... where visionaries, game changers, and challengers discuss business models
I have always been a big fan of a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) because it can be done quickly and reveals a great deal about a project or new start-up. For a small business, the most important part of this matrix is Strengths because unless you have certain areas where you can compete with others, it will be a very long, difficult, road. Understanding what skills, techniques, networks, ideas, etc. that you have that can earn you some money in an often crowded marketplace is critical. They will be the base of your business
In working with my clients, I have three core questions that I like to explore with them regarding their strengths in their business model.
For experience, skills and talents, this is normally what you are going to sell. Lots of people come to me with the next “great idea” but this rarely works out. Either the idea has already been developed or in most cases, the person does not have the resources, execution skills, etc. that a larger business can bring to the table and make that idea work. For an example of a better approach, a tailor I am currently working with has taken design at school and has 20 years experience in the industry. An accounting client has similar credentials. With these in hand, they can begin the process of asking people to buy their services. You have to have something to build on. Recently a client came to me with an idea to launch an online auction house in an already busy marketplace for jewelry. Her only strength was her ability to create the website. She had no experience in the industry, no real understanding of the players, no list of contacts and financial resources were low. Not a great idea.
Contacts and networks are important at the start because they are the first group you can hit upon to buy your services or products. A client who sells a type of industrial equipment has a good, long, list due to a family relationship who runs a business in the area. He has also worked with this person and knows most of the clients personally. A great list to start with and to build upon! Access to certain networks can also often be the only basis for the business and if the barriers to entry are high, can lead to quite a successful start. There are no lack of management consultants whose only real competitive advantage is the fact that they worked in a certain industry or government area for a long time. Yes, they can also do some of the work but their true advantage is the ability to pick up a phone and the person on the other end will answer. Why else would you hire a washed up political operative or former minister of state?
Financial and other assets are all about keeping you afloat when the business isn’t making much money. For solopreneurs (and other businesses as well) those first few years can be a difficult time and the inability to pay rent often results in the business being abandoned and a job search started. In working with my clients, a common suggestion I make is to go out and find a part-time job before you start your business. Best if the job is in the same industry. This relieves a lot of financial stress; allows you to learn more about the industry while you launch your own business; and provides a longer time frame for you to get going. Even if you have lots of money in the bank, a common problem is spending it all at the start thinking the business will “take off” once the world discovers you. The truth is often the opposite.
Knowing your strengths and using them as a basis for your business is a pre-condition before you start anything. Myself and many others have started businesses without having a clearly defined strength in that industry and it almost always leads to failure. Have I ever told you about my web TV business? You don’t want to hear :-). Cheers.