Over the years I have talked with a lot of people who have had
great ideas for starting a business.
These days, it seems that many more are trying their luck at
startups.
I will show due respect
to anyone who can take a business from scratch and make it grow, but there is a
common misconception among many who travel this path:
If you have a great idea, people will
knock down your door to get to it.
The key to starting a business is not a great idea, per se,
but the marketing of the great idea.
Let’s get one thing straight out of the gate; marketing is
not sales. The two are commonly
confused. Marketing does not close
any deals. That is the function of
sales. However, the two go
hand-in-hand. Marketing is the
path that leads to sales. Without
it, sales are not possible. In any
business, but particularly in new businesses where capital investments are many
times very shallow, the distance from the customer and the sale must be the
shortest path possible.
That is where a marketing plan becomes very important. A good marketing plan should take into
account several factors. First, is
this the best time for your idea? You
should have an analysis of the market and the need for your product or service. Some ideas are ahead of their
time, others are behind it. How do
you know your idea has any stickiness? Measure the needs of the market
against your idea. Will anyone buy
it? You need to have that
discussion with people who are part of the industry you are targeting. Secondly, what does the competition look
like? If you want to start an auto
parts store, how many auto parts franchises are also in your area? Is there enough work to support all of
you or are you going to try to push one of the competitors out of business? A competitive analysis will tell you
just what you are dealing with.
Within a mile of my office, there are three car washes. One was a do-it-yourself- five quarters
for two minutes. It serves the
low-end market. Two are franchise
drive-through operations. They
serve the higher end market of people who want a clean car, but don’t want to
bother doing it themselves. They
don’t mind paying $8 a wash to have someone else clean their car. Along came a fourth car wash; an
independent drive-through start up that marketed a three month,
all-the-washes-you-want-for-one-price deal. I could have my car washed every day for three months for
less than the do-it-yourself place. It was a sweet deal. Within six months, one of the franchises had gone out of
business. The market can only
support three and the new independent found a way to get customers in the door
quickly.
That brings me to the third part of the marketing plan. You must understand that no one will
purchase from you until they know who you are and you have given them a
compelling reason to do so. You
must make the market aware of your business offerings, In that communication,
you must be able to address three questions.
- Why
should they be purchasing from you instead of someone else? This is where you must differentiate yourself
from the competition. Do you
have better service, better prices, better products, quicker turn-around
time, etc.?
- Why
should they outsource to you instead of doing it in-house? If
you can set yourself apart as an expert in your field, this is a very
compelling reason. Most
in-house staffs are given a number of varying tasks to do. If you have your specialty, play
this up. This is where the
quality of your work will come into play. If your company is a business-to-consumer type of
business (i.e. my car wash example), play up the convenience of your
services.
- How
will you be a benefit to them? If you do not take care of a need
or a desire, you will never make a sale. Needs are the things that have to happen in order to
continue to function, such as selling fuel to auto owners. Desires are more emotional
purchases that bring us pleasure, like purchasing the little red sports
car instead of the station wagon.
These three components need to be
up front and clear in your marketing presentation. If you can make a case for
these three, you are on the short path to a sale.
Keep
in mind that many new businesses fail in the first year simply because they
cannot get the sales to support their expenses. Marketing plans are essential for new businesses. They should be a key component to your
overall business plan. Doing a
little upfront work can go a long way in making your new business a success.