Category Archives: Entrepreneurship

Entrepreneurship, Marketing, Owning a Business

Competitive Advantage is a Moving Target

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Smart business owners have their competitive advantage front and centre at all times.

“Competitive advantage” answers the question, “Why will customers buy from you instead of your competitors?” It’s the starting point to positioning your products and services in the mind of your customers, the key to setting yourself apart from other businesses, and critical to the success of any enterprise.

Here are a few competitive advantages and examples of their use in the marketplace.

1.    The First. Being the first to offer goods will be an advantage over other businesses. The downside of this advantage is that it rarely lasts for long, because others will soon get the scent of success and jump in to compete for a piece of the action.

2.    The Best. One way to distinguish your business from the others is to offer products and services of higher quality. Being the best is an enviable place to be, because everyone wants to deal with and be associated with the best.

3.    The Cheapest. The Dollar Store business model has parlayed this advantage into a highly successful chain of establishments. Interestingly, the franchisor’s website claims to be “Canada’s largest franchised dollar store chain and the fastest growing concept in retail.” “Largest” and “fastest growing” are advantages designed to tug at the heart strings of potential franchisees, while the basic business case is built on offering goods for a buck.

4.    The Fastest. Fast food services and drive through lineups are visible evidence of this competitive advantage at work. Everywhere you look something claims to be fastest: fastest car, fastest computer, and fastest weight loss program.

5.    Convenience. Small corner stores in high profile locations turn convenience into profit, while pizza delivery drivers turn it into part-time self-employment. This competitive advantage commands higher margins for making customers lives easier.

6.    Technology. Newer, better or faster technology can lead to savings or a superior experience for customers. Technological advantages can position a business ahead of competitors, at least for a few blinks, until the next miracle blasts its way into the marketplace. Have you tried to get your VCR fixed lately?

7.    Secret Formula. The Coca Cola Company is still a surefire example of leveraging a “secret formula” to massive gain. According to Wikipedia, the business offers “more than 400 brands in over 200 countries or territories and serves 1.6 billion servings each day.”

8.    Exclusivity. An exclusive agreement with a manufacturer will provide a competitive advantage over other retailers. Winning a contract from an established organization, such as a government agency or a larger corporation, can also be a competitive advantage. A pitfall for this business strategy is the tendency to drift into being a one-legged pony, relying on one or two contracts for survival. Unless the owner is diversified, the business can evaporate when the contract ends.

9.    Qualifications. Work experience and education are commonly used to advantage, both in business and when competing for jobs. A handsome set of credentials sweetens the deal for any potential buyer.

Competitive advantages don’t last forever, they evolve. For example, a business that is successful by being first will almost immediately find competitors on its doorstep, vying for a piece of the market. Being first might be an advantage for a while, until someone else offers a more enticing deal to customers, like lower prices, a faster service, or higher quality products.

In business, you don’t have the luxury of creating your competitive advantage and then forgetting about it. Smart business owners continuously innovate to stay at the forefront.

Entrepreneurship, Owning a Business

The Art of Putting Off Procrastination

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I’ve been meaning to write this article for some time, but kept putting it off.

Procrastination is a rat and a killer of dreams and life. As near as I can figure, it’s just a bad habit with its subversive roots somewhere in the realm of fear: fear of failure, fear of success, fear of change, and fear of one’s own shadow.

Although I pride myself in being action oriented, I am also capable of long periods of procrastination for some things. The rat lurks below the surface, rising only to taunt me occasionally when I realize I’ve been putting something off for far too long.

Black belt procrastinators have their bulletproof rationales ever at the ready to justify their inaction. One of the most sinister cornerstones of inaction is that there always seems to be an abundance of reasons to put things off until later. You can wait for the government, the health system, your health, your advisors, till the time is right, or you have enough money or time—if those don’t do it, you can wait until your friends approve or your grandma gives you her blessing. A procrastinator will defend his inaction to the death, and then choose the slowest possible way to die.
Putting off personal issues is troubling enough, but business owners can’t afford the luxury of procrastination. As we all know, what doesn’t get done today… will still be waiting for you when you wake up tomorrow morning. Business owners need to have a bias for action and a way to stay focussed on the most important matters in front of them.

Here are seven steps sure to help you deal with procrastination.
1. Clarify Your Vision. What kind of person or business do you aspire to be? Clarifying your vision will enable you to channel your energy into actions that are right for you.

2. Write Your Mission. How will you fulfill the elements of your vision? Will you be the best, the fastest, or the friendliest?

3. Identify Your Goals. Goals are specific, measurable, achievable, realistic, and time dated.

4. Select Your Most Important Goals. Choose the top three to five goals. Feel free to pick the low-hanging fruit, the ones that will bring the most results for your investment of time and energy.

5. Make a To-Do List. Make a list of tasks for each of your top three goals. If you’re still listing tasks three days later, you’re probably still procrastinating.

6. Choose Your Payoffs. Identify how you will reward yourself once you’ve achieved each of your goals. It’s also helpful to make a list of the benefits for each goal.

7. Take Action. Choose one task and go to work on it immediately—today.

Unless of course, you’d rather take a bit more time to think about it.
At all times we walk a narrow path between under and over thinking our actions. Too lean and quick might open the door to disasters, too long contemplating and we drift into the fuzzy world of procrastination. That’s the deal.

