The 3 C’s of Opportunity in Business
It is easy to visualize your passion as being a huge asset to your business.
In many instances it is. However, it is essential that you realize your passion has to correlate with market needs.
So many business fail to do this and end up disillusioned that being a ‘genius’ at your product or service does not necessarily translate into success in business.
Success is often a sum of details.
It is useful to put all business opportunities through the 3C’s test, namely understanding your:
- CUSTOMERS
- COSTS
- COMPETITION
CUSTOMERS
The most important thing to any business is the fact that there is a continuous stream of customers coming through the door, of course. Customers are the key and the lifeline to any business.
First and foremost, always be selling what customers want to buy, not necessarily what you love best.
Remember filling an existing need is easier than creating a new need.
Secondly, targeting the market’s ‘sweet spot’ has to be carefully assessed.
‘Fish Where the Fish Are’.
Ensure that the market is reachable and ripe, in need of your product or services.
Much research has to be done to back up your gut instinct and has to be followed. Research areas such as direct tabulated observation, Google searches, libraries, Industry Canada, traffic data counts, Stats Canada, household spending reports etc. Talk to people in the industry.
Research can be targeted on basis of geography, demographics and anticipated growth areas.
If in doubt, seek sage advice or advisory groups (such as ASE) to reconfirm your findings.
Done the right way, you can avoid costly mistakes.
COSTS
A regular and disciplined examination of numbers is essential.
Without quantifying you are shooting in the dark. Your perspective is not in place.
Know where your profits are! What numbers drive your business? Are they sales, costs, margins or net bottom line?
So often when asked what their break-even point is, some of our clients at ASE struggle to answer.
Paraphrasing Peter Drucker, ‘what you cannot measure you cannot manage’.
All control systems of measuring key ratios give you a gauge of your business success.
Sometimes referred to as KPI’s (key performing indicators), they are a must have for all businesses.
KPI’s can monitor not only financial numbers but also productivity and efficiency ratios in your business.
Recently we engaged a client in examining how she was spending her time in business, time that is her most valuable resource. We jointly and carefully studied her weekly calendar to see how she was spending her time. Much gets revealed with such examination.
As elaborated by Pareto’s Law, 80% of her time was spent chasing 20% of her returns.
KPI’s are an early warning systems that alert you to upcoming challenges.
KPI is a dial in your dashboard, letting you know if you are driving safely.
COMPETITION
Competition drives down your prices and profits. However, competition also forces you to get better.
To stand out you can be the ‘first’, ‘best’ or ‘different’.
The easiest option is of course ‘different’. Often referred to as the ‘unique selling proposition’ (USP) Our advice at ASE is differentiate – prepare to be unique and able to stand out with what you offer. Seek a ‘niche’ market. otherwise you become a ‘me too’ business which starts with a huge ongoing disadvantage.
Ideally a business has to have a moat around it to protect it from competition. Some measures to consider include how easy it is for others to enter that business. Do you have any protection via licensing, patents or copyrights to maintain your ‘USP’ or any special skills or technology that gives you the upper hand? Do you have niche segments of the market that are ignored by others, for example?
‘Unless a business has a unique advantage over its rivals, it has no reason to exist.”
The 3C’s Customers, Costs and Competition give you some clarity and define your opportunity.
This clarity can then help you prioritize your action plans.
Associated Senior Executives with so much strategic experience shorten, help the client’s learning curve and reduce the painful mistakes that take down so many businesses.
Shishir Lakhani