Tuesday, 25 June 2013

How Small Businesses can Recover, Grow and Succeed

Small businesses have had their own share of the recent economic crisis that rock the world. While many have absorbed the shook and moved on, others are still struggling with the effects of the recession.

Recently, D&B an organisation that provides insights and actionable information to support small business growth offered some tips on how small businesses can recover, grow and succeed during challenges. These principles include

  1. Make use of data: The big businesses are not the only ones who need data to make decisions, small businesses should also take advantage of it to improve on their business decisions.
  2. Be transparent with your business: Small businesses that share information on themselves are more likely to get access to capita.
  3. Get personal with your customers: Small businesses stand a chance of developing a one-on-one relationship with their customers more than big businesses. Make use of all the channels possible to keep the interaction going on with them.
  4. Don't be restricted: Explore new markets, seek for new opportunities, and develop new strategies.
  5. Make resilience the norm: Adaptive and agile small businesses are responsive and ready for change 

Quotes on Personal Development

It is only the very wisest and the very stupidest who
cannot change.

     --  Confucius

We are either progressing or retrograding all the while;
there is no such thing as remaining stationary in this life.

     --  James Freeman Clarke

To conquer oneself is the best and noblest victory; to be
vanquished by one's own nature is the worst and most
ignoble defeat.

      --  Plato

Everybody wants to be somebody; nobody wants to grow.
      --  Johann Wolfgang von Goethe

The happiest life is that which constantly exercises and educates what is best in us.
      --  Hamerton

Monday, 24 June 2013

What is a Start-Up?

In business, alot of terms are so difficult to define, and others lack a consensus meaning among experts. One of such terms is START-UP.

What really is a start-up business, and when does it ceases to be a start-up? Below are some of the expressions and illustrations of what a start-up is.

1.    A 'startup' is a company that is confused about --
  • What its product is,
  • Who its customers are.
  • How to make money.             
      As soon as it figures out all 3 things, it ceases to be a startup and then becomes a real business.
                 - Dave McClure
2.    A startup is a human institution designed to deliver a new product or service under  
       conditions of extreme uncertainty.  - Eric Ries 

3.  A startup is an organization formed to search for a repeatable and scalable business model
        - Steve Blank:

From the definitions above, a start-up is not yet a business, it is more like a moving object without precised direction and destination under high level of uncertainty, and its operations are temporal until it finds a proper business model.

CASE STUDY: Smart Move by Dow Chemical

Herbert Dow founded Dow Chemical in Midland, Michigan when he invented a way to produce bromine cheaply. He sold the chemical for industrial purposes all over the US for 36 cents per pound at the turn of the 20th century. He couldn't go overseas, however, because the international market was controlled by a giant German chemical cartel that sold it at a fixed price of 49 cents per pound. It was understood that the Germans would stay out of the US market so long as Dow and the other American suppliers stayed within its borders.

Eventually Dow's business was in trouble and he had to expand. He took his bromine to England and easily beat the cartel's fixed price of 49 cents per pound. Things were okay for a while until a German visitor came to Michigan and threatened Dow that he had to cease and desist. Dow didn't like being told what to do and told the cartel to get lost.

Shortly thereafter German bromine started appearing for sale in the US for 15 cents per pound, way below Dow's price. The cartel flooded the US market, offering the chemical way below their own costs, intending to drive Dow out of business. But Dow outsmarted them. He stopped selling in the US market entirely and instead arranged for someone to secretly start buying up all the German bromine he could get his hands on. Dow repackaged it as his own product, shipped it to Europe, and made it widely available (even in Germany) at 27 cents per pound. The Germans were wondering 1) why wasn't Dow out of business and 2) why was there suddenly such demand for bromine in the US??

The cartel lowered its price to 12 cents and then 10 cents. Dow just kept buying more and more, gaining huge market share in Europe. Finally the Germans caught on and had to lower their prices at home. Dow had broken the German chemical monopoly and expanded his business greatly. And customers got a wider range of places to buy bromine at lower prices.

Dow went on to do the same trick to the German dye and magnesium monopolies. This is now the textbook way to deal with predatory price cutting.

Source: Herbert Dow, the Monopoly Breaker