Journey on an entrepreneurial path can be both rewarding and taxing depending upon how well the path is charted out. Many young minds today are looking beyond the regular 9 to 5 schedule and trying to build a successful business, however only a few of them succeed. This does not mean that you should get disheartened and not venture out however the journey has to carefully planned. Here I am listing down four questions one must answer before starting a business. The success of your business will depend upon how well you are able to answer these questions hence due thoughts need to be given for each of them.
But before we get on to the questions, let us first understand how the businesses are built. There are primarily two approaches to business i.e. 1.) Product-based & 2.) Need-based. I am not advocating any of these approaches here as both of them have their own nuances. However, a brief description of these approaches is given for understanding:
Product-based Approach: You have developed a revolutionary product and want to build a business around it. Since the product is new, the need is either not well defined or is being served by other products. For example, somebody who designed solar inverter for the first time would have faced a similar situation. Success/failure will depend upon how well you are able to create a need for the product through your marketing programs.
Need-based Approach: You have identified a consumer need which is not being serviced effectively by current eco-system. With your intellect, you are able to create a product/platform to serve this need and market effectively to consumers. A good example is OLA/Uber who created a fabulous platform to serve the consumer need for immediate cab bookings at affordable prices. The success will depend on how big that need is and your ability to come up with an innovative & convenient solution.
Both of these approaches have their own nuances and hence warrant different solutions from technical, marketing etc standpoints. However, the common thing between the two of them is the four questions one must answer to succeed. Whether you’re following product-based or need-based approach, answering these four questions in a well defined and descriptive manner can ensure the success. The four questions are:
1.) What problem are you solving? : Even though you have a revolutionary product, if it is not solving any consumer problem you need to re-think your strategy. The world is full of problems and success will come to those who are effective in solving them. Hence the linkage between product and consumer need should be clearly defined. This will answer questions such as “why consumers will buy your product/services?” & “What should be your competitive positioning”. This is the first stage of planning your business and you must understand that consumer will not buy your product because you have created it rather because they have a need for it. Hence devote enough time to ascertain what problem/need your product will serve immediately and in future. For e.g. even though solar energy is a revolutionary product, still the adoption is very low because so far consumers have not found any need for it as there are other cheaper alternatives are available(Only from the commercial angle).
2.) What are you trying to achieve? : Business involves people, whether they are investors, employees or business partners. For success in any business, people need motivation and nothing motivates them more than ambitions. Hence outline a time-bound, measurable and ambitious target for your business. Remember that there should be no ambiguity and it has to be ambitious (Definition of ambitious is up to you) enough to excite people. If your target is not ambitious enough, work again and also include milestones for regular review.
3) What’s stopping you? : Once you have set yourself an ambitious target, ask yourself what’s stopping you to achieve it. It could be anything like “Competition”, “Consumer awareness”, “Market conditions”, “Budget constraints” etc. It is extremely important to do a SWOT analysis of yourself and identify opportunity areas as well as barriers to success.
4) How can you overcome the barriers? : The fourth and last question should give you the innovative ways of solving the identified problem in the question no.3. If competition is your biggest barrier, you need to devise innovative ways of marketing and positioning your products and services(take the example of Sensodyne). Remember if your target is ambitious enough and you can exactly pinpoint the barrier, then with rigorous brainstorming you should be able to devise an innovative solution for it.
Once you’re able to successfully answer these four questions, successful execution is all you need but that is a different topic altogether.
Although these questions look simple, each one of them demands enough time and discussion to build a successful business. One must try and engage as many minds to brainstorm and come up with the answers. Building a successful business is not only a commitment to yourself but also to the people around you. To illustrate how this works, I’m giving below one case study of Reliance Jio in India
How Reliance built a successful business: Reliance Jio launched 4G services in India in 2016 and in a very short span of time, it has become a market leader in an industry dominated by the incumbent players. Indian telecom market at that point in time was dominated by voice services. Data usage(Mostly 3G) per subscriber, though was growing exponentially, was charged at a very high rate. This was the biggest hindrance in reaching to economically weaker sections and also boosting usage of existing subscribers. With this background, Reliance Jio launched 4G services and became a huge success within the first 3 years of launch. The success story can be deciphered by applying the four questions given above:
What problem are you trying to solve? : Consumer trends were clear, data usage was to be the driving factor in telecom with the launch of smartphones and the emergence of social media/content platforms like Facebook/Twitter/Youtube. There was an immense need for faster data at affordable prices and incumbent operators due to their own legacy problems were unable to serve this need. 4G services were not launched on time & data costs were as high as Rs.250/GB making it inaccessible to a large population. Reliance Jio took up this opportunity and positioned itself as the fastest and most affordable 4G network.
What are you trying to achieve? : Most of us working in incumbent operators had laughed at the target of 50% market share given by Reliance. However, that target although being quite aggressive not only excited the employees of Rjio but the entire ecosystem as it worked towards making it possible. Today 50% market share is not a distant possibility.
What’s stopping you? : Back in 2015-16 when 4G services were being launched, the biggest show stopper was the unavailability of the 4G handsets. I remember this was taken as a saving grace by incumbent operators. They thought since there were not enough 4G handsets available in the market, 4G services will not take off. In a highly penetrated market, <5% had 4G handsets hence could become a serious threat to the success of R-Jio.
How can you overcome the barrier? : The traditional approach to increasing handset penetration has always been “tie-up with handset manufacturers and launch bundling offers”. This model had not seen the desired success for two reasons:
1.) Did not excite consumers as it was mostly a push strategy
2.) Did not excite manufacturers to innovate as there was not enough demand.
So Reliance Jio came up with a unique idea, instead of going for traditional push-based strategy, they went all out with a reverse strategy. Underlining thought could have been that if there is enough pull in the market everything else will fall in place. So it did, with their free services offer, consumer lined up for Jio services and manufacturers had to revise their device strategy for India. Suddenly cheaper 4G devices in large numbers were made available for the Indian market. As we read this, 100% of devices shipped to India are 4G enabled now. The other thing which worked in their favour was the target they kept talking about and big announcements from time to time in support of that target which kept exciting the market and suppliers to innovate.
This went on for enough time to give Reliance Jio the edge over other operators and today when everything is settled down, Reliance Jio continues to remain the preferred choice for telecom despite having little or no pricing edge over other operators.
Now you might say that Reliance is a big company and can take these decisions due to deep pockets however, the point I’m trying to make is about the process a start-up need to follow. You may come up with a completely different solution for a similar problem which may suit your size and scale. As long as the process is followed, the results will certainly to be better.
Wishing you for all the success in your venture. All our country needs at this point in time is more successful entrepreneurs like you.
All the Best