Choosing the right business model is a key for startups today
Freemium or Premium models? Direct or indirect sales? Riding a big player or trying to become a player? The decision on a business model is one that determines the success rate of startups looking to enter the global market. But, how should you go about it? Incorporating these key elements before deciding on a business model will increase your chances for success, especially when expanding to new markets.
Many international entrepreneurs develop unique products that have the potential to be very well received in their respective target markets. However, many run into difficulty when it comes to forming a coherent business model that will generate sales and early adoption and will be easy to implement. In order to run a successful business, you need a clear understanding of your current business model. Before making a decision on how to sell your product, you must examine very closely the following elements:
Customer Value Proposition: The stronger your customer value proposition, the more likely you will have customers using it. Your product or service must help to solve a problem or provide a very specific benefit. For instance, Amazon provides a unique yet simple online shopping experience for consumers and companies interested in selling their products on Amazon’s platform. It’s the largest online marketplace and you can find almost everything and everyone there. That’s tough to resist being part of.
While Amazon has a sophisticated offering and platform, it’s customer value proposition is simple. Unfortunately, many companies make the mistake of communicating too many benefits at once, which often clouds the core message, not only for customers but also for employees. This makes it tough to get traction in the marketplace.
Early Adoption: Your customer value proposition is worthless unless you get customer adoption. The cost of customer acquisition today could be high, especially if you are in a crowded market with lots of players. I like the approach of identifying a niche customer segment of early adopters and targeting them initially. These customers like experimenting with new things and can provide valuable feedback that can be used to improve your offering. This was the case with many successful companies like Facebook, Twitter, Gilt and others. Early adopters can also create lots of buzz, which is essentially cheap marketing.
Differentiation: Today, more and more companies understand that they need to be different than their competition and provide consumers with innovative features that set them apart. For example, LinkedIn executives understood that they could not avoid the social networking phenomenon and opened their platform to include third party applications and links to other platforms. Today LinkedIn has more than 80 million registered users, spanning more than 200 countries and territories worldwide, and is by far the most successful business networking platform on the web.
Pricing: Pricing can be another key way to build your customer value proposition. Zynga, the most exciting and talked about casual gaming company today introduced the virtual currency and the micro transaction models, which help bring more and more users to play their games, creating stickiness, while making these users their best sales force. Because their games are developed on a low-cost basis leading to high margins, Zynga became a monster player in just a few years.
These elements make up the core of a powerful business models, even though forming a successful business model can and should take lots of work, and frequently evolve over time. International startups looking to enter the US market must have a clear business plan in place when expanding internationally. It will impress investors, who are becoming more concerned about the viability of new ventures, and help in speeding up the a successful global expansion.
You have worked day and night for quite some time on creating what you feel has the potential to be a very successful product in a high growth market. You have put together a management team that is a strong and versatile that you are proud to work with. You have tested the market, exposed the company at networking events and relevant conferences. Now the time has finally come to meet with US investors and raise the first round of funding for the company, so you can strategically penetrate the US market and become a global company.
You have traveled a long way from your home country to meet with interested US investors, but, as an international entrepreneur you have different set of challenges that you need to address, from language barrier to cultural differences. How do you make sure that your first impression is going to be a positive one and not your last chance to meet with these investors? Here are some tips on how to bridge the gap and create a winning strategy for meetings with US investors:
Generally speaking, there is a tried and trusted formula in terms of the presentation content and overall approach, that US investors are used to seeing. It is the order that VC’s will frequently blog about and advise students at pitch Bootcamps to follow. Therefore, give investors what they want and expect in order to increase your chances of securing an investment and making your trip to the US a fulfilling one on all levels possible.
You are an international entrepreneur and your plan is to operate globally right from the start. Your first target market is North America and you are excited and eager to bring your revolutionary product or offering to this market where you know there is so much opportunity. You come here for a visit to look for an office, meet with potential partners and associates, test the market and get a feel for how successful your product can be in America.
