📖Reading: Before You Start Planning, Ask The Right Questions.

Watch video number 1 below this section to learn how to think strategically for your business.

📖Reading: How to Learn What You Don’t Know You Don’t Know.

Watch video number 2 and 3 below this section to learn how to be strategic and to recognize your revenue drivers.

▶️ Video

A fundamental principle in entrepreneurship is that “customers drive the business”. Simply having a product or service for sale is no guarantee that you are going to get any customers, much less enough customers to make a good profit. Success is tied to your ability to create value for a customer, which means you have to understand what is valuable or meaningful to them. And customers are different from you, so you cannot just go with what you like or think is important. You have to understand customer needs, the problems they have with a particular product or service, the aspects of a particular product or service that they care more about, and how they go about making purchase decisions.

All customers are not alike, and so you need to organize them into market segments having distinct needs. Customer interviews can help to better ensure that you are:

1. selling the right set of products or services to the right types of customers,

2. providing your products and services in the right way, at the right prices, and at the right time and place, and

3. doing your marketing in the right way. The results can be a catalyst for making smarter and more effective business decisions.

Though customer interviews will be helpful throughout the lifetime of your business for different reasons such as when re-positioning the company, adjusting your prices, entering new markets, or adding new products—interviewing customers before you launch the business is vital to ensure you start off on the right foot.

Let’s focus on four basic issues: who to talk to, how to approach people, what to ask them, and what to do with the information you gathered:

Who to talk to?

Who you interview depends on what you are selling.

The first thing you must determine is the extent to which you are selling primarily to businesses or organizations such as churches or schools (what is called business-to-business or B-to-B marketing) or to individual consumers and households (called business-to-consumer or B-to-C marketing).

If it is B-to-B, the interviews need to focus on key people inside the kinds of organizations you are going after (e.g., the owner, the general manager, the head of operations, the office manager).

If it is B-to-C, then you want to talk to a mix of individuals who have purchased a product or service like yours in the past, or who clearly could have a need for your product or service if it is something truly brand new. You want a mix of individuals that reflects different genders, ages, racial groups, income categories, educational backgrounds, and so forth (but focus on the factors that more relate to what you are selling and the kinds of people you will likely be able to reach) These individuals should have the potential willingness and ability to buy your product or service. If you already have a clear sense of your target audience (the market segments that you are going to prioritize) then interview people who fall within this target audience. But many entrepreneurs are not sure who to target—one reason they are doing the interviews is to figure this out. One thing is imperative when looking for individuals to interview: make sure they are NOT friends or family.

How to approach people?

The best way to do the interviews is in person. This will allow you to probe a bit as you ask questions, and you can learn important things that might not have been included in your initial set of questions. The most effective way to approach people is with honesty: “Hi, my name is ____ and I am in the process of starting my own business. I am trying to avoid mistakes by talking to different consumers about their needs and experiences. I was hoping you could help me by answering a few questions. I promise I am not trying to sell anything to you, and I will not take up too much of your time.”

There is no one best way to find people to interview. Your approach depends on the kind of business you are starting. If it is a B-to-B business, then you should visit businesses that could clearly use (and ideally are currently using) the kind of product or service you are selling. With B-to-C, if the product or service is something a wide range of people might use (e.g., a cleaning company), then talking to people as they come out of a mall, or in public markets can work. If it is a more narrowly focused user base, then try to go to places where the people with that more narrow need might congregate. The key is to get a range of different people, not just an easily accessed set of people who are fairly similar.

An alternative that is less desirable, but quicker, is to do interviews online. If you choose to go the online route, a great way to create an online survey is through www.surveymonkey.com. SurveyMonkey allows users to create 10 surveys and receive 100 responses free of charge. It is super easy to use and once you create a survey, you can send it by email, text message, post a link on a website, or post on social media.

What to ask ?

