Seven Domains Of Attractive Opportunities

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Joel Osebor

We continue this week on the series on what every entrepreneur (new or existing) should know or do to start or continuously grow their business. With reference to the SEVEN DOMAINS OF ATTRACTIVE OPPORTUNITIES by John Mullins, in his book The New Business Road Test, we have seen the need to research the market and industry where we desire to start our business or currently providing products and services. Please see www.dailytimes.com.ng business archives for these articles.
To gain a sustainable advantage in business is at the micro level of KNOWING YOUR INDUSTRY. It has been proven that there are factors and strategies that give an idea or an existing business advantage over competition. Being the first in the market or having superior product or service does not guarantee that your business will last long. Imitations occurs quickly in most industries both from existing competition and from new players, your initial first mover advantage can be threatened and become obsolete with tough competition. There are factors broken into COMPETITIVE SUSTAINABILITY and ECONOMIC SUSTAINABILITY that assures to some certain degree the survival of your business or idea in the industry it is poised to compete.
Having a competitive advantage in your industry requires the provision of unique and differentiated benefits to customer that are better, cheaper or faster than those offered by your competitors. This advantage comes from having:

PatentsTrade secretsSuperior organizational processes, capabilities or resources that other competitions have difficulty in imitating.

Patent protection (trade mark, copyright etc) gives advantages that could be sustained for a long period to reap benefits for your business. Entrepreneurs should be more proactive at ensuring that their unique products or services that have not been offered in the market should have patent protection for their ingenuity. Many businesses have lost their investments because their patent protection drive was not properly done.  As you think about your business venture, access the service of a lawyer or business consultant to give you necessary advice about your products and services that needs patent protection.
A superior process that encourages creativity and innovation gives your business a competitive advantage. This advantage is evidence in the kind of people and organizational processes we have in place in our day-to-day business activities. Having the right human capital with the right capabilities to grow your business is necessary. Your human resource processes, organizational structure, learning environment, company culture, team work and job flexibility most times will give your business the sustainable advantage you need over competition. It is important that an atmosphere of learning, idea sharing and systems of work flow is created to ensure business objectives are achieved seamlessly. Most SMEs are plagued and under-performing because they have not given the priority having the right people and a process of running their business the process efficiently.
Economic Sustainability is about developing a business model that guarantees the going concern (last for a long time) of your idea or business. Researching business models that works for your industry is paramount to its survival. Technology is changing business models globally. A business cannot operate in our current knowledge-based economy with the models or strategies that existed in the industrial age. In thinking about the economic sustainability of your business factors such:

The turnover expected in relation to the capital investment and profitsCustomer acquisition and retention costs and the time it will take to attract a customerProfits level are adequate toCash flow of the business

When the cost of doing business is higher than the turnover, that business may not survive in the long run. Your business model should allow you critically analyze the following areas of your idea or business: distribution channel, your sales channels, suppliers, personnel and other over- head costs, customers? payment policy, medium of advertising etc. every entrepreneur should consistently explore business model that will help them run a ?Lean Process?. New and existing businesses need to explore technology, social media, strategic alliance and other possible strategies to gain sustainable economic advantage in their industry.
Investors wants to know that any advantage your new or existing possesses will have a staying power to thrive that long. Otherwise, competitors may enter and overtake your company before and exit can be achieved. Competitive and Economic Sustainability are what ensure the possibility for the successes of your idea or business.
To gain sustainable advantages in your business consider the following assessment:

Do you possess proprietary elements ? patents, trade secrets and so on ? that other firms cannot likely duplicate or imitate?Can your business develop and employ superior organizational process, capabilities or resources that others would have difficulty in duplicating or imitating?Is your business model economically sustainable, i.e. can you show that your company won?t run out of cash quickly? That depends upon the answers to these questions:

–          Will your revenue be adequate in relation to the capital investment you need and the margins you can get?
–          How much will it cost you to acquire and retain customers?
–          How long will it take you to attract customers?
–          Will your contribution margins be adequate to cover your fixed cost structure sometime soon?
–          How much cash must be tied up in working capital (inventory or other), for how long?
–          How quickly will customers pay?
–          How slowly will suppliers and employees be paid?

Based on the evidence you compile in answering the above questions, what are your key micro-industry risks, from competitive and economic perspectives, and how ? if at all ? might they be mitigated?

Try fitting the above in your business planning process to determine the attractiveness of the industry you want invest or currently invested in.
Next week we will be assessing what drives your entrepreneurial dream and the team you would work with. Passion and purpose are key drivers to successful business endeavours. Every investor is interested in the pedigree of the drivers of a business. In the next three articles, we will take a look at them.
Do have a successful business week ahead!
Joel Osebor
[email protected], [email protected]
+2347033779949, +2348098682881
The writer is the Chief Executive Officer of Con-Edge Enterprises Solution Limited, an organization based in Lagos providing: Business Development, Business Process & Strategy and Training & Consultancy services for SMEs, Multinationals and Government organizations.

Joel Osebor

He has over (13) years work experience in Accounts & Finance, Operations, Administration/Business Management, Procurements and Business Development in Trading, Mortgage Banking, Telecommunication, Real Estate & Construction, training and consulting and currently a discussant  on Channels Television Business Morning show.

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