Starting A New Business

The best business ideas often come out of that moment of rebellion when the budding entrepreneur comes to the conclusion that “I could do that better myself”. All those ideas presented to the boss that were never acted upon; colleagues seen to be not pulling their weight but earning the same; watching the profits that are being made from ones efforts heading off in another direction. All these very common scenarios often act as the catalyst to starting a new business.

The great danger is to fall in love with the idea and rush in without thinking it through. This doesn’t mean writing a business plan immediately; important though it is that comes later. The first step is checking on prospective customers, are there enough buyers out there who want the product or service, enough times and at a high enough price to make the idea viable when the bills have been paid.

Five Forces

In short the business idea needs to be seriously challenged. How easy would it be for others to follow and become serious competition? How much competition is there now and how good are they? Is the world changing and the product may no longer be required? Who will be in charge the buyer or the seller? Too much dependence on a small number of big buyers can be very dangerous. Will the business be under the thumb of its suppliers who may be able to impose too many conditions?

 Market Research

If the first hurdle is cleared without mishap it’s time for the research to begin. To look at customers and their needs – who are they, how many are there, where are they?

  • Customer behavior – how much they buy, how often and for how much?
  • Competitors – who are they, where are they, what are their strengths and weaknesses?
  • Costs – what are the direct costs that will occur if a sale takes place and the indirect costs that will be there whether a sales takes place or not?

Armed with this information it’s time to come up with some sales assumptions taking into account businesses tend to start off slowly and build up momentum with increasing sales but often experience peaks and troughs in demand that need to be built into the sales assumptions on a month by month basis.

The Business Plan

The business plan comes next, the narrative that explains the who, where, why, what, when and how of the first year in business. This is accompanied by the financial forecasts in the form of cash flow and projected profit and loss statements.

There are many styles that can be found on the internet but it is important to choose something fit for purpose. The 100 page plan is well over the top for simple one man or woman business but may be absolutely right for the new manufacturing business with plans to create 30 new jobs. There are three good reasons for preparing a detailed business plan:

Luxury Brands Form Strategic Alliances to Increase New Business

Sales in the global luxury industry are creeping up. Slowly. However, luxury brands haven’t broken out the champagne to cheer the economy’s cautious upturn; they’re looking for ways to make inroads into the buying choices of the rich and famous. And one consideration is partnering with other luxury brands who, while they don’t compete, share the same wealthy audience.

Is it Strategic Alliances or Fusion Marketing?

Call it what you will, fusing the marketing efforts of two, non-competitive companies it is the most inexpensive, yet effective form of marketing, that while totally underused, generates the most rewards: mutual profits. Best-in-class companies, working together, sharing expenses and manpower build brand equity, increase their customer base and deliver on their promise of quality service. While their customer database is a valuable asset for any company and would never be shared outright, partnering on a project by linking both their names on a marketing piece for promotion is smart business. It’s also a great way to infiltrate a different marketplace to generate new business..

Partnering to Control Secondary Markets

Luxury companies often, and unhappily, see their high-end merchandise being auctioned off on sites like e-Bay, and they can’t stop it. Gucci is one luxury retailer who has taken matters into their own hands by partnering with Christie’s (an auction house specializing in fine art) to provide a service that gives owners of vintage Gucci handbags and luggage the opportunity to have their items appraised. After the collector has her piece appraised, she’ll be notified if the piece is suitable for an upcoming Christie’s vintage sale. The beauty of this partnership for Gucci is that they are controlling their secondary market, while Christie is gaining vintage pieces directly from the owner.

Other examples of successful collaborative marketing partners that have boosted the bottom lines of each of the companies, and provided customers with a unique experience.:

  • American Express partnered with Hilton Hotels and generated a specialized credit card for travel rewards.
  • Fairmont Hotels teamed up with Lexus to provide hybrid Lexus cars to their best customers.
  • Frequent Flyer Clubs fused with hotels, car rental companies and cruise lines.

Strategic alliances can be formed with the unlikeliest of bedfellows; there just has to be a common denominator and that is usually the customer. Luxury companies willing to recenter their brand positioning and partner with other like-minded, prestige brands will continue to create passion, desire and a new customer experience for their jet-setting clientele. Not to mention that profits will start to tick upward.