If property investment is all about location, location and location, successful business management is all about marketing, marketing and marketing.
One of the most common causes of business failures is a failure to understand all there is to know about the market and the potential customer. Entrepreneurs need to gain this knowledge even before developing a product or service.
Here are three marketing questions you should ask yourself and answer to succeed in business:
#1. Do you target people who really need your product/service now?
If you sell headache medication, do healthy people need it? Maybe when they have migraine, but not now. If you are trying to sell handguns to young females, do they really need one? Maybe when someone tries to rob them but it may not be a priority. They may well prefer to spend that money to shop at Myer.
The key to selling is whether or not your target consumers need the product now. Ideally, you need to target a group that absolutely needs your product/service now. In this situation, consumers also would be more willing to pay a higher price.
The lesson I learned from selling CRM (customer relationship management) software is this: Most companies simply didn’t feel a compelling need to buy the software now. The businesses I targeted could easily delay purchase of the software or choose cheaper low-tech alternatives such as Excel, Outlook, or Google Docs.
On the other hand, if I had targeted businesses that hire many sales consultants, track their complete sales process from lead generation to post-selling activities, or have a massive customer database, I may have enjoyed better success.
The lesson: It is simply not enough to say everyone is a potential customer. You need to identify the customer who will buy now.
#2. Is your market big enough to fulfill your dreams?
If you want to log revenues of $10 million in, say, five years and you seek a 5% market share, that means the market must be worth at least $200 million. Now, where does the $200 million come from?
Every entrepreneur must research his market before even developing a product or service, especially if he seeks to raise capital. Christopher Golis, in his book, “Enterprise & Venture Capital,” says venture capitalists would pass up any opportunity if the potential market of the business is lower than $100 million. Thus, it is important to have a clear understanding of the market — its size, geography, competitors and pricing, among others.
You can get reliable data about your market from local libraries or the Australian Bureau of Statistics, and could even consider buying vital data from a market research company like IBIS World (http://www.ibisworld.com.au/).
#3. Do you know how to stay ahead?
If yours is one of 10 sushi bars next to each other on a street, why should people buy from your store, rather than the nine others?
It could be taste, price, special packages or a long-established branding or reputation. Regardless, it is important to have a distinguishing competitive edge by way of one or the other feature. It doesn’t work to say my USP is “good customer service.”
In today’s business environment, good service is a necessary requirement to run a business, but not a sufficient one to run a successful business.
Consequently, the key to business success is to acquire a competitive advantage that your customers appreciate and to retain that edge over a period of time. Can competitors easily copy your product or service? Do you own and leverage patents, design rights, copyrights or trademarks? Even if you do, can your protect your brand through costly litigations?
If you have honest answers to the three questions, you are well on way to building a successful business.
Edwin Lucas is a co-owner and Business Development Director of Digital Office Builder, an online business development company in Melbourne. He has a passion to help small business owners, and aspiring Gen Y and Gen Z entrepreneurs, leverage online technology and raise capital in order to grow their business smarter and faster.