One day you wake up and realize that there is this thing you could do and it would make a positive impact on others. It is something you really enjoy doing. In fact you enjoy doing it so much you can't wait to get home from your full time job to go out and do it. It doesn't matter how many long hours you have to work the idea of doing this for the rest of your life, just makes sense.
But, how do you go about making it into a business that will last? This is a question that countless other business owners have asked themselves at the inception of their own businesses. This part of a business' lifecycle is probably one of the most vulnerable and trying times because it is a time of high risk.
What does it mean to be at a time of high risk? High risk when we think of investments mean that there is a higher chance that you will not get a return on your investment versus an investment that has medium to low risk. These types of investments have usually been proven and have been around for many many years with a proven business model. So does this mean that new businesses should just give up? Not at all, in fact a lot of our economy is made up of small businesses so if there weren't people brave enough to take a chance on themselves and their ideas, the world in which we live would be much different. However, what it means is that when you are thinking of going into business that you should do a fair amount of planning, projecting, and coming up with a well thought out business plan.
But, didn't you say we shouldn't compare ourselves to other people? Yes, this is very true but only in terms of how you define success for your business. While success can be defined in your mission statement and goals. The viability of a business idea should be proven out by doing the necessary research and by looking at important industry and competitor information. While yes, this is look at what is happening in the marketplace, it is studying trends, what customers want, and will help you build strategies that will help your business plan for long-term growth rather than short term gain.
So when you say we look at industry and competitor information what does that mean and how does somebody go about doing this kind of analysis? This type of analysis is a look at Porter's 5 forces, which studies the overall competitive environment of any industry and its compliments.
So what are the 5 for forces:
1. Competitors and Market Share in the industry
2. Barriers to entry
3. Power of Suppliers through cost, availability, and any regulations
4. Elasticity of Demand by customers and the marketplace
5. Threats of alternative and substitute products/services
Be sure to stay tuned because we will be digging into each of the 5 forces and why they are important when looking at the strategy and planning of your business.
If you'd like to chat with us about the Porters 5 or have any other questions feel free to reach out.