How to Eat an ElephantBusiness
Whether you are starting your own business or you’ve found yourself in a situation looking to grow, we’ll try to help and inspire you by sharing our experiences as well as others.
The main focus of our very first article is what you should consider the most important if you want to have a long-term, successful business. How can you do everything systematically and correctly? Simply put – we’ll explain how to work in a way that is manageable to help you take steps in the right direction!
The Company Mission
At the very beginning of our process, we need to ask some easy, yet important questions: Why is this business important to me? How should my work help my clients and other relevant parties?
Sit down on a bench outside for ten minutes, or simply turn off the radio while driving in your car and think about what you are trying to accomplish. What is the main goal of the company, the mission? How do I want to give a safe, reliable, and positive energy to my customers and the whole company?
No need to be humble. Be brave enough to dream. It's important because your mission will be the guiding point for you. It will be your focus when things get chaotic.
Problems will inevitably arise. Maybe you prefer short-term revenue before a precise service to your clients or there will be another dilemma. If you remind yourself of your mission from time to time and realize that this is what made you successful, you will always get back on track.
Don't be afraid to have your company mission front and center on your website.
The next step is creating a vision. That one is a bit more specific. It’s basically your long-term goal. What do I wish to achieve in the future? Even if the vision seems unattainable, the desire to reach it will push you forward.
The founders of Airbnb desired to create a business where people could find affordable housing and feel at home in new places. The idea of convincing people to stay in a stranger’s home, or allow strangers to stay in their home, was quite unusual. Not only did they have to tackle the challenges of beginning a new business, but they also had to convince potential clients to be open to an entirely new concept. Today, Airbnb is one of the leading hospitality businesses on the market.
The vision of eWay CRM, for example, is to: "Become the leading CRM system worldwide." That is bold, for sure!
Analyzing the current status
As long as you’ve made sure you know why you are on the market and where you want to go, it's time to move on. You need to look around and realize:
- Where are you at?
- Who are your competitors?
- Who will your customers be?
- Which suppliers do you want, can you get, and are available to you?
Additionally, it's good to reflect and honestly evaluate yourself.
Analyzing the environment
One of the tools for analyzing the environment can be "Porter's Five Forces". It focuses on the key subjects that have an impact on your business. This exercise doesn’t need to be formal. Take a piece of paper and write things down. You'll need a bit of time, but it will pay off.
Who are your competitors? How many are there? How strong are they? What are their prices and what does the customer get for this price? How will you differentiate yourself?
Threat of New Entry
How easily can others start your business?
If you own the patent to your idea, it will be quite difficult for another company to begin the same business. Your competitors have to buy the patent from you or come up with their own solution which makes it harder for them.
However, there can be barriers other than know-how or a patent. Lacking a prime location, finances, or even small efforts in customer service such as a smile can make a big difference! You'd be surprised by the number of new businesses taking on jobs without being aware of their clients’ needs from the beginning.
Who will my suppliers be? Are they reliable companies? Do they have the capacity to work for me? Can they be replaced, if necessary? Does the company pose any threats to me or have pending issues within their business?
Don't underestimate your suppliers and choose them wisely, especially in your business formation stage. These should be strategic partnerships that last for years.
Who will my clients be? What are their needs and expectations? What is the size of the company? How strong is their workforce?
Sure, you will have more questions to ask yourself at this point. The key is to know your clients as well as possible.
Threat of Substitution
This might seem like competition, but that’s not entirely true. These are products the customer can use instead of ours, while they are from a completely different area.
For example, a taxi service’s threat of substitution could be presented by a private car, public transportation, or ride-share companies such as Uber and Lyft. Spotify’s threats of substitution are the radio and Pandora.
These will be our competitors; therefore, we should take them seriously.
Once we look around a bit, we find out there are loads of competitors and the demand may not be as strong as it seemed. There will always be fear and doubt. Remain strong. Everything is possible.
The second step is to reflect on your own business. You should evaluate your position and this can be done thoroughly by carrying out a SWOT analysis. You will find your: S - Strengths, W - Weaknesses, O – Opportunities, and T -Threats.
