Building a business for you part 1

Building a business for you part 1

PART I

The Army:

During the early 13th century, Muhammad, the shah of Khwarizmi, ruled a huge empire after many successful wars. His empire extended west to present day Turkey and south to Afghanistan. He had a massive army of 400,000 warriors at his command which gave him a huge confidence to challenge anyone. He ended up challenging the nomadic tribe leader, Temujin, who was in his initial stages of growth. Little did he know that this seemingly innocuous act would result in his empire’s fastest demise. Little did he know that Temujin, who was also called Genghis khan, was the great strategist history has ever produced.

Though Genghis Khan had relatively a very small army compared to Muhammad, his style of warfare was novel at that time. Compared to the slow army of Muhammad, Genghis khan’s army was very fast (as their soldiers were trained to fight with arrows while riding on horseback) and powerful. More than anything else, Genghis Khan was a great leader and motivator. Wherever he found talented warriors, he embraced them and joined them in his growing army. When Genghis khan’s army attacked Mohammad, they were able to create panic and fear in their enemies. They used Guerrilla warfare and raided the massive army of Muhammad. Eventually within a year, Muhammad was driven away from his homeland and had a miserable death.

Running a successful business is like leading a kingdom. It is hard to sustain especially if the sector is attractive with a lot of profit. Competitors will emerge very fast from all directions to capture the customers. No longer is size the only deciding factor for victory anymore. The strength of a growing business lies in its ability to create products or services that can challenge the competitors. If such a powerful product or service is built, then any big corporation can be challenged and captured. Like Genghis khan, a new empire can be created out of nowhere.

Though the stages of developing such products or services differ from business to business, we will briefly discuss the basic five stages of strategy that are common to all business in this section.

Choose a Path:

A lot of new businesses emerge out everywhere. Some of them succeed starting from the owner’s garage with a few hundred pounds whereas some businesses fail even after millions in investment. If we look closely, the success and failure depend a lot on the path chosen by the business owner or Entrepreneur. It is the first step in creating the strategy. It is “Choosing a direction to lead”.

To understand better, we should see from the customer point of view. Customers now are bombarded with a lot of options. Whatever they want, they always have options. Depending on their taste and purchasing power, they always have a choice. But what makes a customer to choose a particular brand over another? Is it always cost or the style or image? The answer is always different. Choosing path means choosing a reason for the customer to select us. While a lot of retail clothing store closed in the last year alone, two companies went from strength to strength. These companies have revenues in the billions while their competitor filed for bankruptcy. Those billion dollar companies are Primark and Zara. Primark chose cost as their path where they provide the goods at the cheapest price available in the market. Zara chose design and style. They made sure to bring the best product to the customers in the shortest possible time.  Both these companies operate differently with a different set of customers. But, both these companies gave every reason for their customers to choose their product over their competitor.

Every small business should identify such a reason and convert them as their vision of the company. The business should be built over that single primary reason where customers treat you are the leaders. It should be the reason for customer choosing over you and dumping the competition. The reason might be anything. It might be cost, trust, quality, style, elegance, image or just convenience.  Most often small businesses lose their focus on their vision and tend to run the rat race. They start to do what everybody else does. They start imitating the competitors and end up destroying their own identity.

Even as a tribal leader, Genghis Khan had a clear vision to unite the various nomadic clans and build a massive empire. It was this clear vision that enabled him to create an army which was capable of defeating bigger forces. It was the same vision that helped him to create novel warfare tactics that shattered the massive army of Muhammad.

Create the Weapon to lead:

It is very easy to choose any path. But it is very hard to lead the path and defend it from competitors. This stage is all about creating the right tools to fight with the competitors and become as the leader. Any powerful king needs a strong army to defend and expand. Similar to that, leading in a sector will require powerful operation so that competitors find it impossible to compete.

Wal-Mart started as any other convenience store in a small part of US. They too started buying products from manufacturers and started selling to the customers as like their competitor. But they chose to lead the path rather than like any other convenience store. They started finding ways to reduce the cost of the products and passed the benefits to their customers. They improved the way they source the goods and made sure to improve it little by little. Their store’s reputation also improved from time to time and they started expanding from one to many. Now they are as powerful as an empire. They can change the fortune of a small supplier by a single contract. It is not only their sheer size that prevents competitors from fighting with them. It is the tools that they developed over the time with the operations. It is the backbone over which their entire kingdom is built.  There are other equally big stores like K mart in the US which sells similar products. But it is the operations of Wal-Mart that makes them to be the leader in their field.

