Define your Market and Your Competitive Advantage
By John Marske, M&I Bank
EAC Board Member
The most challenging aspect of any business plan consists of convincing investors of your company’s competitive advantage. The first step is defining your target market. Are you targeting the mass market or are you targeting a specific niche market with unique, specialized needs? Once you define the market (in terms of total dollars), you must state a percentage of that market that you reasonably believe you can capture. Is the market growing, or is it a stagnate market?
The second step is defining your competitive advantage to capture that market.
If you are a start-up, it will be extremely difficult to convince investors that you can compete on price, unless you have some innovative, patented technology that makes you more efficient. After all, what will prevent larger firms, with a lower cost of funding, from duplicating your strategy? Few investors will believe that price-conscious customers will be loyal customers.
If you’re not competing on price, how do you differentiate yourself from the competition?
Do you have an existing customer base that will follow you in your new business? You need to communicate the size of that customer base, and communicate why they will remain loyal to your business.
Do you have an in-house knowledge base superior to your competition? Prove it. If you can’t prove superior knowledge to investors, how will you be able to prove superior knowledge to potential customers?
Do you have a specific branding strategy that will promote customer loyalty? Outline a financial plan for promoting that brand.
Do you have a unique product or service that is creating a whole new market that doesn’t currently exist? How do you define that market? Is your product a compelling substitute product for an existing market?
If you can answer the above questions with factual research, you are well on your way to completing a solid business plan. All that remains is inputting the numbers to convince yourself, as well as potential investors, that you have a sustainable business.
Focus on Entrepreneurship
By Frank Howard, L5 Solutions
EAC Board Member
For those of you who have not taken the opportunity to visit the home page of the EAC, it lists the following beliefs that are core to the organization:
- Entrepreneurship is the economic engine of our economy.
- Entrepreneurial education is a lifelong learning process, starting at elementary school and progressing through adulthood.
- The right support, provided at the right time, will empower individuals to choose an entrepreneurial path that will culminate in innovative, sustainable businesses that create jobs and build a healthy economy.
- Supporting entrepreneurial businesses will create an economically vibrant community.
Fortunately, we are not alone in these beliefs. Effective July 1st, the state of Indiana now has a “Young Entrepreneurs Program” that was recently signed into law. It establishes a program that focuses on community economic growth while providing entrepreneurs from state educational institutions an opportunity to start a business in Indiana. Details can be found in House Bill 1251. In summary, it provides a program through the IEDC where at least once a year there is an auction where communities can bid on businesses/startups that have gone through the application process and met certain requirements. The selected bid is legally binding between the two parties.
What do you think about this program, its goals, and possible success? Does it conjure images for you as it did me… a version of the TV program “Shark Tank” with Indianapolis Mayor Ballard sitting next to Carmel Mayor Brainard talking trash about why their deal is a better one for the home grown Indiana entrepreneur.
Like all ideas, the difficulty is in the execution. Regardless of the program’s success, I am excited that we are not alone. We are fortunate enough to live in a state that sees the value of entrepreneurship and makes it a focus of our state’s economic development.
To learn more about this bill see the following state website links:
Why Write a Business Plan?
By Kevin Jones, Small Business Development Center
Young entrepreneurs, and even some older, experienced ones, sometimes balk when asked to write a business plan. They may argue that taking time to write a business plan diverts them from actually working on the business itself – developing product details, lining up vendors, making customer contacts, etc. Or they may be in a dynamic industry in which a written business plan would be out of date as soon as the ink is dry on the page. The impetus for writing a business plan usually comes from an outside stimulus, such as the need for financing or the prize package that’s awarded to the winner of a business plan competition. The financial incentive is certainly a viable motive for preparing a written business plan. But there are several other very good reasons why an entrepreneur should take the time and put forth the effort to develop a solid, written plan. Writing a plan forces you to consider important issues and to answer fundamental questions about your business before you actually start the business. As such, it helps you to organize your thoughts, as well as your resources, on paper before you start spending money – whether it’s your own or an investor’s. A business plan enables you to communicate the specifics of your business idea to others, including business advisors, potential suppliers and major customers, and family and friends. Your plan will provide a “yardstick” against which you can measure your progress during the initial years of your business. And research has shown that businesses that start with a formal business plan are considerably more likely to succeed than those that go without a written plan. Perhaps the most important reason an entrepreneur should take time to research, organize and write a business plan is that he/she will get a tremendous boost in confidence with a business plan in hand. The confidence–building effect stems from all of the reasons cited above. Entrepreneurs are often described as risk-takers. That doesn’t mean they thrive on taking unnecessary risks. Successful entrepreneurs are those who take calculated risks. A good business plan reduces risk.
