This is the second part of a guest post from Chad Otar, CEO of Excel Capital. You can read part one here.
3. Competitive edge
What makes your business, product, or service stand out?
This is critical to know in advance, especially if you’re entering a crowded industry.
Competitive edge is what allows you to differentiate yourself from your competitors. And that is, in the beginning, about all you’ll have to draw sales away from your preexisting competitors to your business.
Your competitors have established brands and customer bases, both huge advantages over a new business that has yet to prove itself. Of course, you have certain advantages as well, such as the freshness that a new brand can take advantage of (think of the feeling you get when a new restaurant opens up around town or a new single comes out on the radio, it’s that effect).
This wears off quickly, however, it can serve as a useful boost if combined with good branding and marketing.
However, that won’t do you any good if you don’t know what your competitive edge is. Something new which is just like everything else before it is still boring.
But something which capitalizes on the preexisting brand’s complaints, improves upon something, or adds something entirely new (like a new technology) can steal a good portion of the preexisting market and establish themselves quickly.
The 4th element to consider before starting your business is marketing.
You need to create a detailed marketing plan that outlines your goals and how you’re going to execute on those goals for the initial launch and beyond.
Without a proper marketing plan, your business isn’t likely to attract many– if any– customers.
However, the good news is, if you’ve acquired capital and clearly defined your competitive edge, you have two of the most important aspects of marketing established– the money to implement that marketing and the central message behind it.
First, you need to clearly define your target audience.
Who exactly are you targeting your marketing at? How are you targeting them?
One of the easiest ways to figure this out is by asking the question, “where does my target market hang out online?”
By figuring this out you’ll learn all kinds of critical information and know the best ways to target your audience. That’s the second point.
For example, if your market is ages 25-35, there’s a good chance that Facebook Ads will be one of your best bets for marketing.
However, if your market is younger than that, you might want to try Instagram and Snapchat. Clearly, all of these channels might be effective, but it’s likely that one channel will be more effective your than others.
If you run a local business such as a restaurant or bar, investing in content to get you to show up on the first page of local Google searches or Yelp advertising might be good options, however, traditional advertising such as benches, billboards, and bus ads might work better.
Keep in mind that your marketing plan will greatly affect your funding needs. So, it’s important to have an outline– if not a fully fleshed out marketing plan– before gauging how much funding you’ll need and then deciding on a funding source.
5. Trends (and the future)
The 5th element isn’t so much a planning step as it is important research that must be done before starting a business to ensure it’s a smart investment.
The world is moving at an incredibly fast rate, with technologies that were relevant just decades ago being phased out for new ways of navigating and experiencing the world.
And before you say that these developments won’t affect your business because it’s in such and such industry– stop right there.
Years ago, no one could have imagined the effects that the Internet would have on their business.
However, today, every industry in the world has been affected.
A company’s ability to stay in business over the past two decades has been directly correlated with its ability to adapt to these changes. And you can bet that the next two decades will be similar.
So, what do you do?
Take the time to learn about both your industry and how recent technology has affected it as well as the latest– and up and coming–technological advancements.
Learn about AR and VR and how they are poised to change many, if not all, industries over the next 10-20 years. And learn about anything else that’s specifically relevant to your industry.
Keep your hand on the pulse of the world’s economies so you’re prepared for change, not just to stay in business but because the first to adapt to such changes often profit and come out as the new leaders in their industry.
Without considering this information, you could be jumping into an industry that is due for a major overhaul, unprepared for those changes, or walking in with a death wish in an industry that’s about to be phased out.
However, if you consider this before starting your business, you’ll be well-prepared to launch and grow a successful business well into the future.
It’s your turn.
The truth is, if you want your business to succeed, you need to give it your best effort.
Don’t just consider what we talked about here– take real, concrete action.
With each of these factors together, create a thorough business plan that gives your business the best chance for success possible.