Building sales from scratch

Starting conditions: There is a genuine willingness from the owners or shareholders to build a new business, and to ensure its successful operation, sales need to be developed. As mentioned earlier, when we talk about business, we distinguish it from self-employment and understand that by the term “entrepreneur,” we mean the organizer rather than the executor.

The necessity of organization

Let’s imagine having your own business, that is, self-employment, which would provide an entrepreneur without initial capital with an income higher than that of a qualified salaried manager. Then:

• Everyone will be involved in this matter.
• Including those who were hired employees yesterday.
• The supply of goods or services would sharply exceed demand.
• The market would become saturated.
• There would be competition, including price competition.
• Entrepreneurs’ incomes would have sharply declined.
• – Until there is an outflow of people, including hired employees.

Having initial capital doesn’t improve the situation. A person with initial capital is similar to someone without it but with a loan. This raises the question: what’s better, doing everything yourself and stressing out, or living off rental income?

An interesting form of initial capital is qualification and “reputation.” Such individuals, with effort, can be self-employed and earn significantly more than others. These include lawyers, doctors, musicians, artists, architects, carpenters, jewelers, and so on. At the same time, it’s worth evaluating their efforts in monetary terms, and it turns out they are quite valuable. Typically, it takes 10 or more years of life. How much is 10 years of your life worth?

However, if we participate in the market not on our own but with the help of a group of people, then, whether you exploit these people or employ them—depending on whether you are a Marxist or not—you can generate income from organizing a business, and this income can be scaled by hiring more people.

Unique advantage

Employer advantages

When organizing your business, it’s essential to clearly understand what sets you apart from others. Why can’t the people who work for you do the same thing on their own? Why do they pay you by giving up a portion of their labor? What is the service you provide to them, and what are they paying for? Such advantages can include:

• Initial capital. Its presence in the form of money, equipment, real estate, patents, licenses, and other assets. Whatever has been said above, the necessary initial capital often determines the entry threshold for new market participants. It’s not that it doesn’t exist – it can be borrowed – but rather that you, unlike others, are willing to bear the business risks associated with how you plan to use this initial capital. The people working for you, by contributing part of their labor, essentially pay you for the risks you take and for the “virtual credit” that allows them to use your capital. You are willing to take on these risks because you know something that others do not. For example, you have

• qualification that gives you self-confidence. You are a specialist in this field and can anticipate all possible risks instead of guessing. Qualification allows you to provide your employees with information for which they are also willing to pay with part of their labor. Additionally, qualification enables you to break down production into a series of simple operations that can be assigned to less skilled personnel. In other words,

• Organizing a business. The services for organizing and coordinating the work you do are also paid for by your employees. Essentially, this involves hiring a dispatcher who handles all the hectic organizational tasks, connects the stages of production, aligns production with sales, and organizes sales. You also hire the non-production part of your company to keep the accounts in order and manage relationships with tax authorities. Additionally, you may hire lawyers, HR specialists, security personnel, carriers, and so on, as needed. These people also pay you for the assurance that they know what they will be doing tomorrow, as you are their “eternal” client, and that comes at a cost. Naturally, your business organizer services are worth more the higher your qualifications as a manager. In other words, the better you are as a manager, the more money you make. To start, you should understand management better than your employees in order to offer them your services. When we learn to drive a car, we first study the theory, and then, with an instructor sitting next to us, we begin to drive carefully. Think of having such an instructor in your business before you make mistakes you will later regret. And such foolish mistakes will happen. Just ask anyone who has started their own business.