What are your thoughts on writing a business plan?
The Ultimate Risk / Reward Proposition
By Ellen Dunnigan, Accent on Business
Starting your own company is perhaps the ultimate risk/reward proposition. When done successfully, the rewards of creating a profitable and valued business, beginning your legacy, designing your own future, and even being one’s own boss are pretty cool. When unsuccessful, the damage done to one’s finances and psyche are sometimes irreparable.
Even in the best of economic times, starting a new company is a gamble. While studies seem to contradict each other, there is at least some level of agreement that more than a third of all new businesses fail within the first five year. Here at the Entrepreneur Advancement Center, we help people understand the risks of missing or incomplete business plans, lack of funding and market research, work and life imbalance, and other such limiting factors.
Despite these risks, thousands of people start their own business everyday. Some do it as a change of pace, others out of necessity. Some want to be their own boss while others are chasing a dream or see an unmet need. Success is not guaranteed, but for many that’s what makes taking the leap all the more exciting. How about you? Why did you go into business for yourself and what advice do you have for those who are just beginning?
Exhausted from Fatigue
By Terry Anker
It seems we are all talking about the economy — or at least blaming it — more than ever. And that’s certainly understandable. It is one of the rare entities in which we all participate. Whether we are employed or unemployed, rich or poor, young or old, or anything in between, we are all participants in the economy. Manipulated by government oversight or left unfettered, the way in which we build, accumulate and distribute resources (the Economy) has a profound impact on the way that we see ourselves and others.
The last two decades or so I’ve spent a good part of my life in the business of sponsoring new companies — or rescuing old ones — as they venture off to find their way in the world. Routinely, people ask for the magic formula to success in startups. I wish I had it. Sometimes it is an especially important or impressive idea. Sometimes it is an especially important or impressive individual. But in each successful startup, there are common denominators. One is an enormous passion for success — or least, a healthy fear of failure. Another is a dauntless mindset about achieving outcomes (regardless of how that is defined).
There are many dangers that are likewise common to all fledgling enterprises. Certainly a lack of capital or vision or responsiveness or talent all come to mind. But let me add to that list, fatigue. Successful startups are the ones that persevere without exhaustion. It is no simpler or more difficult for a particular successful entrepreneur than a failed one; but the successful somehow pushed off fatigue, until her objectives were met. Franklin Delano Roosevelt said, we have nothing to fear but fear itself. Certainly he did not intend that we should not fear the impressive Nazi war machine. I think it might be an appropriate interpretation to say we shouldn’t give up the fight until we’ve fought it. Entrepreneurs achieve success by running through the finish line, not by losing confidence in the 23rd mile.
Reprinted with permission from Current Publishing, LLC
Close to Home
Source: Current Publishing, LLC (www.youarecurrent.com).
While this newspaper routinely calls for us to spend our time and dollars close to home, when does the valuable booster club spirit become hateful provinciality? As I write this document, the official launch of the Entrepreneurship Advancement Center, EAC (www.goentrepreneurs.org), will have officially occurred. A 501 C3 dedicated to the economic health and vibrancy of Hamilton County by advancing entrepreneurship interest and working to ensure entrepreneurial success, the EAC will take over the high school entrepreneurship education effort and business plan competitions heretofore coordinated by the Hamilton County Alliance. The group hopes to build upon the Hamilton County strength of encouraging business ownership and growth with reasonable tax policy, community amenities, and regulatory support. The theory goes that young people steeped in entrepreneurship as an alternative to traditional employment should be encouraged (and especially encouraged to do it here at home). Who could disagree with an effort aimed at education? Who could complain about an effort to create jobs in our fine state?
Surprisingly, some have suggested that we in Hamilton County should not invest in supporting the fledgling tycoons in our midst – instead they proffer, we should focus our considerable efforts on other Hoosier communities that might not be as well positioned as we. Imagine the argument like this: we can’t waste any coaching or training time on Payton Manning until all the players on the team have caught-up to his skill level. If he atrophies, oh well.
Certainly, no players on a team are unimportant; but winning programs do not delude themselves through egalitarian idealism. Success for all comes from focus on strengths and not from obsession with weaknesses. From my point of view, as Hamilton County leads central Indiana benefits. Cautionary tales about burnt out urban cores with thriving suburban communities (consider Detroit), should reflect more on failed urban policy than upon aggressive suburban innovation.
