Know Your Business
Introduction:
In simple terms, Business can be defined as the exchange of materials between two or more parties. In early days, business was carried out with Commodities. Later, agreements were introduced where one party involved did not have the material readily available. Agreements were later replaced with money. We can classify the parties involved in business as Vendor, Customer, Suppliers, Seller, etc.
Start a Business:
List of items you can keep in mind to start your business:
- Identify the right customer
- Analyze the environment
- Identify the value of the materials involved
- Predict the future of the business based on the progress
- Explore ways to expand the business
Identify the right customer:
A customer is someone who has the capability to purchase your product/material and can provide you with an alternate material for the right value of your product. Involving the right customer who is interested in your product/material will be a key part of the business. There might be parties who are not interested in the product but would like to know about it, just to have an idea. These parties can help with Marketing (spreading information about the materials to others).
Question: How to identify the right customer? - Analyze the environment to filter out the right customer.
Analyze the environment:
Why do I need to analyze the environment to have a successful business? - The environment where you desire to start your business should have a need for your product/material. You cannot sell your product in a region where there is no demand for it.
Competitor analysis should also be part of environment analysis (Stability and Penetration of business analysis).
- What is the business percentage of the competitor? - This gives you an exact figure for the market for the product in the environment.
- How good is the competitor's material? - This gives you an idea of the penetration of their business strategy.
- Market size, regular customer size? - The competitor's stability will give an idea of whether you can sustain yourself in the environment.
Identify the value of materials involved:
The materials involved in the business should be analyzed based on the market. Market study is essential to know the price; some products/materials might have a demand in some regions where you can determine the cost based on the buyer's demand. A business can be based on quality or quantity. Businesses based on Quality (Ex: Rolls Royce) focus on quality and target an audience willing to pay for it. Businesses based on quantity focus on volume, potentially compromising on some quality aspects acceptable to the customer. Quantity businesses target a large number of customers, aiming for profit based on the number of products/materials sold.
Predict the future of business based on the progress:
This involves maintaining market presence; the first three steps should be done periodically to continue in the market. When there is a change in market needs, you must be able to adapt. Environmental changes are frequent, so it's better to study each business deal. If product sales decrease compared to previous sales, analyze the reasons. Adapting to the environment will help you survive in business longer.
Explore the way to expand the business
Sustaining in the market will only get you so far; you need to expand your business. Competitors should be analyzed, and business expansion should be planned carefully.
- Identify the right customer
- Analyze the environment
- Identify the value of the materials involved
- Predict the future of the business based on the progress
References
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