Economics of your startup

December 5, 2011 Leave a comment

Usually entrepreneurs describe their products & services as they see them. It’s important to describe them from your customers’ point of view. Look the difference between features and benefits of your product/service, and think about them. You need to build features into your product so that you can sell the benefits. You also need to think hard and strategize on what after-sale services you will be giving? Some examples can be delivery, guarantee/warranty, service contracts, support, follow-up, and refund policy.

Customers

Identify your targeted customers, their characteristics, and their demographics. The description will be completely different depending on whether you plan to sell directly to customers/end users or to other businesses. If you are planning to sell a consumer product, but want to do it through a channel of distributors, wholesalers, and retailers, you must carefully analyze both the end consumer and the middleman businesses to which you will sell.

Competition

You need to think and carefully answer the following questions for your startups. What products and companies will compete with you? Will they compete with you across the board, or just for certain products, certain customers, or in certain locations? Will you have important indirect competitors? How will your products or services compare with the competition?

You need to honestly think about your product/service weaknesses. Sometimes it is hard to analyze our own weaknesses. Better yet, get some disinterested strangers to assess you. This can be a real eye-opener. And remember that you cannot be all things to all people. In fact, trying to be causes many business failures because efforts become scattered and diluted. You want an honest assessment of your startup’s strong and weak points.

Niche & Strategy

Now that you have systematically analyzed your industry, your product, your customers, and the competition, you should have a clear picture of where your company fits into the world. Consistent with your niche, you can outline a strategy for your startup.

Pricing

Develop your method of setting prices for your product/service. Does your pricing strategy fit with what was revealed in your competitive analysis? For most startups, having the lowest price is not a good policy. It robs you of needed profit margin; customers may not care as much about price as you think; and large competitors can under price you anyway. Usually you will do better to have average prices and compete on quality and service.

Sales Forecast

After you have laid down comprehensive information and plan for your startup in detail, it’s time to attach some numbers to your idea and prepare your sales forecast.  You may want to do two forecasts: 1) a “best guess”, which is what you really expect, and 2) a “worst case” low estimate that you are confident you can reach no matter what happens.

Do keep visiting our Blog for a specific post on Sales Forecast and a Free spreadsheet.

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Marketing Plan for your startup

December 5, 2011 3 Comments

Even when you have brilliant product and/or service, your startup cannot succeed without effective marketing. And this begins with systematic research and careful planning. It is very dangerous to assume that you already know about your intended market. You need to do market research to make sure you’re on track. Use the market planning process as your opportunity to uncover data and to question your marketing efforts. Your time & efforts will be well spent.

There are two kinds of market research: primary and secondary. Secondary research means using published information such as industry profiles, trade journals, newspapers, magazines, census data, and demographic profiles. This type of information is available in  libraries, industry associations, chambers of commerce, from vendors who sell to your industry, and from government agencies. There are more online sources than you could possibly use. Trade associations and trade publications often have excellent industry-specific data.

Primary research means gathering your own data. For example, you could do your own young crowd count at a proposed café, use the yellow pages to identify competitors, and do surveys or focus-group interviews to learn about consumer preferences. Professional market research can be very costly, but there are many books that show small business owners how to do effective research themselves. In your marketing plan, be as specific as possible; give statistics, numbers, and sources. The marketing plan will be the basis, later on, of the all-important sales projection.

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Managing finances for your startup

December 5, 2011 Leave a comment

Unless your rich dad is bankrolling your entire startup without concern for what and how you spend, you need to keep your expenditures under control, and plan your finances well right from the day zero. This is one of the most important Mantra to make your startup successful, especially for the Bootstrappers. Read the full post HERE

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Story of a startup: Part 4

December 5, 2011 Leave a comment

Once we decided upon the name of the brand for our green products, and were happy with the sleek and unique name, we invited couple of our friends over momos and coffee to share our ideas and get their feedback as potential consumers. In the meantime, D had designed a brilliant logo for our brand, which further enhanced the name. M & L were our sounding board for the evening over yummy roadside momos [bootstrapping has its own unique flavors], we talked at length about our branding exercise over GreenFlip. We even talked about some tag lines, and L came up with ‘Fashion Flip to Green’, which won by 4:1 vote then and there, and we accepted and adopted the tag line. We finally had a cool brand name, brilliant logo and an excellent and tasteful tagline, all in sync. Read the full post HERE

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Story of a startup: Part 3

December 5, 2011 Leave a comment

15 days later after our last meeting with S, we met another potential partner, A who showed interest in the idea of Green. Over cups of cappuccinos, we began discussing the idea in detail and crunching numbers and forecasts. The idea was back on track, and it seemed that this is the partnership we have been looking for, that every member of team has set of skills that complements and will help building a strong team to build this start-up and succeed. Read the full post HERE

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