Market advantages

The same understanding is necessary in the market where you plan to operate. How does your company differ from other similar ones? The list of potential advantages is not limited, but I will mention just a few possibilities. This is your business, and you need to understand what exactly you will offer your clients. For example:

• You are the smartest and have come up with a brilliant idea, and you have a little time before everyone around you realizes how you are making money and starts doing the same thing. It’s possible that you are doing something similar to what a large monopolist is doing, but you are more agile and can offer your service before the bureaucratic machine of the monopoly gets into gear. In the early days of the internet, the main providers were small private companies that were willing to operate in a nascent market where monopolists did not see significant profits. They were agile in relation to the customer, competing and shaping customer expectations for the product. However, as the market matured and substantial money began to flow, the concept of the product became standardized, and large telecommunications companies entered the scene, leveraging their entire infrastructure. It became time for the smaller providers, or rather, those who had now become small, to either exit the market or focus on niche and corporate solutions—providing server space for clients, hosting websites, organizing virtual private networks, and so on.
• You have a well-established supply channel for a product similar to what’s available on the market, but at a different price and/or with different quality.
• You have, as it turns out, a “First and Most Important” client. Everything is capitalized. You don’t have to go through the stage of searching for clients without any money, and you can develop your company’s infrastructure using a guaranteed or temporarily guaranteed cash flow.
• You are either brave (or foolish) enough to break the law, and the imports you organize are smuggled, or the goods you produce are counterfeit, or you have, not without bribes, managed to open some doors in regulatory, supervisory, inspection, or enforcement agencies. I am not advocating for breaking the law. However, winners are not judged, and as is well known, the first million cannot be earned honestly.
• You have certain geographical advantages – your pharmacy is simply the most convenient for the residents of the surrounding houses, or your notary office happens to be located in a space where real estate transactions are registered in the state cadastre.
• Existing businesses can have historical advantages. Traditions may have developed in such a way, or you may have a circle of old acquaintances—people who trust you more than others, or individuals with whom you find it easier to communicate.
• Your product or service is of higher quality compared to similar offerings, either due to a new business process or new technology. For example, a courier delivery service is better than the postal service. Or your auto repair shop has equipment that is not yet available in your country and is necessary for certain types of work.
• Or you are the holder of a patent based on which you are offering a new product or a product with improved features.
• And so on.

You should start your business with a clear understanding of what sets you apart from the rest. This unique quality will form the basis of your offering to clients. Of course, you shouldn’t state it outright. Your clients should simply “buy” into your advantage and feel compelled to pay attention to it.

SWOT.

Drawbacks, threats, and prospects

Having described your advantages, you should also consider the disadvantages that exist as well. They are inevitable. Often, disadvantages reflect the advantages: for example, having a patent limits you in terms of competitive offerings—you may not find it profitable to make or sell anything else. A separate section was dedicated to advantages because a unique benefit should underpin the start of any business. Disadvantages, on the other hand, are typically characteristic of new businesses and represent “entry” drawbacks: no one knows you in the market. You lack qualified personnel, and your business processes are not established. Wholesale suppliers are not eager to offer you the best prices. All of this is quite obvious, but it’s important to be aware of it in order to develop strategies to address each disadvantage. For an existing business, disadvantages can vary and reflect your firm’s competitive position. Some may have better quality, others may offer better prices, and some may have a wider selection. You will always know why a customer chose a competitor over you.

In addition to the drawbacks, there is also the factor of threats. This is not something that already exists, but rather what could happen or is already happening, yet is outside your business. The government may introduce licensing for your business or change the licensing conditions. A heavy rain could flood your goods stored in a basement garage. You might not be able to find the right personnel in time, and so on. To understand all the threats your business faces, you simply need to sit down and set yourself the task of writing down 20 potential threats. Then, eliminate 10 of them as insignificant and focus on working with the remaining 10. Recognizing the danger is half the battle. And in achieving victory, we will be aided by the prospects:

The prospects for your business are all the good things that can happen and do not depend on the internal organization of your business. You have the potential to attract a key client who will choose you based on the results of a tender. You have the prospects of your business becoming licensed, and you are the only one with a chance to pass the licensing process. You are counting on a long-term weather forecast for a good harvest, and so on.

SWOT.