Business Growth, Business Killers, Entrepreneurship

Business Killers Part 1

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So, you’ve gone to all the effort to get your venture off the ground and survived the start-up phase. Aside from the fact that you’re too busy to socialize much, or take holidays, your business appears to be thriving. In your circle of friends you might even be a bit of a hero.

Congratulations might be in order. In starting a business, you’ve achieved something that many people dream about but never do. But are things as rosy as they seem?

As a business owner and coach, I am privileged to meet many good people building bustling businesses, but unfortunately too many struggle or fail due the following deadly traps. Here are the most common pitfalls that, if left unattended, will knock your business off the rails and into the gutter.

1.    Too Many Stupid Decisions. It takes a balance of thought and action to be successful in business. Too much thought will cause you to miss opportunities, and yet thoughtless action will lead you into the jaws of bankruptcy. Everyone makes mistakes, but too many blunders will keep a business in the poorhouse. It takes relentless due diligence and a lot of street smarts to succeed. Survivors tend to respect risk, do their homework, learn from mistakes, and keep losses to a minimum.

2.    Aunt Martha’s Whacky Bookkeeping. Scratch the surface of any failing business and you’ll discover they’re either doing their own books or have a flimsy arrangement with some friend or relative who doesn’t know squat about doing bookkeeping. Every once in a while the backyard bookkeeper works out, but mostly it leads to disaster. The bookkeeping system is the foundation for all business decisions. Without timely and accurate financial information, a business owner is running blind and it’s only a matter of time before he hits a wall. Successful entrepreneurs hire competent bookkeepers and treat them like gold.

3. Urinating In the Tax Collector’s Cornflakes. It’s easy to understand why business owners might be at odds with tax authorities. The nice folks from the taxation office always scoop more money than we think they should, they tend not to play nice if you get behind, and they’ll cheerfully take your business down if you can’t afford to pay. Once you’re behind on taxes, you really fall hard because of the deadly two-punch penalty-interest combination that spins a seemingly innocent amount into a blazing concern in no time at all. You don’t have to love taxes or the people that collect them, but you do have to respect them.

4.    No Rainy Day Fund. When a business begins to generate cash flow there are financial distractions. There is a compelling urge to peel off a bit of cash to buy special toys or trinkets. While it’s important to reward yourself for all the hard work, there comes a time in every owner’s business life when a personal nest egg is needed to avoid a financial black eye or even a bankruptcy. The ideal time to save money is when things are going well; the problem is—when business is booming, the last thing on anyone’s mind is saving. If you haven’t already done so, open a savings account and starting saving money today. When that rainy day comes, you’ll be glad you did.

Too many new business owners fall prey to these and the many other traps identified in parts two and three of this article. Stay tuned to learn about other business killers, such as uncollected receivables, high debt, relentless low-bidding, and more.

Business Planning, Entrepreneurship, Market Research

Eight Vital Steps to Proving a Business Case

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After a number of years spent assisting start-ups to write business plans, I believe that the point of all early stage market research is to prove or disprove your business case; that’s what the feasibility does, and it’s best done before you go to the trouble of writing a business plan. In doing a feasibility, you will gather enough information to decide whether to proceed or not, while also collecting most of the data you’ll need to write a business plan.

Here are the main elements of proving your business case:

  1. Validate Customers and Demand. Prove that your anticipated customers truly exist, that they want or need your products and services, and that they will pay for them. This can be done through market surveys, interviews, or focus groups. It can also be determined by studying businesses already in the market.
  2. Confirm The Size Of Your Market. Prove there are enough customers to support a thriving business. For consumer businesses, total market numbers can be found through secondary sources, such as census information, surveys and reports—business-to-business research can be accessed from business databases.
  3. Determine If You Qualify. Prove that you have the skills and knowledge to own and operate the business. This is a matter of matching your skill set to that required by the business or industry. In some cases, you may have to upgrade or get certified before starting the business.
  4. Source Your Suppliers. Identify suppliers and communicate with them to verify availability and costs, including shipping and any duties or tariffs that might apply if you’re moving goods across borders.
  5. Validate Pricing. Prove your pricing will work. This will entail getting clear on the cost of producing and getting your products or services into the hands of paying customers, and researching the competitor’s prices.
  6. Build a Financial Forecast. Prove your financial case—that the business will be profitable—monthly for the first year, less detailed for year two and three. At a minimum, you’ll want to create a sales forecast, a cash flow forecast and a 3-year income and expense projection.
  7. Determine Sustainability. Prove your business will survive and thrive. This includes confirmation of each of the six points above, and taking a close look at your personal situation—ensuring that you can manage the business ongoing in terms of your family, time, money, and energy.
  8. Assess Risks. Prove that you can mitigate risks and meet all of the applicable regulatory requirements. This can be done by talking to those already in business, reading trade or industry publications, and getting involved in relevant associations.

Once you’ve gathered the information above, you will be well on the way to proving or disproving your business case. There may still be other hoops to jump through, such as nailing down financing, building partnerships, clarifying investor strategies, and comparing the investment with other opportunities. As to whether or not to start the business, that is a decision that can only be made by the entrepreneur taking the risk. The eight steps above will prepare you to make the right decision for you.