I have been mentoring entrepreneurs for close to two decades, I have found that they can grow their business much faster when they broaden and strengthen their appreciation of the different parts of a business more holistically. Some of these include:
- Be clear on one’s motivation to start a business. An entrepreneur must understand their inner drive beyond making money. Is it about gaining recognition, overcoming a challenge, proving a new market concept previously rejected by others? Beyond having a business plan, entrepreneurs must have a personal plan!
- Have a demand-side (customer) thinking for a new product concept. Many founders fall in love with their product. They often resist suggestions and even become defensive instead of listening to feedback. Features that are useless from a consumer-use observation could have been removed to make the product more consumer-centric, which will lower the cost, and ultimately lower the price or improve profit. They spend their lifetimes chasing their fortune on supply-side (company) thinking, unable to scale for lack of understanding on what makes their product or service relevant and differentiated, in the eyes and hearts of the customers.
- Realize the importance of cash flow. Focusing too much on revenues and profit generation without planning for cash and receivables management can be disastrous. One time, a market research predicted correctly that the average demo-to-buying conversion rate for a new consumer durable product targeting the lower middle class was going to be 10% if sold on installment. But the collection was terrible, hence, the entire project unsustainable.
- The right team (and its required capabilities) is indispensable.. The qualifications to be part of the entrepreneur’s team has to be clear. Do they need people to help in an area they are weak at? Do they need more people in marketing or in operations? Are they in a customer acquisition stage or do they need people to help in the retention stage?
- Marketing is indispensable. Instead of generating awareness and encourage trial among their target market, many entrepreneurs often price their product too low, so there is a mismatch between the goal of a launch with the solutions they adopted, and the actual final value.
- A well-developed business model provides entrepreneurs with clear directions for better decision-making. Value creation (or the offering model) can only be monetized when value delivery (or operating model) is efficiently enabled. Value capture (or profit and cash flow) is the desired outcome when value delivery is done (and done well). Spending too much time in operations without understanding that all operating models exist to support the offering model often becomes problematic as value creation, value delivery and value capture have to be in sync at all times.
Check out the weekly Zoom mentoring schedule of Josiah Go on the Facebook page of Day 8 Business Academy Foundation. To help entrepreneurs in 2023, Abenson and Waters Philippines are subsidizing 50% of the seminar fee of the 7th Entrepreneurial Strategy seminar scheduled on Feb 4, 2023. Click bit.ly/EntrepreneurialStrategy2023 for details. Also, registration for the 6th Entrep Summit is available through https://day8.org/6th-entrep-summit/
Josiah Go is chair and chief innovation strategist of Mansmith and Fielders Inc. He is the record-breaking, bestselling author of 19 books in marketing and entrepreneurship.