Business Strategy

A business strategy is formulated by selecting the target audience of the product and assembling the marketing mix. A firm can assemble marketing mix elements in many different ways so that the relative weightage of the different elements will be different in the different combinations. Because of this reality, business firms are employing an abundance of strategies and strategy stances. It is a relentless race to stay ahead of competition.

Basically, however, there are only two broad routes available for forging business strategies. They are the price route and the differentiation route. In other words, any strategy has to be ultimately either a price-based strategy or a differentiation-based strategy.

Companies taking the price route compete on the strength of their pricing and the price cushions they enjoy. Normally, those who resort to the price route and compete on price will enjoy substantial cost advantages, giving them flexibility in pricing and marketing. The differentiation route, on the other hand, revolves around elements other than price. The product with its innumerable features is one major source of differentiation. In fact, any of the ever-so-many activities performed by the business unit can constitute the nucleus for differentiation.

In other words, differentiation allows the company the freedom and flexibility to fight on the non-price front. Differentiation, therefore, is a crucial option for a firm in its search for a rewarding strategy. A good majority of business battles are in fact fought with a differentiation-based strategy rather than a price-based strategy.

As already mentioned, a business unit that opts for the price route in its competitive battle will enjoy certain flexibilities in the matter of pricing of its products, and use price as the main competitive lever. It will price its products to suit varying competitive demands. It will enjoy certain inherent cost advantages, which permit it to resort to a price-based fight.

Young Men in Business Battling the Good Ole’ Boy Network

There are two ways to do business in a city or town in the United States. You can go with the flow and work with the establishment or your can take your entrepreneurial talents, hard headedness and will and ram it up their ass. What do you mean you ask?

Well lets take any city in the US for instance, there are folks in business, good ole’ boy networks established and they work hard to make sure they get the juice. It is the same way in Nationally run businesses with lobbyists, associations and political favors.

Adam Smith warned us of this, it is not a new thing. It is pretty disgusting if you ask me. You would think that companies with all the juice and power grew their businesses to that size by competing in hard fought markets and industries. But they grow old and tired and why work hard when you can pay your government to run interference or run block from your competition so you can continually score goals. Why bother working hard if you don’t have too? Indeed, isn’t that human nature?

This is the way it has always been done, it is the reality and the way things are. If you think it is anything else you are full of shit. It is what it is and you will have to deal with it or risk being pummeled from out of the blue. Before you start a business you should probably check who your competition is, which clubs they belong too and who their friends and relatives are in a community. If they are too politically connected you need to be extremely careful while risking your capital in a business.

Let me tell you a story; You see when first starting out in business I was into car washing. And I found just such a competitor well connected in the city. Well it was an Owner of a carwash in Thousand Oaks CA in 1990. I had taken clientele from him due to better quality, lower prices and quite frankly better service. Although I must admit, as good as we were, the car wash owner was really no competition, the service was mediocre at best.

When we did a car wash fundraiser across town he went to the city and complained about these kids polluting. He could not complain about us, we were helping for free. The wash water run-off never made it to a storm drain as it flowed into the grass. But that did not stop him from shutting down the operation and immediately the code enforcement the next day came to our business and started going through the book looking for something to get us on? As you know CA is always like WA, MA, MD and FL first to implement environmental legislation and CA is the worst state to do business in with all their over regulation on everything from ridiculous labor laws to fines for ascetics.

The well-connected car wash owner gentleman’s name was Jack Galley and he is now dead. He was getting older and probably our competition and refusal to submit to his attacks finally killed him. So what, he cheated, and used his connections and abuse of power to attack us, we were a great company back then, we deserved the customers, so screw him. As his health started to fail him he sold his car washes to Wash Depot, a car wash consolidator, because he could not maintain volumes during illness and competition increasing in the area, mostly from us.

During that time, I watched the local carwashes from fifty miles come together and form a small association and go after our company during a 2-year battle with City Hall, planning commission, council, city attorneys office, public works and court room. We finally won, in the media, courtroom, city hall and in the Market Place.

We refused to give up, never give up. So suffice it to say; “You can go with the flow and work with the establishment or your can take your entrepreneurial talents, hard headedness and will and ram it up their ass!” We choose the second option. Most who try this lose. Personally I am not into losing. But I advise small business owners starting out, to be a little less hard hitting and go a little more with the flow.

You see often “discretion is the better part of valor” but if you are forced to, sometimes you have to fight to be a man. Think on this in 2006.

Personal Qualities Required To Be An Entrepreneur And Start Your Own Business

A lack of skill, ability and experience in certain business areas need not be a barrier to success and starting your own business. The personal qualities exerted by a small business owner overcoming deficiencies over and over again are vital and present in many entrepreneurs much more so that specific technical knowledge.

Not everyone is a master of all business attributes in fact very few are. Certainly being a master of all is a fantastic position but unrealistic while certain personal qualities are essential to fight the inevitable battles to come. Business battles the successful entrepreneur wins.

Businesses that have grown and become medium sized and bigger are not reliant on the business owner entirely. Employees are engaged with specialist skills and abilities to develop and grow the business. A sole trader just starting out has to settle for a comfortable living or have the ability to grow the business to the point where more specialist abilities can be added to the business.

Most small business owners who start a new business do so in an area where that small business owner has some knowledge, experience and skill. It is a natural progression having acquired the business knowledge and experience to use those abilities to build the business under self employment rules rather than earn profits for an employer.

The personal qualities a small business owner possesses are more likely to determine the level of success. Abilities such as hard work, determination, persistence, intuition, tolerance and aggression can be the bedrock of success. But the road to success is not all slam wham bang for the entrepreneur.

Small business owners invariably work longer and harder than employees. An employee works for wages and an adequate work performance is enough. A small business owner is more likely to be on the job at first light, miss the coffee and dinner break and twelve hours later announce he has to finish off for the day because he has to go home and do the business accounting books that he started on Sunday.

Determination and persistence go hand in glove with success. Every new business runs into problems at some time or reaches a stage where the business owner needs to be completely focused and stick with a strategy to make the plans work. Things go wrong from time to time; its normal, determination and persistence are valuable qualities to see through these times.

Aggression in forcing through a business plan may sometimes be the only viable option. Not physical violence but the heightened state of anxiety to push through the plan and make it work with controlled aggression and passion. On the other side of the coin there will be times when the small business owner has to exercise tolerance and just go with the flow.

Many small start up businesses go out of business within 2 to 3 years of starting a new business. A major cause is under capitalisation which basically means they run out of money. Liquidity is a major area of concern for every small business entrepreneur and a cautious approach to a new business can be of considerable value.

There is a strong tendency for a new business start up to borrow money and buy new equipment just to get started. Such businesses are taking a major risk the plans will work. Some plans do work but rarely it is a smooth path and a better option is to build the business and reinvest profits made.

A more cautious approach would be to start a new business without borrowing substantial funds because if the small business owner has the ability to make a success of the business and make money then they can usually do so without external funding and use the profits made to build the business in the future.

The sound reason for a small business or a start up business to borrow money is to already be showing a good financial performance. Use the extra funds to speed up future success while borrowing funds with no track record is a gamble and a gamble which fails only too often.