Abstract/Summary:
This report critically
analyzes the second phase,
The Execution Phase, of Business Start-up Stage. The Execution
Phase of the Business Start-up Stage is concerned with the marketing
of the company and products, creating repeat customers, and
establishing the critical mass of business survival. This task
is quite difficult because all the business processes as defined in
the Growth Tactical Business Plan are being gradually started and
supported on daily bases while still be changed daily as well - the
processes as developed in the Tactical Business Plan are generally
designed to be evolving. This phase of any business development is
the bridge between a static business existing just on paper and one
that is actually operating. Approaches to effectuating and
managing this dynamic evolution of the business are proffered based
on sound business analysis and management principles.
Introduction
Three phases characterize the Start-up Stage of every business
endeavor: The
Starting Phase, The Execution Phase and The Penetration Phase;
each with its peculiarities and pitfalls that must be adeptly
circumvented by the business owner to be successful.
Now that the business Starting Phase has been concluded, the
Business Start-up Stage then moves into the Execution Phase which
generally focuses on the marketing of the company and products,
creating repeat customers, and establishing the critical mass of
business survival. This Phase is the most critical phase of the
business development planning of any business, because this is the
phase in which most businesses fail.
This phase is the beginning of
the onset of the implementation of the
Growth
Tactics Implementation
Plan, hence the business is effectively being put into a dynamic
state: Relative to the starting phase when the business is in
essence in an inertial state, starting operations the business gets
to be put into a dynamic state. The business
which is otherwise static in the starting phase must be passed
through a dynamic state during which it must evolve into the routine
operating state - admittedly another static state, but already
described as more of an dynamic equilibrium state. and that is one
of the causes of the difficulty with this phase and of the frequent
failure of businesses in during this phase, the Execution Phase.
The effective navigation of
the pitfalls and management of the peculiarities of this phase of
the business development plan was the whole basis for the
development of a
Growth Tactics
Implementation Plan, generally containing and documenting the
well-planned evolution of the business-entity into the business
critical mass as crafted, and without which the would-be business
owner will always be at risk during the implementation of this phase
of the business.
Creating
Operations Critical
Mass
The approach
adopted for the development/creating of the business critical mass
is very crucial to the success or failure of the business. Two main
approaches for
initiating the execution phase are often adopted for this goal. A variation of the two
approaches is the use of professional services and outsourcing to
perform some tasks until a well qualified staff is discovered and
hired to support the performance of the task in-house. Of course, in
all three approaches, the hiring
process can also be scheduled in myriad of ways to ensure that the
trainer is always available as each employee comes on board and
needs to be trained. The employment scheduling could also be set to
follow the business processes implementation sequence that is most
efficacious for the tasks of the phase. However, no matter the
scheduling, there will always be the need to have enough funding to
support the large expenses and overhead that this approach demands.
The choice of approach
however, is irrelevant if the business growth goal, is simply
owner-employee[-manager] business, which is the situation in which
the owner is also the sole primary employee. In this particular
case, the owner is automatically constitutes the team for the
supporting the critical mass operations. Even then it defaults into
the second approach, as the owner must undertake marketing blitz to
generate sales and then take on the other hats of production,
shipping and delivery and other associated tasks.
The choice of approach,
in all other cases that is not of the situation of owner-employee,
of course, is also determined to some extent by the funds available
to finance the critical mass operation while undertaking the market
entry tasks. In general, the critical mass creating process can be
tailored to match the funds budgeted for the purpose.
Financing the Business Critical
Mass
The business owner desirous of successful start-up of the business
can never have too much money for this phase of the Business Startup
Stage. After all, the failure of most businesses occur during this
stage and most of such failures is due to depletion of funds. This
phase usually incurs large amounts of funds, for instance, certain
types of high ticket items sales can span about 3 - 9 months during
which time funds are being expended, tradeshows are attended to
introduce produce are extremely expensive - costing about
$20,000 per show, and at least five tradeshows are required create
impression in the prospective buyers.
So the
business owner determined to successfully navigate through this
phase of the business development should as a matter of guarantee of
success triple the amount of funds estimated for budget for
this phase as determined from the
Pro Forma Financial Plan.
In fact, when the decision has been made by a business owner to be a
participant in and of a very specific market, then endless budget
must be guaranteed. In general, creating cash-cows specifically to
fund this phase is essential, although the creating of cash-cows is
situation-specific, and hence must be discovered by each business owner.
Marketing the Company and
Products
Irrespective of the approach adopted towards creating the
business critical mass, the support must necessarily derive from the
marketing, sales and delivery of the products to the buyers. The
initial buyers may or may not become customers but all the
same the buyers must be satisfied as they were customers. This is
the market entry phase, hence market entry strategy also comes into
play here - in terms of the entry barrier. Therefore the
challenge is the establishing of market participation. So, it
should be borne in mind that the general conviction that business is
simply the profitably marketing of a product, is really tested here,
off course, entails sales of the product.
However, the marketing of
the product also requires the marketing of the company itself. In
general buyers like to buy from companies that they know would be
around for a long time to service the products they buy. So
this phase also has the task of keeping buyers informed of the
prospects of the company that assure stability and growth.
