Building a Business

Entering/Capturing the Market

  • Sales Channels (“Choosing your Sales Channel”) A sales channel is the process in which a company gets its products or services to the market to sell. From raw materials to production to distributors on to the market, understanding how your product will get to the customer is an important step. Understanding the sales channel grows the business’s understanding of the cost as well as steps needed between the company and the actual customer.
  • Marketing Methods (New School vs Old School Marketing Methods) Marketing methods are often confused with advertising methods. While advertising is the means by which a business publicly provides information to sway customers into purchasing the product or service, marketing methods are the means through which the advertising is delivered. Through marketing methods, the business target audiences in which to convert into customers.To learn more about marketing resources for business growth check out Arkansas SourceLink’s Marketing Resources.
  • Sales Lifecycle (Sales Lifecycle”) The sales lifecycle is a process through which the marketing and advertising efforts prospect potential customers. Those potential customers who show interest in the product or service turn into leads. Once leads are identified, the sales staff then works one-on-one with the lead to produce a sale and convert the lead into a customer. This process of turning the target audience into customers is the sales cycle.
  • Pricing (“Pricing Strategies”) Pricing a product or service can be a complicated process that involves both hard facts about the cost to produce the product, what the competition is charging, what is expected in terms of price from the target market and what price can the market sustain. Pricing products and services is both an art and a science. Standing by the price the company sets also takes courage and the right sales and marketing strategies to support.
Product Adoption Curve

Product Adoption Curve

Building the Team

Building the right team(s) for the business is another important step in a successful start-up. While each business is different, the teams needed during the start-up often include the board of directors, advisory team and the start-up team. Putting the right people in the right places is not easy, yet the right people in the right positions working toward the common mission for the company will make the start-up lifecycle much easier for the business.

  • Management Roles – While assembling the management team for the young start-up company, the business plan should define the roles that are needed and supply the qualifications and expectations of that person on the team. If the management team has been identified, then the business plan should note the role that person will play in the start-up and what their qualifications are for that role.
  • Board of Directors – Companies appoint or elect a group of individuals who jointly oversee the business’s activities. While there are no rules on how many individuals can serve on a board of directors or what role the board plays in an organization, the board of directors often plays an important role in providing oversight to the company. A company is required to have a board of directors if the organization has been incorporated. Plus, the board must maintain adequate notes from meetings and discussions for public record.
  • Advisory Board – An advisory board is a group of individuals who volunteer their time to assist the business with advice, connections, leads, or industry expertise. An advisory board differs from a board of directors in that the advisory board is not responsible for the oversight of the business. The advisory board acts as a coach to the business to provide assistance.
  • Employees – Beyond finding finances, writing the business plan or building sales, hiring the right start-up employees can be a daunting task. However, the entrepreneur needs to make the selection of employee #2+ very carefully. The business will not be able to offer fancy benefits packages or the assurance that the business will be open a month or year later. However, the entrepreneur does have some assets to provide early employees. Taking advantage of those assets and ensuring the employees share the same vision, the entrepreneur’s leadership during this early stage is critical to managing early human resources.To learn more about hiring and retaining good employees check out Arkansas SourceLink’s Hiring and Managing Employees.
  • Outsourcing – Many start-up businesses are not able to hire a full staff to manage the various aspects of the business; therefore outsourcing is a viable option for a variety of business services.

The areas in which businesses outsource functions include the following and more:

  • Legal – Intellectual property protection, general business representation, contracts, establishing form of business, stock issues, partnership agreements, and more.
  • Accounting – Book keeping, filing taxes, monthly or quarterly reports, and more
  • Marketing – Market research, market planning, market strategy, advertising, designers, web development, SEO and social media strategy, channel development, and more.
  • Business Development – Sales strategy, lead generation, lead follow-up, and sales.
  • Other – Manufacturing, raw material supply, additional business services, etc.

Intellectual Property

Intellectual Property defines the property rights of owners of intangible assets (products of the human mind) that federal statutes govern. Intellectual property laws attempt to balance the rights of the property owners with the rights of other people, and those rights are for a given duration. Intellectual Property provides the competitive advantage necessary to generate commercial success.

  • Types of Intellectual Property – The three core areas of Intellectual Property are Patent, Copyright and Trademark Law.
    • Patent – According to Gina T. Constant with Rodey Law Firm, “a patent is a government –granted monopoly over an intangible asset for a certain number of years.” During the 20 year duration of the patent, the owner has a the right to exclude others from making, using, offering for sale, selling or importing the invention into the U.S. There are three types of patents:
      • Utility – “Everything under the sun made by man, except natural phenomenon, laws of nature and abstract ideas.”
      • Design – “New, original and ornamental appearance of an article of manufacture.”
      • Plant – A reproducible new species of a plant.
  • Trademarks – A trademark is a signal to the consumer as to the source of the good or service. This mark has been created to protect the goodwill of the company and prevent consumer confusion. A trademark is good for as long at the mark is used and if the company renews the trademark registration every 10 years. Trademarks protect letters, words, logos, pictures, drawings, slogans, colors, product shapes, sounds and artwork.
  • Copyrights – This federal protection prevents the copying of an expression of an idea typically found in literary works, songs, journals, computer code, choreographic works, graphics and so forth. The copy right duration is for the life of the originator plus 70 years. Copyright protection begins the moment an original work of authorship becomes fixed, but registering the work with the copyright office will allow legal protection of the copyright more plausible.
  • Additional information about intellectual property can be found at Nolo.com or consult legal guidance from a lawyer specifically practicing intellectual property law.
  • Protection Enforcement – Unfortunately, the U.S. government does not have enough resources to police all the intellectual property infringements that occur within the country as well as globally. That means each business is in charge of overseeing and policing the protection of their own intellectual property.

Continue onto The Business Plan