Identify the Business You’re Planning
Business planning history is littered with the remains of companies whose founders thought they knew what businesses they were in, only to discover that the industries weren’t quite what they seemed. Consider:
The railroad industry. During its heyday, railroad tycoons assumed that they were in the railroad business. Along came powerful competitors that had nothing to do with railroads — automobile manufacturers, the interstate highway system, jet aircraft, and regional airports. The tycoons realized that railroads weren’t in the railroad business after all; they were in the transportation business. Perhaps if they had seen the big picture sooner, they may have had a rosier future.
Eastman Kodak, over its long history, made most of its money processing film — so much money, in fact, that the company came to believe that it was in the chemical-imaging business. Along came the digital revolution and new ways to record images. In no time, Kodak’s customers weren’t interested in the photo process, but in capturing memories — on film, video, or computer. Kodak was in the memories business all along.
Amazon began as the world’s largest bookstore, and it quickly became the most successful Internet-based retail business in the world. Before long, the company expanded to become a shopping mall for virtually anything you need, from kitchen supplies to musical instruments. Its business, though, remained the same: retail sales over the Internet.
Then along came the Kindle, Amazon’s groundbreaking e-book. In one sense, Amazon remains a bookseller. But the nature of e-books puts the company in the position of being more like a publisher. Whether Amazon will become a publishing company remains to be seen, but already the new technology has begun to break down the walls that separated traditional businesses.
The first step in planning for business success is to identify what business you’re in. Why do customers want the solution you provide, and why do they choose your business over the competition?
Here are three related questions to guide you to your answer:
What basic needs do you fulfill in the marketplace?
Beyond specific products and services, why do customers come to you?
What are the three nicest things your customers could say about you?
In reviewing their answers, the owners of the text-editing business were struck by the phrase peace of mind. Those three words helped them realize that in addition to providing a text-editing business, they were also in the insurance business — making sure that embarrassing typos and inconsistencies didn’t trip up marketing and communications managers.
In response, the company changed a few of its procedures. The owners put a managing editor in place to oversee the largest projects, and they enhanced their client-service staff to provide more communication throughout the editorial process to reinforce their clients’ peace of mind. Within six months, business increased dramatically.
Now you can take a shot at answering the questions. Invest some time answering those three questions. As you consider each one, jot down whatever comes to mind. Your answers may not go directly into your business plan, but they influence almost every aspect of your business-planning process.