At some point during your business venture, you may find that things are not going as you had planned, or hoped. This can be frustrating, but it can also be an opportunity to reevaluate your business plan, take stock of where you are versus where you want to be, and make any necessary adjustments in order to better address your market.
Try to be sensitive to the concerns of your customers. You can’t change things for the better if you don’t know what people view as the problem in the first place. Chances are, if you actively seek out feedback, the information you receive will be invaluable as you refine your strategy and focus. In general, there are two ways to go: you can find out what your customers need and give it them, or you can create a need for what you have to give them. The thing is, these can turn out to be the same thing. Your consumers may know what they want, in a general sense, but still not have a totally clear idea of what product or service could give them that. The trick is to provide it in a way that is not already available—or to make something that is already available cheaper, faster, better, more accessible. If you realize halfway through the semester that the exact same thing you’re marketing is already on the market for half the price, think about what else you might do to distinguish yourself from the pack.
Flexibility is one thing that can help make a good business a great business. What you have to remember, though, that this is an ongoing process; if your product isn’t selling as well as thought it would—or think it should—there is still time to make changes. Is your current market saturated? Do people know about your product or service? Are there other consumer bases you could potentially sell to? Keep asking yourself these questions throughout the semester. If one strategy just doesn’t seem to be working, don’t be afraid to try something new.
Monday, May 4, 2009
Sunday, May 3, 2009
Planning Your Business
One of the most critical aspects of a successful business is the way in which it is structured. For our business sofTee this aspect was curial to fully utilize our time and resources. The structure we chose was a traditional business hierarchy with a general overseer, a CEO, as well as various section heads to oversee each aspect of the business.
CEO: This position is necessary when initially forming a FBE business. This person will probably be the individual who proposed the business idea and, as a result, is the most passionate about the business. This trait is key because the individual who assumes such a role will be coordinating nearly every aspect of the business. In the scope of FBE this person will be an overseer to all departments of the company as well as be in charge of turning in the weekly deliverables. Exclusion of this role will result in a disorganized business which will be unable to accomplish anything throughout the semester.
Director of Marketing: This position is necessary for all businesses trying to sell a good or service to a specific demographic. In the case of our business, sofTee, this role was essential to our success when marketing to college students. The director of marketing’s role is to create advertisement campaigns to spread the word about the businesses good or service. While this seems like a novel idea, the results from our business’ marketing campaign display a significant increase in the number of sales. Those who assume this role should be creative and have the skills necessary to create excitement about the good or service.
Director of Sales: This position, while not essential, is in charge establishing a target market in to sell the good or service as well as the logistics behind making those sales. This person, depending on the business, will be required to talk to a variety of people to gauge interest in the good or service. They should be able to communicate effectively and have time management skills to organize events to sell the products.
Accountant: It essential that all finances be recorded accurately immediately after they happen. For this reason an accountant is an essential element of the business. This person should have some fundamental understanding of how to account for various transactions as well as be organized to give an updated finance report every week.
Head of Manufacturing: This position will vary with every business depending on what it is selling. In the case of our business, which required sewing, we needed a head of manufacturing. This position was in charge of all the production for our business. This person on our team was the most skilled in sewing. Whoever knows the most production should assume this role in the business.
While this outline just touches on the key categories needed to form a successful FBE business other may be included depending on the businesses specific needs. The remainder of the team should be distributed into under the resulting subcategories depending on everyone’s interests. At the end of the day it is about having the most effective and happy team, and through proper team structure this can be accomplished.
CEO: This position is necessary when initially forming a FBE business. This person will probably be the individual who proposed the business idea and, as a result, is the most passionate about the business. This trait is key because the individual who assumes such a role will be coordinating nearly every aspect of the business. In the scope of FBE this person will be an overseer to all departments of the company as well as be in charge of turning in the weekly deliverables. Exclusion of this role will result in a disorganized business which will be unable to accomplish anything throughout the semester.
Director of Marketing: This position is necessary for all businesses trying to sell a good or service to a specific demographic. In the case of our business, sofTee, this role was essential to our success when marketing to college students. The director of marketing’s role is to create advertisement campaigns to spread the word about the businesses good or service. While this seems like a novel idea, the results from our business’ marketing campaign display a significant increase in the number of sales. Those who assume this role should be creative and have the skills necessary to create excitement about the good or service.
Director of Sales: This position, while not essential, is in charge establishing a target market in to sell the good or service as well as the logistics behind making those sales. This person, depending on the business, will be required to talk to a variety of people to gauge interest in the good or service. They should be able to communicate effectively and have time management skills to organize events to sell the products.
