by editor at Monday, January 25, 2010 in Business, Management
Tags:  business innovation, small business, working capital

Small Business

The persons intended to use this guide are advised to study the criteria first and then start setting minimum desirable score targets for each head/topic. Drop the topics that do not score satisfactory. Look for better ones giving better opportunities that may suit you.

You will now use this short bit and start devoting much of your time for assessment research, planning and development. Pursue the following assignment to start off.

Business Innovation

1 – Target Prospective Customers to discuss your product / services offered.

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  Photo by Iain Winfield

  Will they buy your product / services, at what price and how much will they buy?

• Do they like your product / services to the other competition?
• You must find their own real views.

The usual approach of the public in general is to go affirmative or tell you what you wish to hear. So sort out the hesitant remarks, qualifications, comments on the existing products / services. Do not force your own ideas on them by suggestions. Your task is to get their original views and reaction to guide you.

2 – Use Desk and Field research for market analysis

• Understand the market segment (by quality, price, location, etc.).
• Chalk out the segments you wish to target and why?
• Find the quantum of the segments you are selecting and their changing trends.
• What are the present price break-up structures?
• Assess the market share that you can hope to avail keeping in mind your own prices, location and limitations of your distribution and product promotion.

3 – Be careful in your competition analysis

• The various brands available and their operation techniques.
• The reasons of the success.
• How will they react after your entering the market?
• What criteria makes you confident that you can beat competition?
• What brands / services will be hit by you most, to gain sales?

4 – Guides the strategies before start / Launch

• You will use your home to start or mark part time.
• You will prefer well introduced name in partnership or a new store /retail outlet.
• You will buy finished products for resale as a dealer / sale agent of manufacturers.
• You will contact out manufacturing of your products.
• You will buy an existing business or go into partnership / joint ventures.
• You will lease or hire premises and equipment instead of buying outright.
• You will need to plan out strategy to increase your sales.
• You are advised to carefully study more papers on Devising Business Strategies and Developing a Strategic Business Plan.

5 – Set confident targets and prepare first-cut financial projections

The possible sales are to be estimated realistically and factual costs worked out to project magnitude of orders and key components. This exercise will help to establish a rough break-even point or achieve a no profit and no loss position. Once this is done you can now move ahead. For immediate help and projected calculations various forms and sheets are available that could be used to assess 3/5 years sales / financial projections to workout profit and loss, cash flow, ratio analysis and graph paper projections at different sales levels for optimum results reviews.

Care is advised to avoid the natural tendency of over estimating sales, under rating costs and development lead periods. Be conservative, you must never confuse profits with cash. All cash available is not total profit as overloads balance out slowly in smooth working business. If something goes wrong, you will be using your own cash or working capital instead.

6 – Action Plan Helps

You will need funds much before the business operations actually start. This is termed “Working Capital”. Acquiring premises, stocking, retailing or manufacturing facilities for development and sales, salaries and costs, utilities customer credits and so on. All these critical aspects are funded, initially from, cash available and not profits, that are not yet generated. The working capital takes care of these initial compulsory expenses. This is the most crucial time before the sales start generating funds and profits.

7 – Your ideas must get a tough roughing

The first and foremost: enough money to start.
The second important: the selection of most probable product that you can understand and handle.
The third important: to get premises, staff and know-how if needed.
The fourth important: will the product be successful.
The fifth important: the sales promotion strategy.

There are many if’s and do’s and buts. Besides launching delays, equipment limitations, escalated costs, more competitions and so on. Toy would need an open-end strategy.

Every enterprise or business needs a lead time maturity time, commonly known as incubating time to develop and create its position in the market sustaining the positive and negative competition. Some hard months could make you fed-up. But you have to stay in to make room for yourself and your product or services.

You should have an open mind to admit faults and seek external help and services to understand where you went wrong. There are Government support organizations like SDBCs in USA, Enterprise Agencies and Business Links in UK, Ec BICs throughout Europe and so on.