Doing what love and following your passion might sound like an ultimate formula for a business success, unfortunately that would never be enough for a business to succeed.
As an entrepreneur or a small business owner, you need to research and closely keep your eyes on your targeted market and competitors.
Since you’re running a small business and mostly working as the fulltime CEO/Manager for it if not also holding multiple other positions in it, then your skills and inner game are key for your startup to succeed.
Here are the 5 factors that you need to take your time to research and apply on your business idea and implementation whether you already running your business or planning to start one:
1. Attractiveness of your target market:
An attractive market lets you serve your clients with a value and capture a good market share without being under pressure of demands for high quality service/product for low prices.
There are multiple characteristics that can define a good market:
- Continuously Growing
- Has Plenty of customers without awareness of benefits
- Has Customers With needs for variety of solutions
- Has Customers that appreciates the value of brands
- Has a stable improving technology without sudden changes
- Has Barriers for new businesses to enter, and easy to exit for existing businesses
- Has plenty of suppliers without dictation of prices
- Isn’t seasonal and not subject to fashion and whims
With that type of markets it’s easier for you to plan and confidentially take your decisions.
You should also be investing in growing your business or by acquiring your competitors.
On the contrary an unattractive markets can be recognized as:
- Is downsizing
- Has relatively few customers which are powerful negotiators
- Has Customers whom looking for standard and quality, but willing to switch to competitors at the slightest sign of lower prices
- Has a Huge Amount of competitors, as the market is easy to enter and hard to exit
- Has technology suddenly changes which makes your past investment worthless
- Has few suppliers whom dictating the prices
- Is seasonal with customers taste and demands changes according to changes in fashion and whims
Your business might suffer in unattractive markets from threats surrounding it and sudden changes that can turn a good decision into a horrible mistake.
You should be keeping the followings steps in your plan if your market turned from attractive to unattractive:
- Planning ahead with proactive steps to strengthen your business while your competitors might be acting slow and getting weaker
- Finding niches that stay attractive even if the market goes more unattractive as the new changes might be using their taste
- You can diverse your business’s risk into other attractive markets
- You can exit the market and sell your business while everybody else think it’s a good time to continue
Markets don’t stay the same forever, an attractive market might turn into the opposite with time, so you always want to watch for that and most importantly to adapt.
2. Market Competitiveness
Competitors can’t be taken for granted and it’s not always the same type of competition.
You can also influence your competitors for better or worse.
There are different competition models that goes as the following:
It can happen when the competitors work together to control the market supply and price by coming to an agreement to fix the prices.
It’s illegal in many countries like U.S., UK and European countries
It’s when competitors work together, but not in ways that distort or fix the prices.
Can be easily seen in competitors cooperation to share researches costs.
It’s when competitors recognize and not looking to compete each others by common sense without formal agreement.
It can be seen with business chains, with a sensible decision not to open a new branch in any area if the competitor exists in it unless the population is above a certain volume.
It gets dangerous when the opportunities dry out and competitors looking for further growth.
It’s the typical type of competition model, when businesses compete head to head for customers.
Prices kept in check to serve customers while being sensible enough to provide profits to the business.
It’s when competitors goes for any or all customers.
The business target turns from making profits to hurting other competitors, while the competition gets aggressive, prices goes low, and product bounces increased.
It’s gets illegal in some cases too.
Knowing which type of competition your targeted market is having can help you to adapt and plan ahead.
3. Your competitive advantage
It’s what you’re selling?, how you’re creating it?, and who are you selling it to?
Answering these questions will put the spotlight on what you really do best that can differentiate your from your competitors.
It’s not always about the price, matter fact it’s mostly not.
Some customers won’t understand the concept of “you only get what you pay for”, and the are mostly not the type of loyal customers that you can keep, as they are ready to switch to competitors at the slightest sign of lower prices.
Differentiation is what keeps your business in competition and keeps your loyal customers, you can think of companies like Apple, which leads to positioning your business.
4. Your Plan, Implementation and skills.
The daily activities of your business have a huge impact, from implementing the plan, executing tactics and taking actions.
The expertise in marketing, sales, finance, operation and human resources make a huge difference in how your business would grow.
Your passion, commitment and willingness to do whatever it takes to reach your vision and get make your business succeed.
You’re the main drive of the business and if you lose your passion and commitment at a certain point, your business will go down with it, even if you had the best management and planning skills
As an entrepreneur you start with a great enthusiasm, but once you face the difficulties to start your business, facing low profits situation and maintain your business growth, you start to losing it.
But it all change when you build a business that is differentiated by a way that customers value it, which restores your excitement and beliefs to continue growing your business.
Your business can still grow if it has a competitive advantage and operates in attractive markets, even if you lose your passion and commitment, but threats will be surrounding your business by competitors taking over.
Well Planned strategy with the focus on a niche which you can differentiate your business and create value in attractive market can be a key for success of your business.