Accountant: It essential that all finances be recorded accurately immediately after they happen. For this reason an accountant is an essential element of the business. This person should have some fundamental understanding of how to account for various transactions as well as be organized to give an updated finance report every week.
Head of Manufacturing: This position will vary with every business depending on what it is selling. In the case of our business, which required sewing, we needed a head of manufacturing. This position was in charge of all the production for our business. This person on our team was the most skilled in sewing. Whoever knows the most production should assume this role in the business.
While this outline just touches on the key categories needed to form a successful FBE business other may be included depending on the businesses specific needs. The remainder of the team should be distributed into under the resulting subcategories depending on everyone’s interests. At the end of the day it is about having the most effective and happy team, and through proper team structure this can be accomplished.
Wednesday, April 29, 2009
Research and Development
Research and development is pivotal to the success of any business. Market research must be conducted throughout the duration of the business’ existence. This research must be continuously analyzed, and the results must influence the direction the business is taking. Product development flows directly from the stream of market research. Market research reveals which products potential consumers value in the market.
Market research must be conducted throughout the entire business process. Upon the conception of the venture, thorough market research much be done to measure interest in prospective products from different sectors of the market. There are a lot of ideas that can be very profitable but your team is a limited source of ideation, so it is essential to just sit down with possible future customers and see what their response is. Note that the idea of actually sitting down and talking to the market was introduced. This notion is a key to a successful business. As much as online surveys are useful for several things, the process of sitting down with a segment of your market is useful because you can ask follow up questions and get full feedback that the impersonal world of the World Wide Web prohibits in several manners.
In addition to that, a feedback loop is necessary to ensure success in your business. This feedback loop (do not think of ModCon) will be the ongoing process of working with market to understand what they want and trying to see if the products you have satisfies the desires of the market. By fine-tuning these two things, the perfect product for the market can be created so that you can have the best chances of success in the market that you are trying to sell in.
Also, remember that products are not simply limited to just physical products but can also include events and packages with your product. For the SofTee team, this meant that we could recognize the desire for shirt decorating and stuffing events by preschools. Without this realization, we would have missed out on one of our largest sales, but because we listened to what the markets were saying about the product and how they would like it presented to them, we were able to modify our product to satisfy their desires.
Tuesday, April 28, 2009
Ideation - Coming up with a good idea
Your product or service will be the backbone for all that you do in your FBE business, and it can be the difference between success and failure. Even if the marketing is flawless, you will not be able to make profit if the product is not a good one.
The product should fulfill some criteria, the most obvious of which is that there must be a demand for it. There must be a reason that people would want to buy this product. The product must give the consumers some benefit - comfort, protection, style, efficiency, hunger alleviation, etc. Most importantly, this benefit must be strong enough that the customer is willing to pay money for it.
The most obvious market for FBE business is the Olin College community itself. It will be easier to get people you are already friendly with to buy your product, so keep your friends in mind. If you have a good product idea for another market, that's great, just be sure you have a way to reach that market. Ideally your product will be cheap and easy to manufacture so that you will be able to keep prices low. Also consider the time of year in which you are selling - no one needs new blankets when it is getting warmer at springtime, but people might need room decorations at the beginning of the school year. Your product should be simple so it is easy to advertise, but flexible in case it turns out to be a flop.
Our idea for sofTee was that we would take a customer's old t-shirt, sew up the bottom and sleeves, stuff it full of stuffing, and then sew up the collar. What we liked most about this idea was the use of the customer's own t-shirt. We felt that this gave our pillows a more personal touch, and our pillows would stand out in marketing because they were so unique. The idea was simple and we had moderate interest shown in a preliminary survey. The primary cost for these pillows was the stuffing, and with a sewing machine the manufacturing process was easy. There was a cost to making the pillows, but it was not so high that we could not sell the pillows for a reasonable price.
It turned out that the aspect of our product that we thought would make us stand out, the personal touch, did not help our business. People would be interested in the product, but not interested enough to take the time to sort through their closet to find an old t-shirt, and then give it to us. It was an inconvenience to the customer, and the benefits of the product were not strong enough to overcome this inconvenience. It's possible that we would have sold more pillows if this idea were implemented in the fall semester, when people were more concerned with putting things in their dorms rather than packing them up. The sofTee pillow met the criteria of being demanded somewhat well, it was easy and cheap to manufacture, but it could have sold better had it been easier to buy.
