Updated: Nov 19, 2021
So earlier this morning I was having a meeting with a potential business partner whom we are trying to start a new product with. We had met to brainstorm the new product that is aimed at helping SMEs access funding from a local microfinance institution. Having worked in the entrepreneurship space for more than a combined 30 years we felt like we knew more than any one. We decided to jump into it and panel beat a product into shape and roll it out into the market. We ordered some coffee and started talking about our idea and talking about just how many entrepreneurs need finance for their businesses and how our new product is going to solve their access to finance challenges and we are going to be millionaires because we are the first ones to figure out a solution to this huge conundrum.
After a few minutes of gisting about the product we took out our pen and paper and said to ourselves “lets get serious and start writing down our thoughts”. Now the more we wrote down our thoughts the more our years of experience started speaking back at us, asking us why we would be trying to build a product the very same way we advise entrepreneurs not to do it. The blanks and gaps on the paper stopped us right on our tracks and we said “we have do this the right way”. We must eat our own dog food and develop this product using a proven business development process. At that moment I realized one fundamental thing a business strategy is needed at every stage of the business. I considered for a moment what do startups need, what do growing businesses need and what do mature businesses need in the form of strategy.
My musings led me to pick up from years of my past experience helping businesses develop winning strategies. I began to spot similarities across the three levels of businesses. The similarities led me to writing this blog.
Businesses at any level require the basics of a strategy.
These are identifying a target customer, understanding the customer’s need, defining a value proposition to meet that customer’s need at a price the customer is willing to pay and that will make the business a profit and finally identifying how to find the customer, convince the customer to buy the solution from them and then delivering the purchased solution to the customer. These few fundamentals are what consist of a solid strategy and any business at any level will be grappling with these concepts to clearly develop a sound strategy.
Identifying a target customer starts with building the customer profile and identifying all the segments where the customer may be found. This act of building a customer profile can come from research, observation of customers in the field or from reading about different consumers. Identifying a customer’s need is the immediate next step of a strategic planning process. Customers all have needs and these needs are what drive them to purchase solutions.
The key to delivering a value proposition is understanding the customers obvious needs and the customers underlying needs. To the extent that a customer is purchasing a drill to go and make a hole the need is not the drill but the hole. The type of hole the customer is going to make and the kind of material the customer is going to bore into. At the fundamental level understanding these needs and how the customer goes about solving them is key to defining a winning value proposition which is the obvious next step in the strategic planning process.
Beyond the needs and the value proposition is the identification of the size of the potential market that has the same need. Businesses that scale are built to solve similar needs across big markets. Lucrative markets are going to be the markets where many users with the need exist whom no one is meeting the needs for, and they have the purchasing power. A good estimate of how much of this market the entrepreneur’s business can capture is the starting point of understanding the potential revenue that the business can make and the bigger the market that can be captured the more valuable the business. An entrepreneur will then have to consider what the factors are that can lead to the successful capture and penetration of the identified market. The factors of success consist of internal resources, capabilities, partnerships, supply chains, systems etc. that must be leveraged to acquire the customer.
On the backdrop of the above information often a business at any level is now able to develop a strategic plan on how they can go about acquiring new customers and growing their revenues. And this here dear reader is the nuts and bolts of a business plan broken down in simple language. Obviously depending on where your business is at you will need to either attend a business strategy workshop or engage a business strategy consultant to help you develop a winning strategy.
Here at the SNDBX we have our strategy advisor, WYLDE International, who have strategic planning processes that can help you create initiatives for successfully growing your business.
Get in touch with us today and build a winning strategy.
This article was written by Chris Odongo, Strategy expert at the SNDBX, a one-stop-shop collaborative space that brings together 31+ different professional service experts who work together to help entrepreneurs to grow and scale and entrepreneur support institutions to succeed in their programs.