Starting a successful business will be one of the most difficult things to do. However, this can be something that can provide its own satisfaction as part of achieving life. Almost everyone has had a business idea at some point in their life. Getting started can actually be a challenge in itself. Following some basic principles in business will increase your chances of success.
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Part 1 of 3: Planning Your Business
Step 1. Create a business plan
In this business plan, you should detail every aspect of your business, from the budget to the company's plans for acquiring customers and how the marketing will be done.
- Re-read your business plan regularly because you will draw the outline of the company's strategy from the plan.
- Consider everything. You have to monitor in detail everything in your company, from operational costs, working time, to marketing. Use spreadsheet tables to organize and organize your information data.
- The most important step in making a business plan is to do a break-even analysis. That is, you study things like the velocity of money. You'll also estimate expenses and income, as well as things like expenses that don't directly relate to the company's operations, but rather are administrative and marketing expenses, and sales revenue. Then, you have to calculate the break-even point (BEP), a point at which expenses and income are balanced (there is no loss or gain). How much money do you need to make a profit each month, to break even?
- If your break-even point is too high, you may need to change your prices or staffing.
Step 2. Define your target customer base
Analyze the product from the target customer's point of view, then see what he needs and wants. Don't look at the things you like. Study the potential customer base specifically – geographically, and demographically.
- If you have sold the product before, do an analysis of the buyers who have purchased the product. If not, consider who is likely to buy your product.
- Calculate your revenue model. This will help you clarify which market you will be targeting. For example, if your revenue model is selling all of your products online, you can narrow your customer base to people who are most likely to buy products online.
- Determine the customer base of your business competitors. However, don't try to follow the exact same base. Are there any gaps in the market that are missed?
- Narrow customer base in terms of demographics (such as age, gender, and ethnicity), geography, income level, and personality.
Step 3. Study trends
Do your homework so you can identify the latest products or trends. Of course you don't want to sell something that has lost its popularity. Some trends include the way people communicate with each other. Steve Jobs of the technology company Apple is a genius at this; for example, it has revolutionized how people download and listen to music.
- Look for trends that are more general than your specific business, but that will still have an impact in the long run. For example, social networking is a new way for people to communicate, and it affects almost all existing businesses.
- Visit a local campus and talk to students there about what interests them.
- Take 20 minutes a day to read something related to the field you want to work in. Read magazines, newspapers, online sites, books – read something related to your field. This will educate you, as well as help you spot emerging trends.
- Start a business built on your core talents. For example, if you have an art background, don't try to sell machine tools. If you have a writing background, look for emerging markets like social networks, where you can showcase your talents.
Step 4. Know your company's core values
Write it down. Core values contain the principles that govern your company, and these values are not for sale. They are the essence of your company and what you consider important.
- Write down the company's vision and mission. Make this a joint effort. Build core company values based on the values you believe in, as well as on the personal values that are believed by the important people who work in your company.
- Be prepared to compromise on small things for the good of the company. But never compromise on big things, like your company's core values.
Step 5. Examine competitors in the same business as you
Don't ignore them. Do as much research as possible about your competitors. Don't imitate them, but don't be afraid to learn from them.
- When setting prices, you need to know exactly how much your competitors are charging.
- Get to know the unique selling proposition (USP) that you can incorporate into your business brand. What is a factor that makes your product different from market share? This could refer to something as simple as “excellent service.” For example, some airlines rule out good service because their USP is to provide the lowest possible fares. Others pride themselves on offering freshly baked pastries from the oven as well as the softest seating. Both have USPs that set them apart from other competitors.
Step 6. Innovation is everything
A business must be prepared so as not to be left behind. You need to be able to spot trends and adapt, but still stick to your core product. We can all name a few companies that innovate too far. See New Coke. However, Coke Zero is a product that innovates traditional brands by incorporating new health trends.
- Eighty percent of today's products are different from the ones that existed, even five years ago.
- Your product must be able to survive even when imitated by others. Since your product is good, maybe someone will try to copy it. The way to survive these imitators is to constantly innovate your product.
Part 2 of 3: Maximizing Profits
Step 1. Press costs
You need to be creative in managing costs and look for ways to keep them down. This is an obvious mathematical equation. If you reduce expenses, you will get more profit.
- Renegotiate all business contracts annually. Don't tie the company up with too many contracts that include years of validity. You should be able to bargain or talk to suppliers about cost and performance changes.
- Buy products that are in stock too much. You can get the product at a very low price and try to create a new product line that way.
- Monitor and study all operational costs, such as printing costs and telephone costs. Look for energy-efficient ways to reduce operating costs, for example by controlling the thermostat level.
- Be tough. Study all costs and discuss ways to keep them down. For example, do you need all the employees you have? Are you spending money on marketing techniques that don't get customers? Can you find cheaper rentals elsewhere?
- Keep track of your expenses. You should make sure that you are not overly optimistic about your spending projections. Spending less money than expected is always safer. If you do not clearly understand the purpose of your expenses, you will not be able to reduce costs.
Step 2. Determine the profit margin
To determine your profit margin, calculate how much money you make per transaction. If the selling price of the item is IDR 1,000,000,00 and your profit is IDR 250,000,00, the profit margin is 25%. You can use an online calculator to calculate the profit margin.
- In the profit margin formula, gross profit represents the difference between the cost of the product and the selling price (i.e. the profit made).
- Try to slowly build up a reserve fund so you can survive and get through the tough times when your profit margins aren't as big as you'd like them to be.
