Our favourite blog posts of 2017

By Samantha Garner | December 30, 2017

Can you believe it’s almost 2018? This time of year is great for looking back and reflecting on the past year, and we wanted to share our favourite posts from our blog this year.

We wish you a happy and successful 2018, and thanks for reading!

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Best wishes from GoForth

By Samantha Garner | December 23, 2017

From of all of us here at GoForth Institute, we wish our fellow entrepreneurs a festive and restful holiday season.

We’re looking forward to exciting new things in 2018, and we hope the new year is wonderful for everyone – in small business and in life!

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The components of a business model

By Samantha Garner | December 18, 2017

As we discussed in our last post, a business model is a blueprint for the business, outlining how you’re going to run your business, and how you’re going to make money. It’s made up of five elements:

  • Business concept
  • Value chain position
  • Calculating customer value
  • Revenue sources and cost drivers
  • Competitive advantage

Let’s take a closer look at each one.

Business concept

A business concept is essentially a clear description of your business. It’s made up of:

Value chain position

Understanding the value chain, or more specifically, your business’ position in the value chain, is critical to further understanding your business on a larger scale.

A value chain is the series of activities that make products and services get from you to the end user. As products and services pass through the value chain, they gain value. For example, a leather bag involves researching the best design; designing the bag; sourcing leather; creating a prototype; tweaking the design; creating the final version of the bag; adding details such as pockets, straps or hardware; and packaging the bag for sale. All of these steps add value to the finished product.

In a value chain, there are two flows of activities: i) Upstream activities, involving the production or manufacturing of a product or service; and ii) Downstream activities which are associated with selling or marketing of the product or service, distribution of the product or service to the end user, product warranty and customer service.

If you’re going to operate a service business, your value chain is shorter because there is no manufacturing process. Most services are delivered directly to the customer only through downstream value chain activities like marketing, sales and distribution.

Where will your business sit in the value chain? Where can you add value for your customer along the way?

Calculating customer value

Are you 100% positive of the value you can bring your customers? Or are you only about 70% positive? It’s important to estimate the value of the tangible benefits your customers will receive through the purchase of your product or service.

After all, customers today are presented with a bewildering range of value and choice of products and services. They can shop for benefits and can buy from virtually any company worldwide. Figure out how exactly they will benefit from choosing you.

What does your customer value? What actual benefits will they get from doing business with you instead of your competitors? Once you understand customer value, you can better estimate what people will pay for your product or service.

Revenue sources and cost drivers

Next, it’s time to identify revenue sources and cost drivers (any activity that causes a cost to be incurred). A very healthy business model always has several sources of revenue from many different types of customers and multiple products and services. Diversification is good!

With multiple revenue streams, you not only reduce risk, but you also create several sources of income. If one revenue source isn’t doing so well, you have other sources to keep you going. Offering multiple products to multiple types of people also means you spread out your risks and minimize the costs of marketing and acquiring new customers.

Now – cost drivers. The most common ones are volume and time. The cost of an activity increases as more units are produced and the longer it takes to complete. For example, increased sales may also mean you have to hire a new employee – increasing your HR costs.

What are your cost drivers? How they can be improved and made more efficient?

Competitive advantage

Your business has a competitive advantage when customers believe you offer clearly superior products and service from your competitors. Craft a competitive strategy, which considers how your business will compete against others — either by being different, or by serving a niche market where there are no other competitors.

Why not just copy what others are doing? It seems like a good idea, but it can also get you into trouble. Why would customers buy from you if you’re the same as your competitor — one your customers already have history with?

Crafting a competitive advantage and clearly communicating your advantage to the customer will lower their risk and make them at least think about buying from you instead.

Small businesses can serve niche markets, or smaller markets with unsatisfied needs. For example, maybe your market research suggested that there were plenty of wedding cake bakeries in your area, but customers were complaining about not being able to find vegan or gluten-free wedding cakes. Sense a competitive advantage there?

Small businesses can change quickly; they can respond to changing market conditions faster than larger businesses, making them better able to satisfy customers. Understanding how your business will compete against the competition will help you stand out.

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The difference between a business model and a business plan

By Samantha Garner | December 9, 2017

When you’re getting ready to start your small business, you want to create as solid a foundation as you can – and that involves education and planning. You might have heard that you should start with a business plan, or a business model. That’s great! But what are they, exactly, and how are they different from one another?

Business model

The business model is a blueprint for the business, outlining how you’re going to run your business, and how you’re going to make money.

