Tag: market research

Categories
Business Development & Marketing Cash Flow & Forecasting Finance General Rescue, Restructuring & Recovery Turnaround

When should you pivot your business model?

The term “pivot” was first applied by Eric Ries, creator of the Lean Start-up method, to describe how a new business can shift its activity in a new direction in response to customers’ behaviour.
It is a tactic used by many entrepreneurs when it becomes clear that the original business offer is not attracting the predicted level of business.
One example of a pivot was a company that was set up to sell online marketing products such as website design and found that this activity was not delivering so instead set up and promoted a Business to Consumer (B2C) shopping App, which generated much more business.
While it is necessary for a start-up to be committed to and believe wholeheartedly in its product or service, especially when it has done some market research to find out whether there is a sufficient level of demand, in a rapidly changing market it makes no sense to remain wedded to that product or service if it does not generate the projected sales.
Continuing to spend money on promotion without achieving any improvements sooner or later will lead to cash flow problems and a business in difficulty.
So while commitment is of course a fundamental ingredient for success when starting a business, flexibility and an open mind about what can be fashioned out of the core business skills are essential.
Sometimes it is necessary to pivot the business model by implementing fundamental change to achieve a transformation of the business’ prospects.

Categories
Banks, Lenders & Investors Business Development & Marketing Finance General Rescue, Restructuring & Recovery Turnaround

The delusional fund raising pitch

We continue to hear that banks aren’t lending, but there may be a good reason for this.
There is a lot in the press about SMEs and Startups seeking to raise finance directly from alternative sources such as peer to peer and crowd funding platforms.
Furthermore private investors are often receiving pitches of the blue.
All too often the fund raising pitch doesn’t provide the information needed to make a decision, or worse it is simply delusional.
Sometimes we come across statements like “we have no competition”, “we only need to capture 2% of the market”, or even “everyone needs our product”.
The (printable) responses to these are likely to be “are you are so *** brilliant that no one has ever thought of this idea?” or “could that be because no-one actually needs what you’re offering?” to the first.
The response to the other two is likely to be a raised eyebrow and a request to see what research has been done.
It seems that businesses pitching for finance often fail to understand that the only thing that really interests funders is whether they will get an adequate return. The pitch needs to be backed by solid figures and research evidence, details of who the target customer is, why the product solves their need when others can’t, why you can deliver on this promise and how this is a good market opportunity.
Have you come across any delusional pitches?

Categories
Banks, Lenders & Investors Business Development & Marketing Cash Flow & Forecasting General Turnaround

SME businesses need goals and a plan

As we noted in our last blog more than two thirds of the new jobs created since 2008 are people registering as self employed to set up in business for themselves.
There is as yet no information on why.  It could be that they felt they had no alternative after redundancy, especially if they were older people who calculated that the odds of finding another job were less than favourable. Some may have dreamt of becoming their own boss.  Some may have jumped before they were pushed.
A few will undoubtedly be people with a strong entrepreneurial streak and an innovative product or idea.
One thing all business coaches say is that to run your own business requires passion and commitment, market research, a business plan and sound financial management.
Any plan will include analysis of the market and assessing the competition, without which it is difficult to know if a business can succeed.
Once a plan has been produced, a focus on bringing in business and satisfying customers tends to involve doing more of what works and stopping doing what doesn’t. This needs constant vigilance and regular monitoring to make progress towards goals in the plan.
Revisiting the business plan is more like checking the map to make sure you will eventually get to where you are going. Sometimes when conditions change or opportunities arise you have to fundamentally change your goals and also your plans. There is no strict formula for a plan but having a goal and road map allows you to measure progress towards reaching your goals.
A survey of 1000 SMEs carried out by Bibby Financial Services recently found that one in four of SMEs cited increased competition as their greatest fear, yet all too many of them don’t have any goals and even fewer have analysed their market, let alone produced a plan.
One has to ask, how many of these new self employed businesses really had any idea what they were getting into?

Categories
Banks, Lenders & Investors Business Development & Marketing General Rescue, Restructuring & Recovery Turnaround

Is Starting a Business in a Recession Wise or Foolish?

It is no secret that the Government is relying on SMEs to stimulate both the economic recovery and jobs.
Lord Young, senior adviser to the Prime Minister, is on record as saying that a recession may actually be a good time to start a small business on the grounds that wages are low, competition may have fallen by the wayside and premises, too, may also be cheaper to get.
That’s all well and good but there is more to starting a business than having a bright idea and the passion and motivation to get started.
There are a number of other factors to consider, especially where the business is something new and innovative and therefore unlikely to raise finance from currently risk-averse banks and investors.
A start-up must carry out research, identify potential customers, set sensible targets and put all of this into a business plan.  If it needs finance it should consider alternatives to the mainstream sources, whether these are friends and family, partnering with existing firms, seed funding, crowd funding or business angels and also investigate what grants and special concessions may be available that will help in the first year or two of trading.
A mentor or business guardian to help set the path and keep things on track can also make the difference between success and failure.  It’s impossible for a novice to do everything themselves without support and joining local business networks can also be a valuable source of advice and support.
If it is the kind of venture that can benefit from collaboration with other enterprises where there is a synergy, this is an option worth exploring since partnering with existing businesses in a market will help a start-up forge relationships with both a supply chain and  potential customers.
When money is tight, entrepreneurs should explore cash saving ideas such as offering equity, or future work, or future discounts, or other benefits in kind to any business that can provide them with useful services. Examples include introduction to customers, advice, market research, book keeping & accountancy, manufacturing prototypes, provision of office space, use of specialist or expensive equipment, and many more ideas that are only limited by the entrepreneur’s imagination.
Recession or not, starting up a business is all about doing all you can to weight the odds in your favour.

Backing owners and directors facing a crisis

Investing in companies with £3m-£20m turnover led by committed boards and with assets that other investors find difficult to value

start investment process

Unlock your potential by partnering with K2

info@k2-partners.com

020 7720 8000

Linkedin-in Facebook-f Twitter