As a new business owner, you should ask questions that allow you to determine who is more likely to buy (e.g., females, older people, middle-income people), what their needs and preferences are, the nature of their unmet needs or areas of dissatisfaction when it comes to a product category, how much they expect to pay, when and where they tend to buy products or services like yours, and what might lead them to try a new solution (to buy from you). To determine the questions to ask, you must first decide what you want out of your interviews. What are the key things you need to know? What assumptions have you made that you need to verify as being correct? To what extent are you trying to determine what services to offer, what features people care more about, what prices to charge, what time of day to be open, what marketing approach will work best, and so forth. Here is a sample of the kinds of general questions to ask (note: these questions will need to be tailored to your own product or service—the example here is for a cleaning service):

• Do you currently use a cleaning service in your home (or business)? Why or why not?

• If you were considering a new provider for cleaning services, what are the three most important things you would look for?

• If you had a cleaning service, do you prefer that they come when you are physically there, or does that matter?

• Do you have any unique needs or requirements when it comes to cleaning your house (or office)?

• If you were looking for a cleaning service, how would go about finding one?

• How much would you be willing to pay for a quality cleaning service that you could depend on?

What to do with the information … Try to summarize in writing your key findings for each of the questions you asked (creating a simple table can help). The key is to look for patterns, or similarities in the answers across the people you interview. For instance, do people who are older or younger, male or female, or with higher or lower income tend to answer in different ways. If you look at the respondents who answer a given question the same way, what characteristics do they tend to have in common? You are looking for things that help you make decisions about how to better design your business.

You can learn a lot by visiting competitors or businesses doing something similar to what you are doing, particularly ones that are clearly successful. Too many new entrepreneurs assume there are no direct competitors, that they are somehow so different—this is foolish thinking. The money you want customers to spend in your business is currently being spent somewhere else—that is your competition. It is helpful to think of a competitor analysis as scouting the talent of an opposing team. While it is vital to assess your competition at the start of your business, a competitor analysis should also be done periodically throughout the lifespan of your business in order to keep up with the competition and continue to improve your business.

Prioritize your key direct and indirect competitors …

You first have to identify the relevant competitors that you should take a look at:

• Identify 4 competitors within your area. If your business resides solely online, you will likely have more options to choose from. For example, if you are opening a local coffee shop, your competitors are other local coffee shops. If you are selling flowers, then look at flower shops, but perhaps also consider grocery stores that have a flower section. If you are selling handmade birdhouses online, most of your competitors will likely be online.

• You might also try to identify some indirect competitors. Direct competitors are businesses that offer what is pretty much an identical product or service to yours. Indirect competitors are businesses that offer a different product or service, but can potentially satisfy a goal or need similar to the one you are satisfying. For example, if you are opening a sandwich shop in your area, a sandwich shop in the same area would be your direct competitor. An indirect competitor would be the fast food Mexican restaurant also in your area. They may not sell sandwiches, but they too are competing in the food arena for a portion of your customer’s budget.

• Here are some tips for identifying your competition, both direct and in direct:

A simple google search of your business category (hardware stores, hair salons, Mexican restaurants) is a great place to start. For an online business, type in key words or phrases that you would use in order to locate your product on the web. Using the example of someone who makes handmade birdhouses, type in “birdhouses” and see what comes up. Are they sold on Etsy? Can you order handmade birdhouses from Home Depot? Who seems to be your competition in this market? If your product is sold primarily at farmers or arts markets, visit local markets to see if any competition can be found there.

Refer to your customer interviews or surveys. Did your customers mention any competitors? Check them out.

Visit a business directory. This is as easy as typing in “Milwaukee Business Directory” or whatever town or city your business resides in and taking a look at competitors near you.

Conduct a competitor assessment…

After identifying 4 competitors, it is time to go look at what they do, learn from them, and identify things that you might copy that would help you be more successful, as well as things you might improve upon or do differently. If they are local, while you can simply go in an observe things, the ideal approach is to be a customer at the competitor’s firm so that you experience all the aspects of the customer experience.

Here are some things to assess in evaluating competitors:

• What does the competitor do really well?

• What does the competitor do that needs improvement?

• What is the competitor’s source of uniqueness or differentiation?

• What were the competitor’s prices for the products and services that are most like the products and services you will sell (pick up to five products or services)?

• How is the product presented or packaged?

• If the competitor had physical facilities, were they nicely laid out, clean, nicely maintained, orderly?

• How professional was the competitor?

