Over 50% of companies fail after 5 years, and over 70% fail within 10 years time. As an aspiring entrepreneur, I was frightened by these statistics and started looking for a way to manage the risks for my business. In my search, i stumbled upon the creative economy and creative industry course which gives an extensive overview of the business startups.
The past three months in the “Creative Industry and Creative Economy” course, have been eye-opening in every aspect of the process of running a business. Starting with creating a successful business model for our company, by identifying the key basic factors that will help us recognize the odds of survival of our business, and they include (Value propositions, customer segment, channels, cost structure, key activities and resources and partnerships, and most importantly the revenue streams) together these elements work coherently to help us define our business.
An example we took in class is the following business model of Pokemon go. Applying that to my own business(Design Company) has helped me define the value proposition of my company which was done after recognizing a gap in the design industry in Jordan, a 24-hour design-service. In my past work experience, I had several incidents where a customer realizes in the last minute that they need some adjustments or fast designs and we were not able to deliver, which caused our customers to turn to freelancers at times to resolve their issues.
We later started reading the Lean Startup book, which explained about the methods of decision making and the importance of knowing when to stay the course and when to pivot. I was always curious about the right time to launch my business idea and was surprised to find out that the faster we launch the better. Our launch begins with an MVP (a cheap fast prototype) that is fully functional and summons the core experience of our product, at the same time, it doesn’t necessarily need to be in its final form/stage, Spending too much money on the initial prototype is not advised, as the purpose of it is to test the acceptance of our idea in the market.
Building an MVP is the first step of the build, learn measure cycle. this cycle has been devised to help us with testing our product and collecting feedback. During this process we are expected to continuously iterate our original idea or pivot when required, this will help us save spending too much time and expenses on an idea that may not be successful on the long run.
Suppose our business model is compelling, and we have started with an MVP (prototype, video, wireframe…) that is receiving great feedback, there is already a huge risk of losing exclusivity to Our product from competitors if we are not backed up with Intellectual property rights (IPR). Intellectual property is defined as creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names, and images used in commerce by WIPO (World Intellectual property organization).
IP is a double-edged sword that works on protecting our rights, but can also be harmful to us if we breach it’s laws when incorporating other people’s work into our business. We were introduced to IPR by Naomi K. who explained to us in intricate detail, some mistakes we commonly fall into while surfing and using data available on the internet, such as using a song in the background of a video we make to friends, or downloading pictures and using them on our personal social websites without permission. We may not be at high risk of being chased down by the law as students with small social media reference and low income but as business owners, the risk certainly rises to higher extents.
As a graphic designer with a middle eastern background, I must have unknowingly breached IPR laws dozens of times, especially after finding out that Google search images are not for the free use of the public. As a result to my new attained knowledge in IP, I decided to run a company that complies entirely with IP laws, with the purpose of gaining the trust of our customers and having the ability to expand worldwide without being at risk of being chased by the law. I intend to do this by employing or contracting with exclusive photographers for the company to provide “IP protected” images that can also be sold online on our company website to maintain continues a continuous revenue stream. I will also be providing my clients with IPR lawyer whom they can consult for their personal brands, which will help strengthen our customer relations and induce trust and loyalty which are strong elements to our brand mantra.
In order for us to achieve successful long-term goals, we must now formulate an appropriate Strategy. A strategy is not about a specific plan it’s about a vision for the future said Kent (our course instructor), A strategy is a solution to move from where you are now (A) to where you want to be (B)… (Duncan, 2013) It is meant to help us define how we aim to penetrate the market. we tested our strategy abilities in the business strategy game, which is a simulation of running a real-life footwear company, During that experience, we learned how to manage our money and set clear goals to our company.
We started by defining the purpose of our company which was for athlete’s shoes, with the purpose of improving the capabilities of athletes (Niche Market), this requires a focused strategy, this type of strategy aims to be a global leader in a specific market segment. we also used global differentiation strategy that sets the companies’ footwear apart from rival brands, by using high S/Q rating, more models, and styles, more advertising greater celebrity appeal, higher mail-in rebate, or bigger network of retail outlets.
After discussing our strategy in the presentation, we realized the importance of the advertising and marketing we used, and how it was beneficial for us. We learned that advertising together with celebrity appeal was one of the main causes of our winning in the game as it has increased demand drastically every year and improved our image rating. And of course, we were careful to consider the finances we used in our advertising to make sure they do not override our revenues. on average around it is advised to use around 7-8% of our gross revenue on marketing which was a huge success.
We were also very careful in regards to our finance and how much money we spent, despite our high revenues we still tried to cut down costs by purchasing capacity from our competitors instead of building capacity which would have been of too many costs. We also invested into cutting down our rejection rate by improving plant options and increasing worker productivity.
We managed to win the game, with our strategies. Nevertheless, our misinterpretation for pricing and capacity lead to negative feedback from Kent, However, we were forced to use competitive pricing as our attempt to raise our prices to lead to bad revenues, we also had high capacity which we purchased from our competitors (lowered our costs), but left us with large amounts of stock. As a niche market, it is important to recognize that capacity is important but it should not be the main target, nor should we use competitive pricing because a focused strategy has high costs and gives us the benefit of leading in price.
After presenting, we also realized the importance of our brand, and how clear we should be as to what our brand truly is about. I have tried to come up with my own understanding of a brand and its the set of values, goals, expectations, experiences that will facilitate and sustain a relationship with the customer and encourage him to choose your company over other companies.
When constructing a brand, dealing with the company must be with clear attention to the personality it is intending to depict. Think of it as raising a child, what kind of value’s do you wish to teach this child what goals are you constructing? the expectations and dreams you have. when you are branding you are carving the soul and the voice of the company that you wish to use to speak with your consumers.
Every topic we tapped into in this course, has helped me recognize a clearer course of actions to consider for my business, I have learned how to mitigate risk and have better time management by knowing when to pivot. one of the main points to consider while managing a business is being flexible and simultaneously collecting feedback to iterate and better my service/product.
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