The product should fulfill some criteria, the most obvious of which is that there must be a demand for it. There must be a reason that people would want to buy this product. The product must give the consumers some benefit - comfort, protection, style, efficiency, hunger alleviation, etc. Most importantly, this benefit must be strong enough that the customer is willing to pay money for it.
The most obvious market for FBE business is the Olin College community itself. It will be easier to get people you are already friendly with to buy your product, so keep your friends in mind. If you have a good product idea for another market, that's great, just be sure you have a way to reach that market. Ideally your product will be cheap and easy to manufacture so that you will be able to keep prices low. Also consider the time of year in which you are selling - no one needs new blankets when it is getting warmer at springtime, but people might need room decorations at the beginning of the school year. Your product should be simple so it is easy to advertise, but flexible in case it turns out to be a flop.
Our idea for sofTee was that we would take a customer's old t-shirt, sew up the bottom and sleeves, stuff it full of stuffing, and then sew up the collar. What we liked most about this idea was the use of the customer's own t-shirt. We felt that this gave our pillows a more personal touch, and our pillows would stand out in marketing because they were so unique. The idea was simple and we had moderate interest shown in a preliminary survey. The primary cost for these pillows was the stuffing, and with a sewing machine the manufacturing process was easy. There was a cost to making the pillows, but it was not so high that we could not sell the pillows for a reasonable price.
It turned out that the aspect of our product that we thought would make us stand out, the personal touch, did not help our business. People would be interested in the product, but not interested enough to take the time to sort through their closet to find an old t-shirt, and then give it to us. It was an inconvenience to the customer, and the benefits of the product were not strong enough to overcome this inconvenience. It's possible that we would have sold more pillows if this idea were implemented in the fall semester, when people were more concerned with putting things in their dorms rather than packing them up. The sofTee pillow met the criteria of being demanded somewhat well, it was easy and cheap to manufacture, but it could have sold better had it been easier to buy.
Financials
Accounting is a cornerstone of a successful business. Without thorough financial records, any business, no matter how successful, will quickly become entangled in a sticky mess of confusion and utter chaos. Keeping accurate and up-to-date financial records are important in keeping track of just how successful your business is at any point in time. Valid finances quantitatively reveal which business advances are successful and which prove to be nothing more than the most inexpedient fiascos. This lets your team devote more time to the areas that are proving most profitable and less time to dead-weight projects that are dragging your team down. In our SofTee business, we realised that on-campus sales were not very profitable, so we devoted more energy to selling off-campus by improving our website—making it more helpful and user-friendly.
In a FBE team, it gets really easy to get caught up in the adrenaline rush of selling your product. This can cause you to forget to keep your financial statements up to date. When you do finally get around to it, it will be very hard to go back and track every single transaction that you had made, unless you keep very meticulous notes. For this reason, I highly suggest that you record every single transaction the day that it is made. This is important for your own wallet too; if your team borrows money from you, it is in your best interest that you keep thorough records to show that you must be reimbursed.
In addition to that, with a team of nine members, plus or minus a few, money will be going through various hands and will conclude, hopefully, in your bank account. For this reason, I stress that it is very important to keep track of all transactions very carefully. Even if you do set up a system where people are to record what the transaction are themselves, it is necessary to make sure that every member of the team is keeping up with this, or else orders or money will be lost and that will lead to catastrophe.
Your financial statement will be an easy way of seeing how well you are doing as a team, so it is the perfect tool to see how up-to-date you are on your project. Feedback is essential to a successful business. Like market research, financial records are another great mechanism of feedback that can make or break your enterprise.
Prototyping & Production
The production side of the business is fairly straightforward. All you need to do to make things run smoothly is to do the following things:
1) Make sure everyone is trained. EVERYONE. Our business required sewing skills, and in the first few weeks, we had to train several people on the sewing machine. Training will make production quicker, and also means that if one person who normally works on production is unable to work for some reason, someone else can pick up the slack. For example, our head of production was out of town for five days, but since we had several SofTee members trained on the sewing machine, they could spread the extra work out amongst themselves and not be overloaded.
2) Have some sort of quality control. Your results need to be consistent and of high quality. The easiest way to do this is to have one person check all products before they are sent out to customers. That way, you know everything is being held to the same standard. In our business, the head of Production was also in charge of quality control. Since many of our team members were not familiar with the sewing machine, quality had to make sure the seams were all done well. Quality control also had to make sure all the pillows were stuffed equally.
