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Monday, March 1, 2010

Who,What, When, How and The Why?

Starting a business is an exciting thing. The dreams of financial independence, freedom, wealth, etc all the trappings of a "successful" business are the things that motivate us to start a business..really? If that were the case, then most of us would have successful businesses. Being a business owner is one of the keys of success in the Free Enterprise system.
When I sit down with business owners and ask them, this simple question: "What do you want out of your business?"; they provide all the things they DO NOT WANT! What happens? The business owners get exactly what they do not want. Its no wonder many businesses fail within the first 1-5 years of operation. I think its because many business owners fail to plan properly. Why do they fail to plan properly? Its for a variety of reasons, but ultimately it is typically the lack of understanding of how to ask the right questions.
In my opinion, the following questions must be asked then answered by the prospective business owner: Who, What, When, How, and Why?

Who

If you are in business, someone must purchase your product or service. Who is your customer? Depending on your product/service or business model that answer may vary. You must clearly define who your customer is. Who is the ideal customer? Where is the customer located? How much money does this customer make? It must be clearly defined in your mind, so you can zoom in like a laser on that customer. If not, you will totally waste your time with customers that are not suited for your product or service.
Depending on what type of business model you participate in, the customers can be retail, wholesale, or internal customers. You clearly must identify who those persons are in order to have a successful marketing campaign. Marketing is the life blood of any business. Two thing that should take place everyday: Flossing your teeth and Marketing. It can not be just some random marketing program, but focused marketing.

A second part of the question "Who" is knowing the competition. This is very important. Clearly identifying the "enemy" helps define your product or service in the marketplace. If you know how the enemy is positioning himself in the marketplace, then you can counter or lead by focusing on the weakness of the competition. With your USP(unique selling proposition..discussed below), you can position your product above the competition. Knowing who the enemy is and how they market, will provide you insight on how YOU should market. If they are Big, you may have to attack with a guerrilla style marketing campaign. If they are small and you are larger, then you may take a more mass marketing approach. This can be accomplished once you identify WHO the "enemy" is.

What

What are you selling? What is your product or service? Sometimes this may sound very simple, but many people really don't know their product or service. They just look at the profit potential. You must be a student of your product or service in order to transfer the enthusiasm to a prospect. Why should I your product from you? What makes your product better than your competitors? What is your USP or Unique Selling Proposition?
It is amazing how many people approach me about their product or business opportunity, and they have not the slightest clue what the USP is for their product. For example, if I am in a network marketing company, my product is not the product or service the Parent company manufactures. It is the business opportunity! Most Network Marketing people have zero clue on their USP, thus the high failure rate. The same problem exists in direct sales also. The parent company spends millions of dollars on branding the company name in the marketplace, but people by the product from the Individual sales person. That sales person needs to have his/her USP! What is your product? What separates it from every other product of its kind in the marketplace? This question is vital. Going back to the network marketing example, a person must be able to differentiate himself versus other network marketing companies AND other network marketing associates.

When
The question of "When" falls more into goal setting. When do you want to accomplish your sales goals? When provides some timelines to look back and monitor your progress. Many people have short term, intermediate goals and long term goals. It is well documented the success of having timelines attached to your goals.
The Goals should be detailed to the point that your mind can zero in on them. Your daily goals should be something that is reviewed several times per day, without exception. This will program your mind to focus on the the important things and not become distracted.

How
This is the part that separates the "men from the boys". Successful business operations have a system. They have processes in place where by the business owner can measure the results or the output. For example McDonald's or WalMart. Their approach to distribution is very systematic. They can measure the cost per unit or revenue per unit. That is why they are successful companies due to the turn key system they implement in the operation. Employees must have straight forward clear objectives and duties laid out before them. Managers and owners must have the ability to see the entire process from beginning to end, and hold employees and staff accountable for any success or failures along the way. The more systematic the approach, the more predictable the business becomes.
The How answer should direct you to work flows, and also how your business will be detailed. How will the accounting systems be set up? Inventory: how will it be delivered to the customer? How will productivity be measured? All of these things must be thought through when answering the "How".

The WHY
I saved the best for last. As stated before, most people start into business for a variety of reasons:Wealth, Freedom, Time, Vacation, etc. All of these are good reasons. Going into business can be a difficult and challenging endevor. During those lean times, there must be something that pushes you through those difficult times. It has to be a part of your being or your passion.
The passion will drive you over the finish line. If you are doing something you are passionate about, it will not be difficult to answer the previous questions. It will not be difficult to tell prospects your USP. That passion will be passed to your employees. It will become like a virus! The why must be solid and a deep burning deal deep inside your being.

In conclusion, you must have a laser type focus to be successful in business.Having these questions answered in the beginning provides an excellent start. There are many more questions that need to be answered also. Starting a business requires, guts, determination, hard work, moxy, and the ability to have a real good street sense. Its not a sprint, but a marathon. The rewards can be worth it.

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