Fred Smith, the founder, of FedEx, worked for almost a decade on perfecting a solution to what he thought was going to be a huge problem - shipping products to customers. He saw the opportunity to build a freight only airline that would fly only packages. He turned in the concept on a paper to a Yale Professor who gave him a C for the effort.
However, after spending a few years working in the aviation industry, he re-developed a business plan and got financial backing which enabled him to launch FEDEX in 1973.
A new way of doing business that disrupts the status quo is entrepreneurship. This is how to do it.
Evaluate new opportunities
The identification and evaluation of opportunities is one of the entrepreneur’s most important tasks. Good opportunities address important market needs. Examining social, technological, and economic trends can lead to the identification of emerging needs. Entrepreneurs seek to build new ventures and to act on a good opportunity when it matches their capabilities and interests.
Such opportunities offer a reasonable chance of success and require the entrepreneur to make a difficult decision to act or not act. The choice of an opportunity and the decision to act is a critical juncture in the life of an entrepreneur. An attractive opportunity is one that is timely - solving a current need or problem; solvable - can be solved with accessible resources; important - the customer deems the need or solution important; profitable - the solution will be paid for by the customer and it must be conforming to regulatory or industry situation.
Create a business model
To create a theory of a new business, the entrepreneur must cogently and clearly describe the customers and their needs and how the new venture will satisfy those needs. A business model describes the relationship between a venture’s customers, value proposition, differentiation, scope, organisation design, and profit model. This determines the degree of viability of addressing the opportunity
Do a competitive analysis
A competitive analysis explains how you will do better than your rivals. And doing better, by definition, means being different. Organisations achieve superior performance when they are unique, when they do something no other business does in ways that no other business can duplicate.
The entrepreneurial firm is likely to be a new entrant to the industry. Thus, the new venture should describe the barriers to entry, the threat of substitutes, and the bargaining power of the suppliers, customers, and complementors. A new technology venture is likely to perform better when it operates in an industry with high barriers to entry, low rivalry, low threat of substitutes, low buyer power, low supplier power, and low bargaining power of complementors.
Define your strategy
Many profitable firms are built on differentiation: offering customers something they value that competitors do not have. This unique offering can be in the product, service, or sales, delivery, or installation of the product. While the basic product may be a commodity, the differentiation can be obtained somewhere in the various interactions or services for the customer.
Define the risk
Risk is the chance or possibility of loss. This loss could be financial, physical, or reputational.
Scenario planning techniques can be useful for determining strategy under conditions of uncertainty. Risk reflects the degree of uncertainty and the potential loss associated with the outcomes, which may follow from an action or set of actions. Risk consists of two elements: the significance of the potential losses and the uncertainty of those losses.
Pivot your idea
Successful product design and development requires commitment, vision, improvisation, information exchange, and collaboration. The first step is to establish the goals and attributes of the product expressed as the required performance and robustness of the product. When possible, the potential customer should be included in the design process.
New ventures can use prototypes to redefine their business models and strategies. Prototypes can be pictures, sketches, mock-ups, or diagrams that can be collaboratively studied. They also can be physical, digital, pictorial, or some combination of media.
The computer software industry uses prototypes called beta versions of software to elicit response from lead customers. New technologies such as computer simulations can make the creation of a prototype fast and cheap. Rapid prototyping is the fast development of a useful prototype that can be used for collaborative review and modification.
For the innovator, a prototype is a mechanism for teaching the market about the technology and for learning from the market how valuable that technology is in that application arena.
Your ideas and the value of those idea to the customer is not validated unless you have been able to raise funds from people other than your family and friends. Create a plan for this. Financially plan your resource and cash dependency in a manner that allows you to know the right investors for your business. Reach out to the investors ahead of time and create enough interest for them to be updated of your venture ahead of your raise. Create meaningful investor dialogue. Choose your advisors carefully so that they become ambassadors of your vision and growth story.
A few last pearls of wisdom …
Few things will help you establish and grow your business faster than a creating a strong network. No one person knows it all or can do it all. If you isolate yourself and your thoughts, you isolate your business as well. Having access to a variety of resources can increase your efficiency, knowledge, your business’ publicity, and your chances of succeeding.
To be successful you need to be willing to listen to new ideas and actively solicit the opinions of others. Treasure new ideas and opposing opinions; not rebuke them. Simply by showing that you value the opinions and advice of others will make you appear more approachable to your peers, employees, and customers.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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