3) Prototype your products. We ended up changing both our pillow and our backpack after seeing the prototype. We changed how much stuffing was going to be in the pillow, and we changed the orientation of the backpack (originally, the t-shirt design was upside-down). Also, when you start prototyping your product, if you plan to show it to anyone outside your group, make sure it looks good. Chances are, anyone you show it to is a potential customer, and even if you tell them what changes the final product will have, a visual has far more impact on whether they’ll buy one or not. We ran into this with our backpack product. We had a prototype with us when we sold at lunch, but the strings were made of yarn and the shirt was upside down. Even though we explained what changes we were making, no one bought one until we had a final backpack to demo. We sold three in the week after we had a final backpack to demo, whereas before we had sold none.
4) Now for the actual production process: before you start, lay out exactly what steps will be involved in making you product. Then, keep track of how long each step takes. This way, when you divide up the tasks, no one gets overloaded. Our particular product had the following steps: sew three seams, stuff the shirt, and sew the final seam. It took about twenty minutes to sew each shirt: five for the first three seams on the sewing machine, five to stuff it, and ten to sew the collar by hand. Initially, we were going to sew the collar on the sewing machine, but it simply did not look good. Thus we ended up dividing the work by having one person stuff and sew the three seams, and another person sew the collar. Keeping track of time the time each shirt takes to make also helps the professors have an idea of how much time you’re putting in outside of class.
5) Communicate with marketing and your CFO. This is really important, because if you have a new product in the works, marketing needs to know so they can do their job. We released a new product, a backpack, but since marketing did not really have a chance to put up advertisements about it, customer recognition was very low. You should also be in constant contact with you CFO. They will be able to keep better records if they know how much supply is used, how many products are made, and when orders are completed. We had a few weeks where different people thought we had different amounts of stuffing, and we ran out. This stalled production for a few days. Also, near the beginning, production was not telling the CFO when orders were filled, so the financial sheet was incorrect.
We do not guarantee that you will not run into issues, but if you remember these guidelines, you will avoid a lot of problems. Not all of these steps apply to a service based business, but most of them are applicable.
1) Make sure everyone is trained. EVERYONE. Our business required sewing skills, and in the first few weeks, we had to train several people on the sewing machine. Training will make production quicker, and also means that if one person who normally works on production is unable to work for some reason, someone else can pick up the slack. For example, our head of production was out of town for five days, but since we had several SofTee members trained on the sewing machine, they could spread the extra work out amongst themselves and not be overloaded.
2) Have some sort of quality control. Your results need to be consistent and of high quality. The easiest way to do this is to have one person check all products before they are sent out to customers. That way, you know everything is being held to the same standard. In our business, the head of Production was also in charge of quality control. Since many of our team members were not familiar with the sewing machine, quality had to make sure the seams were all done well. Quality control also had to make sure all the pillows were stuffed equally.
3) Prototype your products. We ended up changing both our pillow and our backpack after seeing the prototype. We changed how much stuffing was going to be in the pillow, and we changed the orientation of the backpack (originally, the t-shirt design was upside-down). Also, when you start prototyping your product, if you plan to show it to anyone outside your group, make sure it looks good. Chances are, anyone you show it to is a potential customer, and even if you tell them what changes the final product will have, a visual has far more impact on whether they’ll buy one or not. We ran into this with our backpack product. We had a prototype with us when we sold at lunch, but the strings were made of yarn and the shirt was upside down. Even though we explained what changes we were making, no one bought one until we had a final backpack to demo. We sold three in the week after we had a final backpack to demo, whereas before we had sold none.
4) Now for the actual production process: before you start, lay out exactly what steps will be involved in making you product. Then, keep track of how long each step takes. This way, when you divide up the tasks, no one gets overloaded. Our particular product had the following steps: sew three seams, stuff the shirt, and sew the final seam. It took about twenty minutes to sew each shirt: five for the first three seams on the sewing machine, five to stuff it, and ten to sew the collar by hand. Initially, we were going to sew the collar on the sewing machine, but it simply did not look good. Thus we ended up dividing the work by having one person stuff and sew the three seams, and another person sew the collar. Keeping track of time the time each shirt takes to make also helps the professors have an idea of how much time you’re putting in outside of class.
5) Communicate with marketing and your CFO. This is really important, because if you have a new product in the works, marketing needs to know so they can do their job. We released a new product, a backpack, but since marketing did not really have a chance to put up advertisements about it, customer recognition was very low. You should also be in constant contact with you CFO. They will be able to keep better records if they know how much supply is used, how many products are made, and when orders are completed. We had a few weeks where different people thought we had different amounts of stuffing, and we ran out. This stalled production for a few days. Also, near the beginning, production was not telling the CFO when orders were filled, so the financial sheet was incorrect.
