Originally published on APM Consulting Services December 5th 2012

When I wrote about Idea Validation the other day, the part of the process that was taken for granted, was that you have an idea to validate.  But where do business opportunities come from?  Knowing the fundamental characteristics, of any good business opportunity, makes it much easier to identify them, when they cross your path, or how to seek them out.

Identifying Business Opportunities Through Gaps In The Market

Identifying a business opportunity is built on identifying ‘gaps in the market’, the opportunity to provide something that people want, or need, but have insufficient access to.  Notice that I say, “something people want or need“.  This is critical, and why basic Market Research and Idea Validation is so important.  Just because you could provide something people can’t currently get, doesn’t mean you have identified a good business opportunity.  Some gaps in the market exist for a reason; no one wants to buy.  There are several ways to use gaps in the market to identify business opportunities.

Innovation

Have you ever thought, “I wish there were an easier way to do this,” or “If someone could just make a product that would … I would totally buy that.”  This lies at the heart of innovative business opportunities.  In fact, innovation is one of the most important aspects of most business opportunities.  Innovation means that you are doing something new, different, something that will set you apart from the competition and give you an edge.  There are two types of innovation: Process and Product.

• Process Innovation is all about how things are done.  A better system of delivery, communicating or tracking data.  Look at Groupon, they don’t offer anything new; they just found a new and better way to deliver it to customers.
• Product Innovations are new or improved products & services.  You don’t necessarily need to reinvent the wheel; sometimes you just need to make it work a little better, or look a little prettier.

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Strategy for Success

Originally published on APM Consulting Services November 29th 2012

Research, planning and goal setting will only get you so far, without a clear strategy in place.  If your goals are the destination, your strategy is the GPS & map that will lead you there.  Your strategy needs to provide you with a clear step-by-step path; but how do you choose the best route, and ensure it will lead you where you want to go?  Experience has shown that the best method for creating a strong strategy is to first identify your Critical Success Factors, then build your strategy on meeting them.

Critical Success Factors

Identifying Critical Success Factors

Critical Success Factors are elements that will have a disproportionate effect on your business’ success.  Get them right and success is highly likely, get them wrong and failure is almost assured.  In order to identify critical success factors look at these 5 key areas:

Marketing 

How will you create a compelling message that will convince your target to become your customers?  How will you effectively get that message out and promote your product or service?

Sales Process 

What is your method of delivery?  How will this affect the customer experience and encourage repeat business?

Production  

How will you produce what you are selling?  How will you manage your costs related to production and ensure a profit.

Financing 

How will you finance your plan?  How will you repay any debts moving forward and how will this affect your operations

Personnel 

What skilled people will you need available to you in order to succeed (Accountants, IT, etc.).  What will your staffing needs be?

Achieving Critical Success Factors

Every critical success factor will be built on 6 root factors.  Identifying, which factors apply to your critical success factors, and making a plan to address each as necessary will form the essence of your strategy.

Technology 

IT or Equipment.  Do you require specific systems, tools or equipment?

Resources 

Raw materials & inputs.  What resources do you need access to?

Skills 

Certifications, designations & experience.  What skill based requirements do you have?

Personnel 

How many & qualifications.  Who will you need to hire or train?

Money 

Implementation costs.  What will it cost and how will you provide it?

Timeline 

Deadlines and order.  What deadlines must be met and in what order must tasks be fulfilled?

Implementing

Once you understand what your critical success factors are and the underlying factors they require you have the underpinnings of a strong strategy.  All that is left is to create an implementation timeline, which clearly lays out the tasks required, who is responsible to see them done, the resources necessary, and dates and times for action as applicable.  Check out Gantt Project on our Resource Page, a helpful free tool for creating Gantt Charts.

How to Validate your Business Idea

Originally published on APM Consulting Services November 26th 2012

I have been working with a few clients lately who are in the initial planning stages of their business.  The toughest, and most critical, part of this stage is taking what you think your business should be, and figuring out if you are right.  This is the process of Idea Validation.

How many times have you seen or hear of businesses open and almost immediately begin to fail?

• A restaurant that opens and fails to attract any real attention or good reviews.
• A new product launch that quickly fades after failing to catch on.
• Someone with the next big thing online, or a smartphone app, that never makes back the cost of development.

Whenever I hear these stories the very first thing I think is, they probably didn’t go through the process of idea validation. 

Idea validation is easily the most important thing any entrepreneur can do.  Whether you are starting a new business from scratch, making changes, or planning expansions, you need to validate your idea with you customers.  If you can’t prove that people want it, and will pay money to have it, then you don’t have a business.

Idea validation is not limited to startups and small businesses it is a fundamental best practice for everyone.

Idea Validation 101

Put as simply as possible idea validation is just asking your potential customers if they would be willing to spend their money on your idea.  That’s it.  But, how do you go about doing that?  What types of questions should you ask and how should you approach people.  Here are a few ‘best practices’ to keep in mind when setting up your validations.

Validate 1 Idea At A Time

Whenever possible focus your validation efforts on just one thing at a time.  Despite the fact that your idea is likely made up of multiple assumptions, you won’t be as effective if you design a test to validate them all at once.  Start with your riskiest assumptions, the thing that everything else hinges on.  If this is invalidated then so are all the other assumptions based on it.  Focusing on one thing at a time will also help to make your validation focused, and easy to interpret.

Minimum Validation Level

If you are going ask the same questions to 100 people, how many do you need to answer in favor to give you validation? In order to set your level, think about how the people you are asking represent the market as a whole. This will vary, depending on your situation, but setting an acceptable validation level ahead of time will keep you from later convincing yourself that a bad idea is actually a good one.