Let’s get back to small business owners. Where should they start with? They should start within themselves and the key to success is control. Most of the small businesses fail because they don’t have control over their core operation. The problem with the workforce, the problem with the supplier, problem with creditor, debtors are like diseases. Without curing them, it is hard to wage war against competitors. If these kinds of problems persist, it is hard to survive in the long run.

Once the problems are fixed, then businesses should start converting the basic operations into strengths which are hard to compete with. Converting the operations into strengths varies from business to business. Dell found a cost effective way for customers to select the configuration. Ikea found a way to source their furniture at the cheapest price available in the market. Toyota built their factory so that all their products were guaranteed the best quality. All these companies improved their operations and converted them to success.  As long as these kinds of strengths are built, there will be no fear from the competitors and business can thrive all around the world.

Identify your Allies:

The result of wars are not only decided by the size and power of the army, it is also decided by the power of the allies. The result of the war changes just by inclusion of one more additional allies. Similar to that, the success of a business change dramatically by having one more additional business contact. There is a misconception that the larger number of contacts, better it is. Business owners tend to attend a lot of networking meeting to grow the contacts. However the influencing capacity of the created network is more important than number of contacts. Having a few powerful and influential business contacts makes a lot more difference than having a lot of contacts who don’t have any influence on your business.

While extending our network we should remember one important lesson from the war. No allies will come to help if they don’t get a share of the victory. Similar to that, business networking will never work if it is not beneficial to both the parties involved. If the network is built on the mutual benefit and trust, it is easier to grow the network and build your business. If your business have a successful product, big players like Tesco or Argos will love to partner with you so that they can make money as well. If not however powerful the networking skills, they will not bring in any value. In order to be more influential, it is important to build a product or service that will attract other business owners. If we are successful in building such advantage, even big players would love to partner with us and prosper along with us.

To start with

  • First choose a business partner who will ideally take your business forward. They should have the power to take your business to the next level.
  • Second, try to find all the benefits that you can give to those chosen partners so that you appear attractive to them. Partnering with your business should appear so attractive that they should welcome you with the red carpet.

It was the partnership with IBM that made Microsoft the most profitable company. It was the partnership between Google and Samsung that helped them capture most of the market share back from Apple.

Retain the Power:

One of the biggest problems with small businesses is that they find a new competitors emerging out of somewhere and taking a bite of their profit. The new competitors generally undercut the cost and lure the customer to switch over easily. In the worst case, big corporate enters the market and wipe out the small business owners. Small business owners are always in such threats. How to get protected from these kinds of threats?

These kinds of problems happen in the fighting kingdom as well. Powerful empires fight against each other for fertile lands. Once captured, their next biggest problem will be to protect their territory from the enemy. Whether it might be the kingdom or the business, the answer to the problem is same.

The solution is to get connected to the customers or the people. In case of kingdom, once they capture a land, they will try to form a stable government involving the people living in that land. The key to their success is to make the people in the captured land feel as part of the big kingdom. If there is any internal opposition, it is an easy opportunity for the enemy to come back. In case of business, if a relationship is built with the customers, then it is never easy for anyone to get in. The relationship is built over trust, quality and reliability. Big brands guard such relationship as much as possible. It might be Apple or Samsung or Nike or BMW or Toyota, they all have their fans built by creating such relationship. If small businesses start creating such relationship, new competitors will become their least concern.

Don’t Mistake Silence for peace:

Every kingdom will have prosperous times and hard times to face. Similar to that, every business will have easy and hard periods in their growth. Only those kingdoms that took enough action to build its resources during peace will ensure survival during war. Only those businesses that take enough action to build its resources during prosperity will ensure success during tough economic times.

The automobile industry is one of the toughest industries to compete with. As the profit is more, the competition is also huge. Though established car makers might already have a successful model, they should ensure to spend enough on R&D and add features to their existing product. If they mistake their success as permanent, then it is only a matter of time for a competitor to crush them. Brands like Austin, Riley, Rover and Triumph were wiped out of the market because they failed to improve and relied just on the past success. The competition in other sectors might not be as vigorous as in the automobile industry but stagnation will definitely lead  to Failure. Failure to improve is fatal in any business. While your business is successful, enjoy the benefits and also keep an eye on the competitors.

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