look within your niche to find the major influencers. Then, partner with these influencers to distribute your product or service to their already existing large audience.
Your partnerships don’t have to be directly related to your day-to-day operations. Partnering with nonprofit organizations or causes specific to your core value can also have a tremendous impact on your business growth. Customers love to see companies give back. Here are a few ways you can do this in your business.
- Sponsor a sports club or event, for example, BancAbc sponsors the Highlanders and Dynamos football clubs.
- Econet has Joshua Nkomo scholarships for A Level and University new entrants.
- As a small organization, you can offer raffle prizes as a fundraiser for local organizations.
Find the social cause that makes the most sense for your business. Align yourself with the event and engage the audience. Your brand will automatically be associated with a fun and socially good cause, making it stand out from the competition.
Advantages of business partnerships
- You have easier access to new audiences
- You get your product out to market faster than if you had done it alone
- Your business leverages another brand’s reputation to boost its own brand image.
- It helps you to fill any competency gaps, for instance, let the marketing experts do what they know best.
- With partnerships you become more competitive by getting more exposure
Make use of promotional tools that create consumer awareness about a company’s products and services and drive business growth. Promotional tools can include:
- advertising – you can advertise your product, service or brand in newspapers, radio, television, magazines, outdoor signage and online.
- personal selling or telemarketing – effective personal selling relies on good interpersonal and communication skills, excellent product and service knowledge and the ability to sell product benefits to prospective customers.
- publicity – created by sending media releases to print and broadcasting media, giving interviews to the media and from word-of-mouth.
- short-term sales promotions – market your product or service using coupons, competitions and contests. Examples include the OK Grand Challenge and the TM Pick n Pay Bonanza
Set the stage so as to enable and support growth in your company. Your business scales when it can cope with an increased amount of work while maintaining or actually reducing its total operating costs. This means that your revenue has increased whilst you are maintaining your current expenditure, hence you obtain an increased net income.
Here are five effective, actionable steps businesses can take toward scaling your business:
- You must develop a plan and action steps for how this will be achieved.
- Find ways to automate your processes such as using CRM systems for managing customer relationships.
- Identify your competitive edge, understand the core strengths of your business so you can invest in focused growth.
- Focus on the right things, that is, the key activities that will move your business forward in a focused and strategic way.
- Build your network with the right connections. This is key to effectively scaling your business and long-term growth.
Introduce newer products in the market especially when your company has a good customer base and you know that the market for your existing product has reached saturation. You should understand your customer’s underlying needs and wants better so that you can see opportunities for new products.
You can offer new products by doing any of the following;
- Replacing existing products with something better.
- Providing complementary products that customers need to buy before, during or after purchase of the main product sold by the business.
- Selling other unrelated products as a way to strengthen or leverage the relationship and to provide added convenience. Think of a one stop shop.
Target big tenders
Target big tenders
A tender usually refers to the process whereby governments and other big companies invite bids for large projects that must be submitted within a finite deadline. Here is why you should target big tenders:
Bidding increases your profile
The mere act of being included and taking part in a major bid can raise your company’s profile. This may reap rewards in future bids. It may also encourage the awarding authority to include you in future bids or indeed to ask you to supply other services.
Promoting your brand
If developed properly a well designed and thought out proposal can promote your brand. It provides the opportunity to demonstrate your expertise and knowledge, and illustrate that you are an expert in your area of operation. It also provides a platform to include testimonials from successful projects that you have undertaken.
Any major bid requires efficient team building and team management. Whether you win or not, the experience of project managing the proposal will help you develop an efficient process for bid management and also help you identify the real resources needed to take part in a major tender. Another benefit is the opportunity to identify key individuals within your organisation that can play a significant role in bid strategy and delivery.
If you do not win the tender it is important that you find out why. Even it is simply a case of cost it allows you to assess your costing structure for future, similar tenders. If it is for other reasons such as experience or project management expertise, it allows you to revise business processes throughout your organisation that can be applied to all areas of operation.
Growth will happen from reputation, advertising and the service you deliver. All of this is much easier when you specialize instead of generalize. Specializing is often just looking at things differently and focusing on a more simplified or direct approach. Think about how your organization can specialize your services, your market or your goals for business growth.
Here are a few of the specific benefits associated with specialization:
Higher perception of being knowledgeable
If you have tax issues, who do you perceive as being more authoritative and knowledgeable – a general business consultant or a tax consultant specializing in company taxes? That’s obviously a rhetorical question. The individual with the specialty is viewed as authoritative.
When your business decides to specialize, it automatically garners a higher perception of authority in the marketplace. This can allow you to charge more, while also accepting fewer clients.
Better learning experience
There’s a lot that goes into running a successful business including staying up to date on new trends, best practices, and developments. If you’re in an industry where innovation happens at a swift pace – such as in medicine or IT – then you’re all-too familiar with this challenge.
By specializing, you can lighten your load by reducing the learning curve. When you’re only focused on one or two niches, you’ll find it easier to focus your time and attention. This results in better comprehension and expertise.
Better value proposition
When you specialize, you’re able to provide your target market with a superior value proposition over companies that generalize in a related field. You essentially become a bigger fish in a smaller pond, as opposed to the other way around.This reduces the number of companies can compete with you for that specialist work. Furthermore, you are able to offer services that are not replicated by automated tools or that justify being a permanent part of an in-house team.
Finally, specialization leads to better networking opportunities. This is simply a result of the environment your business runs in. When you specialize, you’ll see an increase in word of mouth marketing. You’ll also discover that you’re interacting with people and organizations that are closely linked to your area of specialty. This means you’re more likely to strike up profitable relationships.
Start selling online
Start selling online
Selling online will make you reach markets that you would have otherwise not reached when selling physically. Your business will achieve growth because of the following;
- Reduced order processing costs – customer orders can automatically come straight into your orders database from the website.
- By selling online, you reach a global audience, thereby increasing sales opportunities.
- You compete with larger businesses by being able to open 24 hours a day, seven days a week.
- Selling online allows you to reduce the number of physical offices or location. This then eliminates costs such as rent, electricity and water charges.
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