Validate Your Customers

The opinion of someone, who is not your potential customer, doesn’t count for much.  Asking your friends and family what they think of your idea is only useful if their opinions matter to the business, not to you personally. Even if your validation is focused on determining who your customer group will be, then target specific segments one at a time.  Or, build your validation to capture key information about the respondents.

Idea Validation Should Be Cheap

One of the whole points of going through the process of idea validation is to keep you from spending a lot of money on a bad idea.  Thus, it is important that you design your validations to be as cheap and efficient as possible.  Free online surveys, landing pages or super basic websites to measure traffic and response, hitting the streets or your competitors place of business to interview people, the list goes on.  The important factor here is designing low cost, low effort, yet effective tests to validate your idea.  See our Resources Page for some suggestions of online tools.

Get Honest Answers

Not all questions are created equal.  In order to validate your idea it is critical to get honest and appropriate feedback.  A few to avoid when creating your idea validation:

Leading Questions – Questions that suggest the outcome that you are looking for will lead respondents and skew your results.

Example: I have created this new, amazing tasting, type of ice cream, isn’t it great?

Should be: What do you think of this ice cream?

Loaded Questions – Using language that plays on people’s emotions, stereotypes, and prejudices will prompt them to answer in a certain way.  Keep it neutral.

Assumptions – Be careful you don’t assume people know the necessary background information.  Make sure they properly understand what you are asking them.

Jargon – Similar to assumptions make sure you use language people are familiar with and will fully understand.  Acronyms, slang, etc. will confuse people and they may answer without properly understanding the question

Double Questions – Ask only one question at a time.  Asking “Do you like it and how much would pay?” should be two separate questions.  This will diminish confusion and keep answers focused.

Getting Started

As you can see idea validation is fairly simple in concept, but it can definitely be daunting and complicated in practice.  Figuring out the right questions to ask, analyzing the data you get back, choosing who to ask and what to do when you don’t get a positive response, it can all be a little overwhelming and time consuming.  If you need help visit our Startup Solutions Page, or contact us and let us guide you through your idea validation process.

The Marketing Mix

Originally published on APM Consulting Services November 16th 2012

The Marketing Mix relates to the content of my previous article ‘Understanding True Marketing’, in which I talked about how marketing should be present at every level of you business, from planning to execution.

The classic academic model of the ‘Marketing Mix’, or the ‘4 P’s’, is another method of looking at this.  Around since 1960 thanks to E. Jerome McCarthy, it has been taught to very nearly every business student for the last 20 years.  The Marketing Mix is a method of looking at, and understanding, your business in a holistic manner, asking you to think about how each aspect adds to your unique advantage.  How you approach each aspect will shape your business; your uniqueness and strengths create the basis of your message.

Over the years the classic 4 P Marketing Mix has been expanded, reworked and applied in a variety of different ways.  Below is my favorite version to date.  With 7 P’s I find it to be inclusive enough to cover a wide range of business types and styles, and is also approachable, easy to understand, and most importantly easy to use.

The 7 P’s

Product

What are you selling?  What makes it special and worth buying?

Price

How does your price compare to competitors?  How does it reflect the quality you are offering?  Is it attractive to your customers?

Place

Where are you physically located?  How does this affect your business and your customers?  Where are your customers and competitors in relation to you?

Promotion

How do your promote your business?  What message is being sent by your choice in types of advertising, wording, sales/discounts, etc?  What benefits are you focused on, and how does that influence perception of your company.

People

Your employees say a lot about who you are as a company and their actions will have a profound effect on how people think about you.  How are they trained?  How do they interact with your customers? What are the standards of conduct?  Are they invested in your success?

Processes

How do you do business?  Your processes affect the type and quality of service you can offer.  They affect the speed with which you can address your customer’s needs.  Do your customers see you as dependable and competent?

Physical Evidence

This is what your customers can see and handle.  The aesthetic of your store, the packaging of your product, how your employees are dressed, etc.  These things can do a lot to inspire or destroy confidence in your customers.

The Final Package

All of these aspects work together to create and support your message and identity.  If any one part of the Marketing Mix is deficient then the whole is perceived through the lens of that one weakness, tainting everything else.  Think of a time you had a bad experience while shopping.  It likely was only one small aspect of the overall experience and interaction, a rude staff member, or an overpriced product.  That one part, however, is likely to have a disproportionally negative effect on your impressions of the whole.

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The Synergistic Model

When most people think of Marketing, they are actually thinking of Advertising, the action of spreading your message.  But Marketing is so much more than that.  True Marketing is the foundation of everything you do in your business, from your planning through to every action.  I was teaching a workshop recently on the basics of business planning and developed this model to help people understand True Marketing.

The Synergistic Model teaches the relationship between 8 aspects of business, and shows how each one effects and is affected by the other.  Market Research, Product Offering, Positioning, Target Market, Market Share, Brand Identity, Marketing Message, and Advertising, all working together to define your business.

The Eight Aspects:

Market research collects info on who potential customers are, what they want and who is currently serving them.  This leads to solidifying your vision for your product, how you will position yourself and who your target market is.  From this you can estimate how large a market share you can serve, giving you a basis for revenue projections.  Once you know what you are selling, to whom, and how you are positioned you have a basis for your brand identity, which in turn defines your marketing message and advertising activities.

If you want to change any of these sections it will require you to consider the impact or necessary actions in each of the other section.

Changing Target Markets:

If you want to change your Target Market, or add a new Segment, then you will need to research this new market, consider how your product will meet their needs and can best be marketed and advertised to them.  Also how will this change affect your brand, and your position.

A New Product:

Maybe you want to introduce a new product or service.  Again research will be needed, marketing and advertising designed and targeted on an appropriate market, etc.

Once you come to understand your business in these terms and use these relationships to direct your decision making, the overall quality of your business and your level of success will be elevated.

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