Understanding Why You Are in Business - Building a Critical Mass

By Chris Farrance

Here are some questions you need to ask - it doesn't matter if you're Global, Fortune, FTSE, start up - or here to day gone tomorrow.
Bear in mind 80% of UK start ups fail in the first twelve months.
So what are the questions?
• What customer need am I seeking to satisfy?
• Why can I do it better than anybody else?
• Will my customers actually pay me real money?
• What Business Model is going to work for me?

1. What customer need am I seeking to satisfy?

Too many companies start from the perspective of 'this is what I do' so 'this is what you will buy'. This can be described as the 'push' model - I/we make it - so you buy it.

But in the current environment this model is totally redundant and a recipe for failure - it may be instant, it may be slow but it will certainly be financially painful!

Why? Because the power is now with the buyers not the suppliers - and this has been exacerbated by the more flexible ways to market - accelerated exponentially by the social media phenomena.

No longer can you control through your marketing communications, media and PR what customers think about you and your product.


2. Why can I do it better than anybody else?

Too many businesses fail to really 'sweat' what it is they do differently - how they differentiate themselves and what their Unique Selling Proposition (USP) is. If what you say about yourselves can be said by others too, then you're not unique.

This demands almost forensic attention and can again be slow and painful. Unfortunately, too, any uniqueness you have may be quickly overtaken by competitors.


3. Will my customers actually pay me real money?

Many companies spend too much time perfecting there product or service before they actually find out not only if somebody would buy it and more importantly pay for it. In my days a a marketer I came across lots of research where people said - no I wouldn't buy it but I know somebody who will!

So find out as early as you can in the development process if there is a market and whether people will pay. The moral here is if you're going to fail, then fail quickly.


4. What Business Model is going to work for me?

The engine of you business must be a Business Model that is understood by everybody who works in the business. This is the synthesis of your offering, your competitive positioning, your pricing and margins and getting the money in. Try and identify what a perfect customer looks like - characteristics, spend, buying behaviour, the product features that are valued and avoid having too many imperfect customers - those for example who continually beat you up on price.


The Outcome

The outcome should be a business that is sustainable and scalable with sufficient in-built flexibility to be able to respond to the vagaries of the place. In this way you build your Critical Mass.

To find out more about Chris Farrance go to http://www.chrisfarrance.co.uk

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