- You should have enough cash to cover several months of operating expenses when you first open your business. Estimate and prepare yourself not to immediately make a profit at these times.
Step 3. Don't rely too much on loans
It is very risky to start a business as a whole with a loan that you have to pay back along with new profits earned in the future.
- Invest as much of your money as possible in your business.
- Consider recruiting partners or investors to share some of the risk.
Step 4. Choose people who fit the company culture
Needless to say, hiring reliable employees is probably the most important thing you will ever do. Make an effort to understand and explain your company culture, so you can hire people who will do well in it.
- Check all applicants' references carefully. When you start a company, you have to spend a lot of time recruiting the right people. Find people who can work in teams.
- Look for people who can work with commitment. Of course you want to find an employee who feels comfortable working in one company for a long period of time. The rapid turnover of human resources will not look good for any company.
Step 5. Perform a job analysis
Before hiring an employee, you should detail every aspect of the job in question. What are the tasks to be done? What skills are needed? What results are you looking for?
- Then, you should write a short job description that briefly incorporates all of these points, as well as any other points that you can use to attract the right employees. Clarify in advance about things that will be encountered such as working hours and assignments. Decide in advance what kinds of abilities, after you've considered them, are must-haves, and which are optional.
- Although CEOs can't always control or manage the little things, they still have to be involved in the hiring process.
- Some companies hire freelancers. That is, employees are part-time workers or not full-time workers. Make sure you comply with the regulations set by the Ministry of Manpower if you hire freelancers.
Step 6. Make your employees feel valued
Most of us have experienced work in a bad environment. A bad work environment drains productivity and it has a bad effect on you. Making employees feel that they matter will help your business be more successful.
- Be flexible about anything related to family matters or other emergency situations. It helps a lot if you understand when your employees need a break.
- Give employees a decent salary. If they feel they are not being properly compensated, they will not be happy, and it will show. Make a compensation plan clearly in advance, but make it fair.
- Surprising your employees with little things, such as giving gifts on secretary's day or an unexpected holiday, means a lot. They will work harder for you.
Part 3 of 3: Increasing Sales and Marketing
Step 1. Don't overlook the importance of sales leads
Sales leads means the number of people who have contacted your company or been contacted by your company in recent years.
- Conversion rate means the number of sales leads who actually buy your product. Making product videos can increase sales leads.
- You should also observe how many transactions each customer makes in a year, as well as the average selling price.
- To increase sales leads, develop a strong social media plan by leveraging a variety of different sites, such as Pinterest and LinkedIn. Establish good relationships with people on social networks.
- Focus your money more on growing sales leads than building a brand. Visit trade-related events to increase customer contact.
Step 2. Location matters
The best location for your business depends on what you sell, but choosing a location carefully can make or break a business.
- If your company relies on a large number of people coming to your place – look for a location on the edge of a busy, busy highway. If your company relies on online or telephone sales, save yourself money by opting for a prime location.
- Do site research. Study the demographics of the area, including income levels, and make sure they fit your customer base. Analyze business movement patterns to make sure you get enough business movement in that location, if that's important to your business.
- Pay close attention to billboards. You need to create a billboard that looks professional and, remember, free of other advertisements. Some local communities have rules regarding the installation of billboards, so contact your local city or village hall.
Step 3. Focus on good service
Customer service is crucial in attracting repeat customers and increasing word of mouth promotion. We've all eaten at a restaurant when something went wrong, then the restaurant manager gave us free food or drinks. Small actions like this will make a company last a long time.
- Taking the time to talk face-to-face with customers is very important, even if you are the owner of the company. They will remember it.
- Consider conducting a customer survey, to better understand how customers rate the services your company provides. Reward employees who do well. Do a survey to find out the advantages and disadvantages that exist.
- Offer discounts to your valued customers. Make it clear to them that you value their loyalty. Establish good relationships with customers on social media networks.
Step 4. Create a marketing plan
A business will not be successful without planning some methods to market products to customers.
- Consider the power of marketing on social networks. Through professional social networking pages such as Facebook, you can create ads that are relatively inexpensive but can be targeted to specific users using the demographic, geographic and interest factors they write on their accounts.
- See traditional marketing methods in newspapers, radio, or television. It all depends on your customer base. For example, if you're trying to pick up older people as your target customers, newspapers might be a better medium than Facebook.
- Consider using a guerrilla marketing strategy, a marketing strategy that focuses on unconventional tactics at a small cost, but with big results. An unconventional approach will draw all the public's attention to your business, thus prompting word-of-mouth promotion quickly.
- Make sure you have a professional company website, and hire someone to handle search engine optimization or Search Engine Optimization, commonly abbreviated as SEO, so that your site appears quickly on Google search engines.
Step 5. Be a thinking leader
Share your expertise with the community and customers. Provide a positive image through traditional media or your own media platform. If people see you as an expert, they will tend to turn to you.
- Some local television stations have morning talk shows you can attend to talk about your product with the television presenter.
- You may be able to write an updateable blog on your company site. You can also consider making a video tutorial.
Tips
- Make sure you have insurance to protect yourself.
- Get ready to work HARD. If this were easy, everyone would have their own business. But keep your personal life in balance. If you feel tired because you never make time for yourself or your family, this will eventually show in the business you are in.
- Be smart. Think about the pros and cons before doing anything drastic in your business. One wrong step can be fatal for the company.
- Make a written contract. If it's not written, it doesn't happen.
- Make a to-do list every day. Good organization is the key to running a successful business.