And suddenly…you realize that it’s not that easy. You encounter business culture differences that you never anticipated. Processes are slower. Conference calls can take days and sometimes even weeks to set up. Emails are very professional and sometimes dry. The style, tone and overall business orientation of American businesses are different than yours. What was so much easier in your home country now becomes surprisingly complicated and many times seemingly impossible.
How do you bridge the gap and avoid making entry-level mistakes?
When Brian Anthony Hernandez, BusinessNewsDaily Staff Writer, asked me to be interviewed for a cover story on international entrepreneurship I was fascinated by his curiosity with the character of the international entrepreneur. After all we are both based in NY where we live and work among many other immigrants and international people. But, the more we spoke the more I was able to share with him the various challenges international entrepreneurs go through when expanding to the US market, and how I am trying to help companies and entrepreneurs from around the world overcome this.
Here are a few tips that can help global entrepreneurs looking to expand their businesses to the US market:
Are you looking to expand your business to the US market? What do you feel is the hardest challenge you might face?
“Entrepreneurs aren’t born, they’re made” – this phrase has become almost as ubiquitous as the age-old question, “Which came first, the chicken or the egg?” While the nature of entrepreneurs can be argued endlessly, there are a few qualities that an entrepreneur must embody in order to be successful. Here are 5 must-have attributes that facilitate entrepreneurial success.
1. No Fear
All the comforts of entrepreneurial life—from being your own boss to working from home—overshadow the drawbacks. Heavy workload, long hours, and inconsistent cash flow…this all sounds frightening, but an entrepreneur will deal with these aspects rather than live in fear.
In Start-Up Nation, authors Dan Senor and Saul Singer attribute Israel’s economic boom to its entrepreneurs’ non-aversion to failure. This fearless mentality produced a nation of entrepreneurs, some more successful than others but none afraid of failing. The more prepared you are for failure—not just financially, but mentally—the easier it will be to recover. Entrepreneurs, above all else, understand what it means to fail: learn from your mistakes, pick up the pieces, and try again.
2. The ‘Entrepreneurial Spirit’
Entrepreneurs have to be many things at once: visionaries, leaders, accountants, business developers, marketers, writers…the list goes on. Given the many roles an entrepreneur must play, flexibility is crucial to succeed in today’s competitive start-up landscape.
However, it takes more than flexibility to be a successful entrepreneur. The ‘entrepreneurial spirit’ is embodied by a passion like no other. An entrepreneur is a risk-taker, a go-getter, armed with a can-do attitude and a perseverant mindset.
3. Clarity
Many entrepreneurs struggle with clarity. What do we mean by ‘clarity’? Focusing your efforts. In order to do this, you need to clearly define your product, your target market, and establish goals.
Entrepreneurs can easily get carried away with ideas. Chances are your idea truly IS groundbreaking and creative, pushing you to take it in many different directions. However, in order to succeed you have to be practical. Define your product well, select a proper target market, and focus your marketing efforts efficiently.
Don’t forget to set goals and milestones as well. Without them, you won’t have any clear direction. Goals will help you stay focused on a specific path, and although you WILL hit several bumps along the way, your target destination will help you stay on the right track.
4. Differentiating Yourself
According to the Kaufman Institute, 2009 marked a 14-year high for entrepreneurial activity. While this is definitely an exciting moment to be launching your own enterprise, it is also a very competitive one. The market is likely to get saturated with start-ups seeking venture funding, which has unfortunately seen a decrease as of recently.
Your product offering may be unique, but it’s not the only one. Stand out from the crowd by using dynamic marketing techniques, like social media. This will engage potential customers and boost your brand’s visibility, basically for free! Keep in mind that social media is a time-consuming task that requires dedication, much like building a strategic partnership.
5. Relationship-Building
Networking shouldn’t be about schmoozing or collecting as many business cards as possible during a one-hour event. This will come off as annoying and, quite possibly, desperate.
While networking is all about building an expansive network, you need to be selective about who you’re contacting. In the short-run, this will make it a lot easier to cultivate strong relationships that in the long-run will provide you with the greatest value. If you spread yourself too thin, your relationships might crack and buckle under the slightest bit of pressure.
phone: 646-884-3442 email: Info@born-global.net
