Starting a business is not a dauntingly easy task, it requires the use of rigorous methods to ensure lasting entrepreneurial success. In this article, we propose to demystify business creation and explore the essential steps to ensure solid growth for your project.
An inspiring story
Before getting to the heart of the matter, I would like to share with you a story of entrepreneurial success . Let’s take this opportunity to honor a French company: Alain Afflelou .
At 24, Mr. AFFLELOU decided to open his first optician’s shop on the outskirts of Bordeaux . Innovative entrepreneur, Alain Afflelou launches a communication campaign that has become cult: “half of your mount in sight”. After a resounding success, it was in 1978 that the franchise was developed within the brand.
A resounding success, shall we say? Speaking of honesty, that’s what characterized the brand’s TCHIN-TCHIN offer . In 1999, the genius idea hatched after a simple observation, 90% of glasses wearers only have one pair. This concept therefore allowed the brand’s customers to obtain a second pair for only 1 franc more .
The development of the brand is also dotted with good performance. Indeed, the 1000th store in the world was born in 2009. Since then, the brand has continued to grow and innovate.
The example of an entrepreneur who has known a remarkable rise despite modest beginnings allows us to introduce our subject. Indeed, entrepreneurship is possible at different scales, up to the heights.
Build a viable business model
Also called an economic model or a business model, a business model concretely shows how your company will earn money, which makes it possible to quickly analyze its financial viability . This allows you to refine your overall strategy and therefore define what you are going to sell, your target customers, by what means…
Your business model will allow you to answer several questions:
- What need(s) do you meet?
- What makes your value proposition different?
- Who is your target customer?
- How will you generate income?
- What resources are needed?
- What will your prices be?
More simply, you will need to create a complete business model, like the Canvas business model that is very widespread today.
1 – Customer segments
Define your target customer segment according to their consumption habits, income, gender, age, socio-professional category, expectations, obstacles, etc.
Your (future) customers are the raison d’être of your project, so you should pay a lot of attention to them . Realizing a Persona will help you in realizing your business model Canvas.
2 – Value proposition
Responding to a need is what most simply characterizes a value proposition . This need stems inexorably from your previously identified initial target.
3 – Distribution
It’s about choosing your distribution strategy to make your offer meet your target. Depending on the characteristics of your customers, you can choose your distribution channels (single-channel, multi-channel or cross-channel). Then, your distribution methods (intensive, exclusive, selective or franchise).
Choosing your location, whether own or “outsourced”, will have a strong impact on your business.
4 – Customer relations
The relationship of a company with its customers is the key to a good business, moreover it costs less to have regular customers rather than to acquire them (see article on retaining and acquiring customers). It is therefore important to question the customer relationship:
- How do I retain my customers?
- How to have a high satisfaction?
- What methods should I use to keep in touch with my customers?
5 – Income
One of the most important points, even an absolute necessity, are the recipes. It is essential to know whether its business model is capable of generating revenue and its potential sources (package, subscription, direct sales, etc.).
Regularity makes it possible to better understand its forecast performance.
6 – Key Resources
This section lists all the resources that are available to you . They are therefore material, immaterial, human, financial, etc. It is therefore necessary to draw a parallel between those you need and those you already have.
Key resources can be internal to the company, rented or obtained from key partners .
They will therefore serve your key activities.
7 – Key activities
These are the activities that are important to the success of your business model . This is, for example, the production of bread for an artisan baker. This sometimes makes it possible to identify the real activity of a company.
Thus, if a key activity cannot be carried out internally, you should consider bringing in one or more key partners. This will also require fewer resources, despite a possible loss of skills.
8 – Key partners
In this part, you must analyze your environment in order to identify potential partners . These external allies could be a factor of evolution and improvement for your offer. It is therefore important to maintain a good relationship with these stakeholders (suppliers, subcontractors, former customers, etc.).
However, pay attention to the opportunities and risks that hang over your activity, such as dependency for example.
9 – Cost structure
Revenues are good, expenses are even better. Generating income will be necessary for the survival of your business, but the costs can become a real threat.
You must therefore assess your fixed costs (not based on your turnover or production volume), and your variable costs , which depend on the level of activity.
You will need to continually optimize your costs based on your environment to maintain financial stability.
Carry out a market study
Once you have found your idea, the first step is to conduct market research . The latter will help you reduce the risk of failure , by allowing you to take the appropriate measures to better establish yourself in your market. Thus, you will have enough to identify business opportunities to enter this market .
This study will highlight several very important points:
- The offer :
Competitive analysis is a comprehensive research on the activity of your direct and indirect competitors . It makes it possible to obtain exhaustive information corresponding to the product or service provided by the competing company.
