The first question someone asked me, what does a business degree mean? What he was asking in other words was, what does it mean when someone has a degree/diploma in business, or what good is a person to a company if he possesses a business degree? I simply answered; He or she has been trained to create value or is a value creator. He or she finds ways to create value for the company.
Then the second question he asked was, if you had to give an SOP (Standard Operating Procedure) on how to analyze a situation for a company wanting to create a new product or service within a particular market, how would you create the steps. I would answer like this :
(1) Ask questions to understand the Current Situation
(2) Ask questions to understand the Objective
(3) Ask questions to find out the Industry
(4) Ask questions to find out the Competition
(5) Ask questions to find out the Company’s business Core competency (Business)
(6) What products generates revenue – Only product – revenue stream
(7) What is the Unique selling Proposition – how you differentiate yourselves?
(8) What are the Customer segments?
(9) Analyzing Cost structure. What are the fixed costs? What are the variable costs?
(10) What would you Price it?
Throughout my years in business, I’ve come across many mistakes and downfalls in which I’ve used to create a momentum for success. I can almost speak on behalf of most entrepreneurs out there, that failing and making a mistake is always good for our future in business. We fail in order to move forward. We move forward to achieve the bottom line, at that is to profit and to create a sustainable business. I’d like to share to you some of my experiences.
One of my experiences of a common mistake while running my business is NOT establishing a solid system integrating all of the different functions together. Every function within the business must smoothly go together and move into a smooth flow that will eventually move your business at a high speed. I found out that I needed to speed up the finance aspect with book keeping in order to keep up with my marketing and vice versa; I needed to make my marketing decisions based on my finances as we must have marketing and finance go at parallel speeds for maximum results.
Another common mistake is being too greedy in business.
While seeking the best profit margins, many experience the issue of distribution. What we normally would like to see is our products being sold everywhere to create easy access for our customers to purchase our products. But the problem is, while seeking profit margins, we have the tendency to get caught up in working with too many sub-distributors, that at the end of the day, they all end up killing and minimizing our profit margins. They would compete against each other to lower the selling price then make it difficult for our customers to choose where to purchase our products. A good solution for this problem is either to search for an exclusive distributor or distribute on-line. You will have more control of the situation to monitor and evaluate your business.
Another common mistake is bad accounting.
We depend on accounting for the growth of our business because accounting and finance is considered the “health” of our business. Make sure that balance sheets are balanced, financial statements are in checked and the amount of money written in the book is also the “actual” amount of money you have at hand. This occurs a lot where the book states you have $15.000, but at hand you only have $4.000. Where did the $11.000 go?
Lastly, another common mistake is tightening your promotion money when your business is going down.
When business is slow, we should increase our spending on promotions. As without promo, your business will either stay slow or go even go down in business. We must be brave to spend our money on promotions. It is key to growing our business.
Lets fail forward and succeed.