We do not guarantee that you will not run into issues, but if you remember these guidelines, you will avoid a lot of problems. Not all of these steps apply to a service based business, but most of them are applicable.
Our original business plan described SofTee t-shirt pillows as "a unique, huggable item that is sure to appeal to a wide range of consumers." With this vivid description in mind, we then analyzed survey data and presented four potential groups to market to: the Olin College Community, Local Residents in the Needham and Wellesley area, Students from Other Colleges, and the General Public. Initial calculations predicted sales well into the hundreds combined across all categories; needless to say, our actual transactions failed to live up to these now blatantly unrealistic forecasts. Blatant, because we have done and learned.
First and foremost, there was the Olin College Community. Selling to this group was convenient, familiar, and logistically undemanding. In addition to accosting our peers regularly, our team set up tables during lunch over a dozen times to advertise our product and make sales. Furthermore, it was easy to strike up conversation with people we knew, and make a sales pitch targeted towards making the SofTee a gift for their girlfriend, mother, them self, or significant other. At the end of eleven weeks, this group turned out to be our largest market, with approximately 48% of sales. The downside to marketing to this demographic was the limited population; after all, Olin College only has 300 students, plus the staff, faculty, and families to support them. In addition, college students often do not have extra cash on hand, a legitimate excuse which we heard often.
After making our sales this season, we found out that it was easier to group the next three categories into two -- that is, rather than consider Local Residents in the Needham and Wellesley area, Students from Other Colleges, and the General Public; it is more convenient to group them as "off-campus sales" and "sales at preschools". Our off-campus sales came from two main avenues: via our marketing campaign at Wellesley College, and via our website. Our sales at Wellesley included working closely with the "No-Nuts" group to setup co-sales, and our operations via our website frequently involved friends and family drawn by word-of-mouth. Difficulties involved the complicated logistics; for instance, obtaining permission to sell at Wellesley was more than a hassle, and selling out-of-state bears the question of how to bring the SofTee to the consumer. We made six off-campus sales (14% of sales).
Last of all, we consider sales made to preschools. After contacting twelve preschools / after school programs, we found one preschool with sixteen children who we were able to form a deal with. In addition to bringing the children a shirt, we purchased fabric markers and ran an art lesson. We provided the kids the opportunity to stuff their own shirts, and we gave them a talk on charity. Through this program, we sold sixteen shirts, or 38% of sales.
Team Communication
A business is built upon its team members and their qualities. Thus, it is very important for the business that its team members are able to communicate efficiently and effectively. In order to achieve this, a business must be mindful of the relatively simple logistics of communication as well as the more advanced nuances of communication like idea generation, conflict resolution and leadership.
At Olin sofTee, we decided that using the internet would be the most efficient and effective way of solving the logistics problem. We firstly set up a meeting time every week outside of our stipulated board meetings. These meetings served as a deadline for a week’s work as well as a simple way to communicate what each of us had done that week and had to do the following week. In addition to the meetings, we set up email lists that allowed us to send emails directly to every member of the business. This archived email thread helped us keep track of any important documents, communicate information at the blink of an eye and be allowed us to reach the whole group at once. Lastly, our group also heavily utilized an amazing product called Google Docs™. Google Docs™ allows many team members to work on the same document at the same time. This enabled us to generate ideas on the fly and discuss it without physically having to meet each other. Thus, using these simple tools, we were able to ensure that our simple logistics of communication were taken care off.
Moving on to the more advanced aspects of team communication, we realize that every team will have members that think differently, have different work ethics, schedules and workloads. Formulating a method to circumvent these problems is of utmost value in ensuring the progress of any business. Most teams of any sort usually face the problem of idea conflicts due to miscommunication. (One member of the team thinks their idea is better than another without knowing all the facts) Idea conflicts waste an immense amount of time and provide little if any value.
The way we dealt with this problem was to initiate any idea on the mailing list. Having to write down an idea in words forces a person to think carefully and fully articulate the idea before communicating it. This helps the others in the group understand the idea better and faster, while reducing the time spent in physical meetings simply clarifying the idea.
Thus, we see that communication is a very integral and important part in any business. Furthermore, getting the right tools and utilizing them in the right ways can help the team work much better, faster and more efficiently.
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