You will understand the overall strategy of your competitors , which will allow you to position your offer knowingly . Knowledge is one of the first keys to have in one’s possession in order to differentiate oneself , and therefore obtain positive performances . This will help you create a unique value proposition and develop an effective marketing strategy based on your strengths and weaknesses.
This gives you a solid foundation to make strategic decisions and succeed in a competitive environment.
- The request :
Going into a new market that you don’t know greatly increases your chances of not meeting consumer needs. In fact, a study of demand is essential to better understand its customers by understanding their expectations and needs .
This research will allow you to acquire knowledge that can be used to adapt your sales forecasts , product pricing, communication, production, etc. Indeed, it is an effective way to point out inconsistencies, rejections or to benefit from various recommendations.
In sum, population surveys provide valuable information to make informed decisions , reduce risk and adjust your offer to better meet consumer needs.
- Sector analysis :
A sector analysis must ultimately provide relevant information with precise indicators , in particular via figures. The objective is to determine the state of the market in which you operate and therefore to monitor the attractiveness of this sector exhaustively.
Here are some indicators to illustrate my remarks : evaluate the evolution of the number of players over the period, their turnover, the distribution of market shares, regulatory changes, future trends…
It is thus necessary to carry out rigorous documentary research on complex markets, which generally requires calling on an external organization such as a Junior-Enterprise .
- The financial forecast :
Analysis which makes it possible to evaluate the financial viability of its company/project , the “forecast” aims to measure its financial profitability . Generally, this forecast assesses the results that the company can expect for the first three years of operation .
This work is absolutely necessary in the business creation process . This avoids making a false start, and it is a welcome analysis for finding funding from financial organizations or in order to raise funds .
This report presents various documents:
- Income statement
- Intermediate management balances (also called GIS)
- 3-way financing plan
- Cash plan
- Balance sheet (the patrimonial and financial photograph of the company)
These elements are an integral part of the future business plan that you will carry out. If you do not master them, we advise you to call on an external organization, business school students can also carry out this mission when a Junior-Enterprise is commissioned.
As an entrepreneur, the support offered to me was of high quality. I will not hesitate to use ESCadrille again in the future.
Alexandre MAGNAT, Entrepreneur and CEO of Intence.
Define your business plan
A business plan is a written document that is intended to convince banks and investors because it summarizes your business creation project. It must prove the seriousness of your project by being realistic and integrating quantified forecasts . This document is flexible depending on the target you want to reach (bank, state, local authorities, future partners, etc.).
Here is how a business plan breaks down:
1 – Pitch your project
A pitch is a short presentation aimed at “selling” your project to your interlocutor . This introduction is both close to and antagonistic to an oral pitch. It will be firmly anchored in your document and obviously less interactive.
Find out how to pitch your business project orally in our previous article.
This pitch is the introduction to your business plan, it must convey your ability to undertake, your seriousness, the synergy with your associates, your commitment, etc. It is also necessary to provide key information to your interlocutor (team, target, company name, legal status, entrepreneurial history, environment, future projection and more broadly your motivation).
Like the 7 seconds needed to make an impression on a person, the pitch is intended to be decisive since it is the gateway to the entire document . It’s up to you to create positive prejudices in your recipient.
2 – Precise presentation of your product or service
Introduced by your pitch, you describe what you are going to sell . The presentation is intended to be concise, precise and clear. Do not hesitate to popularize the technical terms specific to your field of activity because this presentation must be understood by all.
In order to facilitate understanding, you can integrate graphic elements such as diagrams or drawings for example.
3 – Highlighting your business model
After describing your project, you will need to explain in your business plan how your product or service will be sold . To do this, nothing could be simpler because the work is already done. All you have to do is present the marketing strategy that you have developed by creating your business model (Canvas for example).
This part allows your interlocutor to understand the placing on the market of your offer with precise data: price, distribution, communication, production, supply, storage, development of the activity, etc.
This is also the time for you to show the potential threats and the solutions you envisage to deal with them (volatility of the price of raw materials or dependence on a supplier in your region, for example).
4 – Summary of the market study
Market research allows you to assess whether your market is promising by analyzing 4 elements :
- The offer
- Requirement
- The environment (sector)
- Marketing/sales strategy
Your business plan should succinctly integrate the information collected by your market research to enlighten your interlocutor.
5 – Present your financial forecast
Even if your project is innovative, if it is not profitable, it does not interest potential investors . You must include financial tables to attest to the financial viability of your project.
To be honest, that’s the most important point. However, a financial forecast depends on all the factors that can influence your project.
Call on ESCadrille Toulouse Junior Conseil
Founded in 1978, ESCadrille supports you in the creation of your business.
Whether it is to carry out your market study , your business plan or both , we will be there. We also carry out communication strategies to help you give visibility to your project.
Working with a Junior-Enterprise means encouraging an ideal model to promote the link between higher education and the professional world.