This task is primarily the marketing of the company, which deals
with the image marketing of the company. |
Obviously then, taking on
the task of putting the company in the dynamic non-equilibrium state
of operations evolution through to the dynamic equilibrium state has to
contend with the simultaneous marketing of the company image and
survivability as well as the credulity of the product to function as
being asserted. The thrusts for attending to these tasks as
presented are in the sequence of the product marketing and then
company image marketing.Beginning with the
product marketing, the starting point is with the Product Sales
Cycle developed during the development of
Growth Tactics
Implementation Plan. Now although the sales cycle will have
appropriately devolved into marketing activities, as these tasks
should not be considered sacrosanct, but rather as a good guide in
managing the the tasks of this phase, the monitoring program or system also
developed during the Business Plan development is now crucial and
must be frequently reviewed to the end of optimizing the conduct of
the defined tasks.
The original devolution
of the sales cycle into various marketing activities should be
reviewed, and this review should confirm that the devolution of the
tasks is still efficacious, otherwise from the tasks reconstruct
such product marketing tasks as advertisement, telemarketing
campaigns, and all the available marketing tactics.
The manner of association of
the specific marketing approach to the tasks of the sales cycle of
course depends on several factors including the qualification of the
sales process as being of Minor Sales or Major sales, whether or not
the product fills a need or just a want, whether or not the product
is a consumer product or a non-consumer product, and whether the
prospective customers of the target market or sales territory are
homogeneously dispersed or heterogeneously dispersed. The possible
permutations and combinations between these choices should make it
fairly difficult for the business owner to explore every
possibility, nonetheless, these
marketing product characterization are crucial and recommended
approach to undertaking effective marketing of the product.
Most importantly,
performance
schedules dictated number of times for performing each task should be
closely monitored and followed. This means for those tasks
for which the anticipated goal did not materialize, then the
scheduled subsequent task should not be undertaken and the specific
market segment abandoned, or further marketing communication with
the target customer be terminated. This cessation of further
marketing communication in a market-segment, or with a target
customer, is very critical for the purposes of better optimized
leveraging of the funds budgeted for product marketing, because each
of the tasks costs money and it makes no sense spending money
selling into a market that does not either want the product or
requires a different sales cycle other than that which the product
defines for itself - as such reflects a sort of market incongruence
with the use of the product.
The company-image marketing component of the
product marketing tasks actually begins at the
Starting Phase of the
Business Start-up Stage. Three factors bear on this task: One of the
issues that comes into play in this respect is the name given to the
business; Another consideration is the financial strength of the
company; Finally, the intangible image-presentations such as the
quality of the stationeries, print-quality of product- catalogues or
fliers, and appearance of sales staff amongst others.
The introduction of the company is always by the name, hence
rationally, the first aspect of focus is the name given to the
business, a good name is always helpful as every advise suggests. A
reasonable approach to
naming venture legal entities is often a construction of
descriptive word(s) and uniquely qualified with differentiating word(s).
The matters of financial strength and consequentially durability or
longevity can and should be addressed through performance reports or
partnership arrangements or bank financing agreements secured for
the operations. Several Press and News Releases are also very
effective means of establishing stability in the minds of the
prospective customers. In general, the glossy of glossy paper for
stationeries and catalogue prints also promote high-end; otherwise
then the business owner should sue paper of less quality - making
sure to choose the quality relative to the target positioning within
the spectrum of low-end to high-end placement.
The effectiveness of the
marketing blitz aimed at getting the business through the Execution
Phase is determined by the number of customers created; and whether
or not a business is navigating the phase well is determined by the
rapidity with which it creates the critical mass customers. In view of the need for dedicated sales to
accomplish these tasks, dedicated Direct Sales Force should be
hired- of course this then is where color/racism becomes a problem -
and commission sales must not be used. Further the market entry
barriers such as price, scope of choices, payment schedule and
product quality must be carefully managed for success.
Critical Mass Customers
Usually, by the time a business enters the Execution Phase,
the business has at least one, may be two, customers. However,
that does not constitute critical mass customers base, creating of
which is the primary objective of the Execution Phase, being the
market entry phase. There must be enough
customers created that supports the business operations critical mass. Ad hoc number of customers
often presumed to constitute a critical mass customer base is
usually set at ten (10). The critical mass customers, essentially
are the number of customer whose purchase profiles and volume of
purchases are such as to support the business operating monthly
financial needs: The number of customers required to support
the critical mass obviously will vary with business. For tangible products of the
Major Sales classification such as a large ticket items, the
number ten (10) may be sufficient to meet the monthly financial
operating needs of the business at the very least the revenue must support the expenses - break even
point. However, for products with Minor Sales classification, also
qualifying as low-ticket items, the customer count of ten (10) is
based on the number of repeat customers whose monthly purchases
qualify them as critical mass customers. The operation of the
business therefore should include competitive customer relationship
management to allow for tracking customers purchasing profiles.
Finally, developing and
selling to County Government is to be discouraged during this phase:
Usually the staff are not very knowledgeable in many areas, are not
professional in behavior, and do not have a good appreciation of
protocol. So well-structured businesses should stir clear of such
sales. |
