Anton Dominique, COO/CFO of the London School of Marketing draws upon ten years of experience within the marketing industry to share his tips, for entrepreneurs and start-ups, on how to create a unique and easy-to-sell product.
1. Stick to basic principles
When starting a business, always begin by asking the question: what benefits are my customers going to get by buying my product? For example, if you are going to open a fitness centre and ask this question, you will most likely find three answers: to get fit, to lose weight and to socialise. You then need to focus on what benefit segment you are going to target depending on your skill set and resources, and who your competitors are in the market.
Using the same example, let’s say that your benefit segment is ‘lose weight’ and your direct competitor offers ‘Weight Watchers’. It is important not to limit your competition to those who directly compete. Once you have done this analysis carefully see what their value proposition is and what you could do differently so that the targeted benefit segment will come to you. There are many successful start-ups that followed this model including LS, Easy Jet, Cirque du Soleil and Dyson.
2. Do not sell below marginal cost
It is often tempting to sell below marginal cost (cost of goods) to earn a customer, but this will affect the business in the shorter term. Remember it is not revenue or profit but cash that is the king. Try not to sell below your marginal cost or, in other words, try to have a good gross profit and manage your cash effectively. You might incur a loss, but as far as you maintain your liquidity position, you won’t go bust.
3. Make sure your business is scalable
It is important to make your business scalable. Investors and banks are not attracted to companies that are unscalable. If your business is not unscalable, then it becomes a comfortable business for you (such as a local convenient store owner), and it won’t create a buzz in the marketplace.
4. Understand the concept of strategic intent and how crucial it is for your survival and growth
Companies that have risen to global leadership over the past 20 years invariably began with ambitions that were out of all proportion to their resources and capabilities.
But they created an obsession with winning at all levels of the organisation and then sustained that obsession over the 10-to 20-year quest for global leadership. This obsession is known as ‘strategic intent’. It is best described as a marathon run in 400-metre sprints. In common terms, it is your dream that energises your day to day activities, and it is important to have a strong strategic intent at both the time of starting and while running your business.
5. Pick your mentor wisely
It is always good to have a mentor with whom you can bounce your ideas off, and that will challenge your pre-conceived concepts about your chosen industry. I have a very good mentor, Jacques De Cock who has influenced positively on my business thoughts and concepts. I think this is key and you should be open to accepting criticism and use this as a forum to come up with innovative yet profitable business solutions. Finally, I wish all you budding entrepreneurs reading this all the very best!