• To what extent did the competitor’s employees seem friendly, professional, knowledgeable, caring?

• How does the competitor handle customer service?

• Does the competitor have any apparent policies that impressed you (e.g., policies or procedures in handling customer complaints, in handling product returns, in managing their employees, etc.)?

You should also examine their website (if they have one – some may only have a Facebook business page). Here are some things to evaluate:

a) What is the user experience like? Is the website easy to use? Is it easy to find what you want? Is it an interesting journey (think of a website as a stage where the business is engaged in a performance)

b) What is the layout of the website like? Is it visually appealing? Is it well organized?

c) Are there pictures of the products? If so, how many images and how professional is each image? Do they describe the images? What about the product/ service is explained? Do they provide prices?

d) Do they actually take orders or reservations on their website? What are they trying to get the customer to do (e.g., become aware, become educated on aspects of the product, develop a preference, purchase a product, etc.?).

It can also be quite helpful to read reviews of your competitors. Customer reviews can easily be found on Yelp, Yellow Pages, neighborhood websites, and on your competitors’ own websites. Customer reviews can provide help you understand what customers expect, what they do not like, and what they react very favorably to. In addition to the competitor’s website, make sure to thoroughly analyze the social media platforms. Key platforms typically include Instagram, Facebook, TikTok, LinkedIn, Pinterest, and YouTube channels.

Here are some things to consider:

i. Make a list of all the social media platforms they utilize.

ii. How often do they post?

iii.  What do they post about? Do they include pictures of products? Do they feature promotions and sales? Do they provide pictures of their space, office, employees?

iv.  Who is interacting with the posts? And how? How many likes and comments do they have? How many followers? Are the comments positive or negative? Is the page responding to its commenters?

v. What time do they post, and how often?

vi. Which of the platforms is most engaged with?

It is also helpful to try and identify some best practices in business like yours in other cities around the country. You can find businesses like yours that do some really creative things—things that work. Some of these practices may be things you want to copy. It is important to understand emerging trends in the industry together with best practices. Adapting ideas from well-run and profitable businesses is something you should be open to for as long as you have your business. You do not need to re-invent the wheel. Rather, build on top of what others have learned. Of course, the reality of competition and societal change means that these practices and trends are constantly changing. So, it become important to stay on top of things.

good way to become familiar with the practices and trends is to join the national association or professional organizations in your industry. There is a national association for just about anything, so if you look hard enough, you will find one you fit into. Here are some examples:

• The Association of Resale Professionals https://www.narts.org/i4a/pages/index.cfm?pageid=1

• The American House Cleaners Association https://www.theahca.org

• International Association of Ice cream Distributors and Vendors https://www.iaicdv.org

• National Candle Association https://candles.org

here is also an abundance of information available on virtually any industry through online database services and government reports. You may find that some of these are only accessible through a local or university library. Some of the most useful ones include:

• IBISWorld — https://my.ibisworld.com/ Contains detailed reports on over 700 industries in the U.S. Reports are based on the NAICS code.

• Mintel Academic and Market Sizes — https://www.mintel.com/products/reports/ Provides market research reports in several broad categories of consumer markets in the U.S. Topics covered include: automotive, beauty, drink, food, clothing and apparel, leisure & entertainment, travel etc. Each report includes statistical data and analysis of the competitive landscape, market size, segmentation, market forecast, and consumers.

• D&B Hoovers — https://www.dnb.com/business-directory/company-profiles.hoovers_inc.c14dc02687a545e16e 5e4c17a95a0d66.html Annual company reports, ratio data, executive information, analyst reports, SWOT analyses, credit ratings and recent developments. Also includes, industry reports.

• Key Business Ratios — https://guides.loc.gov/dun-and-bradstreet/key-business-ratios

• Statista — https://www.statista.com/ A simple to use statistics portal that integrates statistics from thousands of sources, on topics related to business, media, public policy, health and others.

• Factiva — https://www.dowjones.com/professional/factiva/ A major source of newspapers, web news, and industry news, containing 28,000 sources from over 200 countries in 23 languages. Includes Wall Street Journal television transcripts and newswires. Includes company profiles.

