When Bill Gates dropped out of Harvard to work in a garage in Albuquerque, New Mexico, he was pursuing a passion. But his passion for technology is not the reason the world knows his name. What sets him apart is the fact that he managed to turn his passion into a viable business, one that impacts the lives of nearly every person on the planet.
Passion may be a entrepreneur’s primary reason to start a new business, but it alone won’t cut it. Many companies fail to back up their passion with a solid business plan, and this is one of the reasons why only 40% of new businesses in the UK survive past the three-year mark. So how do you change the odds in your favour?
Know your market
Market research is the first step towards a solid business strategy. It will give you some perspective and help you understand what you’re up against. A good first step is to see what other products and services compete with yours. Take your research beyond just the obvious competitors (like someone who sells a nearly identical product); consider those businesses that offer an alternative solution to what you do.
British Airways and Air France, for example, are obvious competitors. But the Eurostar train or P&O Ferries (the one that crosses from Dover to Calais) also offer the same outcome: they can take you from England to France, so they could be classed as competitors too. And if you already found it a stretch to say that a ferry boat and an aeroplane are competitors, here’s a curveball for you: how about Zoom, Google Meet or WebEx? Teleconferencing could replace that trip from England to France all together in some occasions, so couldn’t they be competitors to those airlines too?
In addition to monitoring your competitors, you should also investigate the external factors that could impact your small business, and I’m not even talking about the pandemic. Market trends, disruptive technology, politics, social factors, the economy and even the weather could affect your business depending on what you do. Take it all in, document it and revisit it often as circumstances may change. Think about worst-case scenarios and how you can minimise the impact.
All this market research doesn’t have to cost you a penny, a lot of it has already been done and you just have to find it. There’s also a lot you can learn by just visiting your competitors and experiencing their customer service.
Know your audience
The best marketing strategy for small businesses is to focus your energy on your ideal customer. You can’t do everything at once, so prioritise those fewer customers who are the most loyal, profitable and easy to work with. Your target audience and potential buyers may too broad to cover with limited time and resources.
As a rule of thumb, your ideal customers will make up only 20% of your customer base, but they will be responsible for 80% of your revenue. If you only have a small marketing budget to invest in your small business, you should focus your efforts on them. But first you need to figure out who they are, so you can treat them like royalty.
If you’re not sure who your ideal customer is, this questionnaire will help you discover more about your audience and identify the best customers for your small business.
Now that you know your market and your audience, where do you and your business fit in? Performing a SWOT analysis is a good and simple way to start putting all this information into perspective. It will help you understand your own strengths and weaknesses and will also highlight external opportunities and threats.
Knowing your strengths will be extremely beneficial when creating your marketing message. I’d always recommend that you focus on the value you bring, rather than just trying to compete on price. Identify your unique selling points (USP), the things about you and your business that make you the best choice for your customer.
If you operate in a niche market and you are the only one who offers your type of product or service in your area, this exercise may be easy. But if you operate in a mass market, and have lots of competitors offering similar products and services, you may struggle to set yourself apart. The good news are: your unique selling point isn’t always about your product. It could be your attentive customer service or convenient delivery options, it could be the material you use, it could be anything your customers value.
Sometimes your unique selling point is you: your own unique experience, your life story and - why not? - your passion. Passion alone won’t cut it, but it makes all the difference.