The analysis of strengths, weaknesses, opportunities, and threats is referred to as SWOT analysis in English literature (Strength, Weakness, Opportunity, Threat). It is typically organized in the form of a table:

All the data recorded in this table is temporary. You will tackle shortcomings, respond appropriately to threats, anticipate new threats, and say goodbye to old ones. You will take advantage of opportunities. And most importantly, your advantages are also temporary, so you need to make the most of them and create new ones. It’s an ongoing battle. Therefore, a SWOT analysis should be conducted not only at the start of a project but also regularly, assessing the position of your company.

The strategy for your work with the aforementioned factors should be based on addressing a couple of factors at the same time:

• Advantages – Opportunities: How to leverage your strengths to realize opportunities.
• Advantages – threats. How to use your advantages to neutralize threats.
• Drawbacks – prospects. Which of the existing drawbacks limit your prospects, and what exactly needs to be corrected?
• Flaws are threats. How to address your flaws in order to respond appropriately to threats.

Your possible strategies can also be recorded in a table:

By periodically updating your SWOT analysis, you should also update your strategies. Based on these strategies, you can develop plans and implement projects. Your entire workday should consist of steps aimed at executing projects that fulfill the plans to achieve the goals set by your chosen strategies.

When you know what sets you apart from others, have outlined and understood your weaknesses, and developed strategies, it’s time to put your business to the test.

Test drive

In the 1920s, psychologist Jean Piaget noticed that small children often do not distinguish between their perception of an object and its actual properties. Surely, everyone can recall how little ones hide from adults by simply covering their eyes with their hands. Children are still unable to differentiate their knowledge of the world from the knowledge of those around them, believing that everything they know, others know as well. This characteristic of the human mind is gradually corrected by life experience; however, we remain this way from birth. Anyone who comes up with a business idea tends to think that their business is needed by everyone simply because it is needed by them. If you have trouble getting fresh milk delivered to your doorstep, you start thinking about a milk delivery business. If you’re tired of constantly organizing parties for relatives, you might begin to consider starting a party planning business, focusing on the specifics that are most relevant to you.

A subjective assessment of the necessity of your business can play a cruel joke on you when you try to bring your business idea to life.

To ensure that your services or products are needed by the required number of people, you should test your idea before implementing it. Before you start assembling a team of salespeople and performers, try to do something and sell it yourself. Or, if you plan to offer a service, provide it for free to a few people and then ask for their feedback on its usefulness. You could even go so far as to create a fake advertisement (in another city) for pre-registration to receive the product or service, just to gauge consumer interest. Observe the public’s reaction, and you’ll understand how many people are genuinely ready to engage with your business. Even if you simply share your idea with a few acquaintances and invite their criticism, you’ll gain insight into how unique your idea is and quickly identify some minor issues that you might not have discovered without outside input.

Market.

Choosing a business or idea to work on can be reduced to two options:

• Work in the existing market.
• Creating a new market for a new service or product.

When working in an existing market, you will face serious competition, so it’s always better to start with an original idea.

We understand that, in any case, whether to reduce competition in the existing market or to sell a new idea, we need to clearly define the niches in which we will operate. In the chapter on sales theory, there was a section about the ideal customer. It mentioned that you should have a portrait of your ideal customer in mind, even if you are selling something that “everyone needs,” like bread. Yes, everyone except for people with gluten allergies, those suffering from obesity, people who don’t like bread, those who are on a diet, and the Chinese, since they eat rice, and so on. When you think about niches and customer groups, you immediately move towards understanding what a “sales channel” is. There’s no point in fishing in a quiet backwater, feeding the spot for years, if we know where the fish are swimming in schools.

Sales channels

A SWOT analysis will help you understand how to sell better, whether to create your own sales network or to use the services of channel owners, clarifying your development strategy at the initial stage.

On one hand, by selling independently, you earn a higher income per unit sold. However, on the other hand, all that income may go towards maintaining the sales system.

