Identify the Business You’re Planning
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? You can begin the figure out your business by answering: What business are you really in? One tried-and-true way to do it is to consider how you would describe your business to a stranger in one sentence.
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?
Invest some time answering these three questions. As you consider each question, 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.
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.
Business 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. But not all companies rocked by change have faltered. Some have prospered.
Consider the railroad industry. 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, 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. Before long, 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 it has also become a publisher. The shift from CDs to MP3s has also transformed Amazon into a digital music company. Now the Internet pioneer, like its competitor Apple’s iTunes, has its own cloud, offering storage for books, music, and videos.