You must consider the following questions if you intend to go into a new business.
Note: failure to plan is the same as planning to fail.
- What is the stage of life of the product/service I want to sell? (is it a growing product/service or declining product/service?) e.g. are you planning to sell cassettes when VCD is already in the market?
- Who are the major sellers of the products/service I want to get into?
- Can I win over customers from them (can I be competitive)?
- Do I have what it takes to win over customers from them?
- What will be their reaction if I come in? You must anticipate this and plan for countermeasures!
- What are the minimum requirements for competing with the big players in the market?
6a. What special attributes do the big players have that make them successful? What differentiates them from other sellers of the product/service?
6b. Do I have those attributes or can I have some of them before I commence?
- Are there gaps in the product range/services that I can fill?
- What is the profit potential of the market?
- Can my potential products or services be substituted by other products? i.e. can customers substitute the product/service I want to sell with another product?
- Can customers switch to another product easily?
- Can I make above normal profits?
If you can’t answer all of the above questions, keep your capital until you find answers to them. It won’t get better during the business.
Remember, you are not in business to maintain competitive equality with other players, you are there to create competitive advantage and dominate the market!
…we apply logic to your business decisions.