There are five elements of a business model:

  • Business concept: A short description of an opportunity, including a description of your average customer; the benefit of your product or service to the customer; the product or service; and the way you’re going to get your product or service to the customer.
  • Value chain position: Your business’ position on the chain of activities through which products and services pass to get from you all the way to the end user.
  • Calculating customer value: An estimate of the value of the tangible benefits your customers will receive by purchasing your product or service.
  • Revenue sources and cost drivers: Identifying your sources of revenue, and activities that come at a cost.
  • Competitive advantage: The state when customers perceive your products or services to be superior to your competition.

Business plan

Where a business model is a blueprint, a business plan is a roadmap. A business plan is a formal written document that includes a description of the business you want to run, your business goals, and the plan for reaching those goals.

A business plan is a detailed document that contains sections such as: Marketing Plan, Startup Expenses and Capitalization, Management and Organization, Products and Services, and Operational Plan.

A business plan is usually developed around the answers to three common questions:

  • Where are we now?
  • Where do we want to be?
  • How are we going to get there?

And is usually written for one or more of these five reasons:

  • To test the feasibility of your business idea and work out any bugs on paper first.
  • To develop strategies ahead of time for marketing, finance, operation and human resources, instead of when you’re in the fast-paced start-up stage.
  • To get funding, such as a bank loan.
  • To attract investors.
  • To have a roadmap to follow for at least the first year in business.

Why does your small business need both a business model and a business plan?

It’s easy to come up with business ideas, but just because you build a company, that doesn’t mean customers will come. A great deal of time and effort should be spent planning before your new company’s products and services ever reach the market. You need a good foundation and planning before you invest all your time and money.

To get started, check out our free One-Page Business Plan – happy planning!

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How to diversify your rural business – and why you should

By Samantha Garner | December 2, 2017

Note: This article was originally posted in February 2014. This updated article contains refreshed links and up-to-date information.

diversify-rural-businessAccording to Statistics Canada, 28% of Canada’s small and medium-sized enterprises (SMEs) are rural-based. Running a small business can be challenging at the best of times, but rural entrepreneurs face additional hurdles: Industry changes, technology replacing human labour, and a steady trend of youth migrating away. Rural-based entrepreneurs, especially those in remote areas, can be challenged even more by lack of access to training (ahem – this is why we put our small business program 100% online!), and a greater distance from markets and business services. Compared to your urban counterparts, you may also be be affected more by the level of taxation, insurance rates, low profitability and government regulations.

Reducing your business’ dependence on one industry or income stream can help you mitigate these risks. Here are six ways to help you diversify your rural business.

  1. Engage existing customers. Know what they are buying from you and what they’re not.  Keep track of the products and services you sell every day. Find out what customers love about your products and services, and what they wished you would offer. According to MIT professor Eric Von Hippel, 70% of new product ideas come from customers.  If you don’t ask, how will you know what your customers want?
  2. Engage new customers. Take a close look at your product or service offerings. Are there customer segments who are not currently buying your products? Could you tempt them over to you with a little product tweaking? Oil Can Charlie’s is a North Battleford SK oil change shop, but owner Jay Bottomley also opened Betty Bubbles next door – a car and RV wash.
  3. Take stock of your company’s strengths. Can those strengths be turned into a new product and new market combination? Caterpillar leveraged their popularity in the heavy equipment industry with the launch of Caterpillar Apparel.
  4. Challenge your competitors. Scope out your competition. Visit them if you can – become a customer. This works best for retail businesses but your goal is to find out what they are offering, how and how well. Can you do better?
  5. Think ahead. Where is your market going? What are they doing? What are their likes and dislikes? Do an environmental analysis of trends that may impact you, your business or your customers in the future – and position your business accordingly. Look for emerging trends in society, technology, the economy, and politics.
  6. Investigate partnerships. Is there a business in your area that isn’t direct competition and could work well with your business? For example, a flower farming business could partner with a local country market to teach a flower arranging workshop, or rent out an unused building as a wedding venue (with the appeal of local flowers!).

Local economic development groups in your area, such as Community Futures, are great for suggesting diversification strategies that suit your business and local market.

Diversification can reduce your business risk and maximize your opportunities to grow business operations while leveraging your company’s resources, materials, talent and success so far. You’ve heard the expression, “Don’t put all your eggs in one basket!” That’s the best reason of all to pursue a diversified strategy.

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