If you are a start-up or a small business, you probably have more on your plate than a reasonable person can be expected to handle. Or at least handle in an effective way without going insane. So what should a small business leader focus on? How should you identify the really important ones from those that are merely, well, important?
Over the years as a business executive, entrepreneur, investor and advisor, I have been able to distill it down to three keys. Let’s call them the Three M's of Success.
It’s an open secret that most successful investors, angels and VCs pay an inordinate amount of attention to management of the company. Why? Because they know that even the best of plans will need to adjust with the changing environment. They want to make sure that people leading the company are capable of responding to the needs of the future. A mediocre plan in the hands of the right people has a higher probability of success, as it evolves and is improved with time, than even the best of plans in the hands of mediocre people who will likely allow it to fossilize and decay over time, not to speak of implementing it poorly.
Moat as a term was first introduced into the business lexicon by none other than the legendary investor Warren Buffet. As is often the case with much of what he says, it is a simple way to describe a rather important (and sometimes complex to implement) business concept. It’s defined as the unique aspects of your business that your competitors will find hard to copy.
Some examples would be best-in-class customer service (think Nordstrom’s or Apple’s Genius Bar), low-cost sourcing (think Wal-Mart), and first-to-market with speedy rollouts — all are examples of moats. To make them longer lasting, a business has to keep moving the goal post by setting ever higher standards for customers to expect and competitors to beat. If you stay ahead of your competitors by improving on your moat, these can serve you a long time.
Another obvious moat many businesses seek are patents and other forms of intellectual property, or IP protection. These can certainly serve as a moat, at least for some time. However, many businesses — especially technology-oriented businesses — have discovered that patents don’t provide the protection a successful business typically needs. Often, “technology” finds a detour that competitors use to go around patented technology. You may end up with a moat around something that is no longer “in” (think Walkman) or “relevant” (think Betamax).
And this leads to the third M every business — big or small — should focus on.
In its simplest form, marketing is all about Value: Creating Value; Capturing Value; Communicating Value; and Delivering Value. If you have ever been through the process of raising money for your business, you have seen investors pore over and pick apart your financial statements. Make no mistake — they are really looking deep inside your business and how it fits within its defined space to discover how you plan to bring value to your customers, your business, and therefore, to them as investors.
Almost all businesses are founded on a product or a service idea that provides value to its users. Smart marketing can help design the product or service that strikes the right balance between needs and wants of the customer with economic realities of the marketplace. It can help identify features that customers not only appreciate but also are willing to pay for. Insightful understanding of customer behavior and trends can shed light on as-yet unarticulated needs and wants of future customers.
Smart and strategic pricing helps capture the value that customers place on products and services provided by businesses. If you price too low, an increase in sales may come at the cost of brand erosion, or unsustainably low margins will prevent investments needed for the future. If you price too high — especially without an adequate moat — you may invite increased competition as well as lose many customers unable to afford your product or service. Good marketing helps strike the right balance between the long- and short-term that provides optimal strategies that are in sync with market realities.
In this age of sensory overload, how should you communicate with your customers? Just being louder and persistent may turn out to be expensive in more ways than one. Good marketing helps find an integrated and balanced way to communicate the value your business brings, in a language that customers can understand and appreciate. “Social Media” may seem like an easy answer to all communication needs until you realize just how cluttered it has already become. The need for smart marketing is even greater today as more media choices have come to the fore. Choosing the right media and orchestrating your message through them is as much an art as science.
And finally, marketing helps you identify appropriate channels of distributing and delivering your product and service. Even if you “sell” your product or service directly to the end-user, smart marketing can help identify “influencers” that may have a significant effect on buying behavior. This is getting increasingly important as customers get more selective about not only what information they get but also whom they get it from.
Before you feel overwhelmed with all the “things to do” that are making you want to “fold ‘em”, think strategically of the 3 M's that can help you stay focused and on a path to greater success. Remember to “hold ‘em, not fold ‘em”!
Atul Minocha is a member of the Chief Outsider West Regional team. He is also a member of Sierra Angels investor group and teaches marketing at a liberal arts college in Lake Tahoe. Contact Atul at firstname.lastname@example.org or on LinkedIn.