On one hand, you can quickly increase your sales volume and reach the point of achieving economies of scale by selling through independent sales channels. On the other hand, you do not control these sales channels, and they can change their preferences very quickly, leaving you alone with a stocked warehouse and a staff that needs to be paid.

It’s also important to understand that when a customer enters a store, they need the opportunity or the illusion of having a choice. They are more likely to buy your delicious pastries at the supermarket than to make a special trip to your bakery.

Implementing through your own network of sellers is the most reliable solution, but it requires investment and time.

Using sales channels is clearly cheaper and very beneficial at the start, especially if you already have an idea of who will be selling your product or service.

One distinct method of selling is online sales. The fact is that the entire internet is essentially a huge virtual supermarket. Customers have instant access to everything available in the market. On the other hand, there’s your own online store or website, and you don’t pay commissions for using the sales channel.

Project

So, we are fully armed, and we have enthusiasm and confidence in ourselves.

• We know what we will be selling;
• We know who we will be selling with;
• We know our position, strengths, and weaknesses;
• We know who our client is;
• We want to start. And we are starting.

We are writing a project – a list of tasks that we need to complete in order to start working. And we only need the following:

• Organize the supply of goods or services (or manufacturing).
• Organize sales
• Organize a company.

Each of these points is divided into subpoints. Additionally, the tasks are interconnected:

• We won’t be able to talk to the client about the delivery until we have something in stock.
• And in the warehouse, this will only appear when we buy it and put it there.
• We will be able to buy it when we can pay for it.
• We will be able to pay when we have a checking account with money in it.
• We will only have a bank account once we have fully completed the company registration process, including…
• Let’s arrange her legal address.
• However, our tasks are not only interconnected, but they can also be carried out in parallel:
• While we are registering the company, we can develop search profiles for the company’s employees and start the recruitment process.
• While we wait for the delivery, we can already start talking to our first clients.
• All this time, we can look for an office space and come up with a brand name.
• At the same time, each task in the project requires resources—human, financial, storage, and so on.
• You won’t be able to receive goods at the warehouse if you don’t have a warehouse yet.
• You’re not genius enough to handle both recruiting and initial negotiations with clients at the same time.

Thus, you need to organize all tasks step by step, understanding which tasks can be carried out in parallel and which cannot, as well as how much time each task will take. Often in your project, there will be “waiting tasks,” during which no resources are required, but time is still passing. For example, the registration of your company’s charter. During this time, you should assign other tasks to be executed.

In any case, you will have what is called a “critical path” — tasks that cannot be shifted or moved, that depend on each other, and that lead you to the project’s goal. And the project’s goal should be determined before you start working on it.

If your goal is simply to “start selling,” you won’t know if you’ve achieved it after the first deal. As we remember, a goal should be

• specific
• measurable
• significant
• achievable
• time-limited

This is exactly how your project will help you assess the time needed to achieve your goal. You can specify the goal and make it measurable by indicating what you consider the start of sales. This could be a certain sales volume or completing the entire cycle up to the next delivery.

When your project is ready, you will have a guide in front of you outlining what to do the next day. Without this guide, you’ll waste a lot of time, make many mistakes, and might even choose to hang out with friends over working. But time is passing. It’s time to start earning your money.

Conclusions:

1. It is important to distinguish between business and self-employment. Self-employment is not scalable.

2. When starting your business, it’s important to understand what unique advantages you have.

3. Your advantages should be both as an employer and as a player in the market.

4. You sell your employees the right to use your capital, the right to utilize your qualifications, and your services in organization.

5. SWOT analysis is a convenient tool for developing a company’s strategy both at the beginning of its operations and during regular strategy reviews.

6. It’s worth trying out the idea before implementing it.

7. It is important to understand what our market is like, who our client is, who the end consumer is, and where they can be found in large numbers.

8. Starting your own business is a typical project that needs to be planned and executed.