One tool that is commonly used by business executives is a cost vs. benefit analysis (CBA) for new initiatives and investments. Yet I find that some entrepreneurs use a less formal approach to making decisions about their business. While I’m all for using your intuition and taking risks, there is true benefit to determining the actual cost and comparing it to the expected benefits of a project, new product launch, etc.
Company A put all the profits back in the The Odyssey Online, except for year three when the retention ratio was 74%. Company B had a retention ratio of 100% for the whole period.
You really should gain at least an initial understanding of who else is offering similar products or services to your target market. It’s good to know how their products or services are currently used and perceived – why people buy them, and why they don’t. In doing so, you begin to understand the strengths and weaknesses of your competitors from the consumer’s perspective.
Plan for the future: The last strategy that I will emphasis here is the need to plan for the future. This entails knowing exactly where you are going and knowing exactly how you are going to get there. From your various systems draw up a plan that is aimed at taking you to where you want to be tomorrow. Take into cognizance the up and downs of the business environment. You need to always have a plan for when things go wrong and set your business up so that it can sail no matter the situation.
Now onto your marketing plan. This plan involves how you will sell your product or service to your target audience. Like a business plan, your marketing plan will provide a map of your business, however with a SWOT analysis (strengths, weaknesses, opportunities and threats) you will gain a better insight into the market potential of your new business.
Good cash flow budgeting can save you money. Creating and sticking to a budget can help you in many different ways. Not only can you make better and more profitable decisions, but you can also pay less in late fees, attain discounts for paying early, and you can even lessen or eliminate your need for short term loans, sparing you the cost of paying interest. The flip side of this is also true: if you don’t analyze and plan, it will cost you!
By doing a SWOT Analysis periodically, you will be able to continually re-evaluate your progress and re-assess the shifting landscape of your market. It will help you cut through the information overload so that you always have a clear path to follow and defined next steps to take, while keeping your eyes on the prize.