This is how you do it:
1) Take a sheet of paper and pen. Divide your paper into four sections. Name them:
2) In every section, write the points you believe belong there. Write down all the important things affecting your business and don't worry about how small they may be.
Examples of Strengths
Unique know-how, positive references, low overheads, no debt, nice product design.
Examples of Weaknesses
Weak marketing, long delivery time, lack of qualified workers.
Examples of Opportunities
Growing demand, expansion into new markets, launching a new product.
Examples of Threats
Regular legislative changes, new competition, rising of the currency value.
SWOT can be done individually, or you can use brainstorming, brainwriting, etc. There are a lot of similar techniques because sometimes, it’s good to know the ideas and opinions of other people.
3) The next step is analysis evaluation. If there are more strengths and opportunities, you are on the right path. If there are more weaknesses and threats, think twice before you continue. If you choose to continue, create a set of strategic steps based on SWOT to use your opportunities and strengths while eliminating weaknesses and threats.
The second-to-last step is choosing the right strategy. There is no use in doing this prior to creating the mission, the vision, and performing a thorough analysis, because you need to know:
- Why are you on the market and what do you want to do? (Mission)
- Where do you wish to go? (Vision)
- What environment are you in and how is your situation? (External and Internal Analysis)
As soon as you’ve made these things clear, you can start thinking about how exactly you will fulfill your mission and vision and how you will manage the challenges you’ll have to face.
Michael Porter can be helpful here again, this time with his Three Generic Strategies.
No strategy is better than the others. Each is used by several successful companies. The important thing is to remain consistent - choose one and stick to it. Don’t give up if you run into obstacles along the way.
Let's have a look!
Approach 1 - The Cost Leadership Strategy
I will be the cheapest. I will try to keep my overhead as low as possible and therefore, I will stay ahead. My products won't necessarily be the highest quality but customers will have what they need and I will sell for the best prices.
Companies such as Spirit Airlines, Wal-Mart, and Cricket Wireless have harnessed this value in their company missions. They work to provide the most affordable products and services to customers.
Be sure that you remain aware of competitors. Sooner or later, one will appear. Therefore, you always have to work on increasing your effectivity.
Approach 2 - The Differentiation Strategy
I will find something to differentiate myself from the competition: a feature, a characteristic, an additional service, etc. This should be something that can't be easily copied. As soon as the competition learns about it, they will try to follow your idea.
eWay-CRM’s distinguishing factor is providing a "CRM in Outlook" in a world where ninety percent of CRM companies are web based.
Approach 3 - Focus
I will build my product or service to target a specific market. Niche products and companies often gain a more loyal client base. This makes it more difficult for competitors to steer customers away. Ties.com is an online retail company that focuses only on neckties and necktie products. There are many online retailers that sell neckties, however, because their sole concentration is on one fashion product, they specialize in that area and customers (old and potential) know that. Therefore, customers continue to give the company their business because they believe they are getting the best service in that area.
A focus helps you make every detail of your product or service perfect. Just listen to your clients. They will lead you in the right direction. This way, you can focus on details and offering first class quality.
Let's do this!
And now for the most difficult part. How to begin.
Write down your middle-term goals. For example: "In two years, my website will have 3,000 hits per month."
What needs to be done in order to accomplish that goal? Divide it into smaller pieces and then break them down even more if possible. Be sure to add specific deadlines to each goal in order to have a timeline in place.
- I will launch the new website by July 1st.
- I will film educational videos about my product and put them on YouTube to accompany the website’s release on July 1st.
- I will have PPC set up by September 1st.
- I will find someone to take care of SEO by September 15th.
That’s what this is all about! Dividing big goals into smaller ones. Making small accomplishments will keep you motivated and on track.
Sometimes this is referred to as “Eating the Elephant”. To do this, one must take it one bite at a time. Try cutting it into pieces, and then into smaller pieces. Finally, the “bites” are manageable. You will start eating them slowly, one by one. And one day, you will find that you have eaten the whole elephant.
So, let's eat the elephant!
Written by Jan Lalinský, who dropped the pen and took a bite. The author is the founder and CEO of eWay-CRM.