• County Business Patterns — https://www.census.gov/programs-surveys/cbp.html A government report published annually that provides county-level economic data by industry. Every county in the U.S. is included. This series includes the number of establishments, employment during the week of March 12, first quarter payroll, and annual payroll.

This step is all about research which means that the process can and will look different for every entrepreneur. Research on trends and best practices can be done online through specific industry blogs, research and trend reports, news articles, etc. Before jumping into any research, it is helpful to make a list of what you are looking for in the first place.

The entrepreneurs we work with don’t have a lot of resources. The key to their success is the ability to creatively leverage resources. Leveraging is about accessing resources you don’t own —acquiring resources without buying them. It can include:

- using someone else’s resource

- use existing resource in non-conventional way

- use alternative resources where you see something as a resource that others do not

- stretching resources

- using one resource to obtain another

An example is the entrepreneur who was catering from his own home. The local government shut him down because of a local ordinance indicating that people preparing and selling food as a business could not operate from their homes. He could not afford to rent commercial kitchen space, and so was stuck. But then he asked himself, “who has a kitchen that they don’t use all the time?”. This led the entrepreneur to think of schools and churches. Today, he operates a successful catering business out of a church, using their kitchen on the five days of the week where they don’t tend to use it, and catering events for the church for free (where all the church pays for is the food).

Leveraging resource becomes a mindset, a way of doing everything in the business. Whenever the entrepreneur needs to buy something, he or she immediately asks “what are all the ways I could get this resource without paying for it?” In effect, buying the resource only becomes the last resort. The entrepreneur is constantly on the lookout for resources that can be leveraged—often things other people might not recognize as resources. Looking at things this way, you start to understand that, you are not resource poor—instead you are surrounded by resources. Here are thirteen examples of leveraging strategies you can use to obtain resources:

• Borrow: Using a resource owned by someone else on a temporary basis, particularly when they are not using it, such as a vehicle, tool or employee;

• Barter: Provide a service or product or give some other asset in exchange for the resource;

• Share: Utilize excess capacity, unused space or some other underutilized resource owned by someone else, such as an empty office, a machine when the business is closed, or a prominent area where messages might be posted;

• Contract: Sign a contract to use the resource for a fixed term rather than be committed to it indefinitely, such as a temporary employment contract;

• Lease or rent: Attempt to lease or rent it for a defined period of time, rather than purchase the resource;

• Outsource: Lessen your fixed investment by getting the resource, lessening your fixed investment;

• License: Use someone else’s property (often intellectual property) by paying a licensing fee tied to activity or usage, such as where you are charged per unit fees for the amount of the item that you make, use or sell;

• Partner: Form a business partnership with the resource provider in order to use a resource they control;

• Consignment: Sell things owned by others on consignment, where you pay them only when an item is sold, rather than purchase the inventory;

• Give equity: Give the resource provider partial ownership in the company in exchange for the resource;

• Ham and egg: Use one resource to obtain another, such as where you use the fact that you are doing business with a certain customer in order to get business from another customer, or you are thinking about hiring a particular person because hiring that person might make your business more attractive to someone else you are trying to hire;

• Collaborate with other businesses: Look for areas where you can collaborate with other firms, such as joint purchasing arrangements to achieve volume discounts, rather than simply compete;

• Exploit personal status: Take advantage of your status as a minority, women, veteran, disabled person, or based on some other personal characteristic in order to win a contract, get a loan, or obtain some other resource.

Where do you begin? Again, it is about creativity. A starting point is to ask yourself, when you need a resource, three basic questions:

1. What internal resources do we have that we are not fully utilizing? Are we making full use of our website, packaging, vehicles, clothing we wear, sales and service people, or any other assets under our control?

2. How well are we leveraging relationships with people or companies in our network? Look at relationships with suppliers, vendors, producers of related products, financiers, distributors, customers— what things do they have that, based on our relationship with them might we borrow, or share, or leverage in some other way?

3. What untapped or underutilized resources exist in the marketplace? Think about resources that are underutilized that you might be able to take advantage of for your business, such as kids who are opinion leaders, houses on prominent corners, walls in restrooms, table tops, car bumpers, abandoned buildings, school kitchens during summer, stay at home moms or dads.