Final Reflective Blog Post
Starting the year, I knew very little about managing a business. I understood some of the basic ideas around marketing and advertising, the basics of copyright law and the need to track my financials. But how do I put everything together to create an actual business? Throughout the module, we looked further into all the elements of running a business, no matter how big or small.
Firstly, we investigated business models for various companies and analysed a company of our choice to look further into how a company chooses to create, deliver and capture value. Business models are a quick way to test assumptions about an existing company. In the HBR article what is a business model the writer discusses concepts which were coined by Peter Drucker who describes business models as assumptions about what a company gets paid for”. (Ovans, 2018)
I would need a business model which brings my customers back to me when they need changes to their website or further graphic design work done for them. One way to achieve this would be to create a revenue stream through subscription services to design changes for several hours a month like many IT support companies structure themselves, with any further work charged at the normal rate. The key metrics of designing a website would be the same regardless of who the designer is, however, my unique value proposition would be to bring these customers ongoing support.
Intellectual property rights allow businesses to protect their unique value propositions and help companies to ensure that their property is not being infringed on.
For web design, many of the layouts and designs I create, including the colours used, the logos and typography will be subject to copyright. As a website designer working for many clients, I will either need to ensure that I own the rights to the designs I create and sell the rights to the company or persons using my services.
I also need to be aware of the rights for using other people’s work in my designs, for example many freely available fonts online may be fine for non-commercial work, but a license may be required to use the font for a commercial project.
New venture development
Creating a business from an idea is a process, and there are many ways to achieve the goal however we looked further into the idea of The Lean Startup. This is a method for creating a business through the minimal efforts needed in order to get a company off the ground. When reading the book written by Eric Reis, one concept stuck very true to what I was feeling at the time.
“Startup success is not a consequence of good genes or being in the right place at the right time. Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught.” (Reis, 2011)
For me, this means that with an idea and the knowledge of the process, I can create a business. Another important concept from the book is to learn to accept that startup businesses will probably fail. The assumptions that we make about how our target customers will respond to our business cannot always be correct, and a lot of the time, we may not even know who our target customers are.
Another document which we looked at was the Global startup ecosystem report 2018 which shows data and assumptions based on research into various industries. I gathered that there is a clear decline in digital media and gaming, and a huge growth potential for blockchain and AI. In one class for Mapping the creative economy delivered by Michelle Peterson, we discussed the Gartner Hype Cycle for emerging technologies (Gartner.com, 2018) both the report and the hype cycle show that what is currently at the forefront of startup businesses in 2018 are also at the top of the hype cycle or nearing the top in the coming years.
Brand Management and Advertising
Although these lectures were given separately, managing a brand and advertising a product sit hand in hand in the business model. Before advertising a business or product, we would need to create an identity which customers can relate to. Branding is about reputation, and often the most well-known brands promote a message through their advertising strategies.
Statistics from Interbrand show that brands such as Apple, Google and Amazon are among the top brands. Apple’s brand and reputation has a lot to do with the way they advertise their products and services. Taken from the Harvard Business Review article Three Critical Innovation lessons from Apple (HBR, 2010), Apple’s approach is to build a portfolio of products, rather than individual products. Through this they have created a brand which tells the consumer they care about quality over quantity and deliver this across the range of their products.
Advertising can take form in a few different ways. This can be broken down into rational and emotional appeals in order to target certain types of customers to buy or use certain products.
We can use slice of life, storytelling, expert or customer testimonials and demonstrations to advertise products. In my approach for web design, I would likely be using customer testimonials and stories to show how my designs helped my client to achieve his goals. Strong advertising is not just in the making of the advert but derives from a sound marketing strategy and take the consumers viewpoint into consideration to persuade them that this is the best product or service for the task (Yeshin, 2011).
Understanding the finances of a business is one of the most important aspects of running a company. Without an understanding of how the money is coming in and where it is being spent, it is difficult to track a company’s performance. All businesses regardless of sector will operate to create value, and this usually means to generate a profit for their shareholders.
In the classes with Simon Hulme we reviewed basic concepts of finance such as product pricing, the balance sheet, profit & loss statement and break-even point analysis. These documents can help a company make strategic decisions as they often show Key Performance Indicators (KPI’s) which can be used by shareholders and management to pivot if the business is not profitable.
In my blog post about finance, I looked deeper into each of these documents and how they can be used to assess a company’s financial health. In summary, if I were to use these documents for my web design business, I would be able to work out how to price my products in order to turn a profit, which can be checked against estimations in the break-even analysis to figure out when profit might be made. Although all of these documents are important, I believe that the most important is the Break-even analysis which can help to forecast how long it would take to become profitable.
Strategy and the Business Strategy game
During the term we learnt how to apply strategy theories by playing the Business Strategy game (BSG). Part of a good strategy is to consider what your competitors will do and be able to react to market changes. The strategy our team started with was a ‘More for less’ strategy in order to sell products at a lower price than our competitors but meeting the same quality expectations. The problem with this approach is that other companies had priced their products much higher and still owned much of the market share.
The Business Strategy game taught me how to analyse statistics in order to make assumptions. One major learning point for me was Strategy requires you to adapt to what is happening and shouldn’t be considered as set in stone (Hussain S. 2018). During the BSG, we found that other companies were entering the private label market using overall cost leadership strategy like our strategy for branded production and missed out on a large portion of the market due to not entering the private label.
By the time we had entered this market, we were too late, and this negatively affected our score. We then pivoted to a differentiation strategy in order to provide more variation in the branded production sector and increased our prices to make use of our already large market share in this part of the industry. This taught us that it is not always about undercutting the competitors, and often the best strategies consider how to use all other aspects of business management to come out on top.
In conclusion, without the knowledge of the business model, finance, advertising and branding, and intellectual property rights it would be very difficult to create a business that is sustainable. Entrepreneurship and the success of businesses is not dependent on talent or any intangible means but can be obtained through correctly following a process to create a unique value proposition.
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Ries, E. (2011). The Lean Startup: How Constant Innovation Creates Radically Successful Businesses. p.3.
Gartner.com. (2018). Hype Cycle Research Methodology. [online] Available at: https://www.gartner.com/en/research/methodologies/gartner-hype-cycle [Accessed 18 Dec. 2018].
Startup Genome (2018). Global Startup Ecosystem Report 2018. [online] Startup Genome. Available at: https://startupgenome.com/report2018/ [Accessed 18 Dec. 2018].
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Michael J. Band Susan Hart. (2008). The Marketing Book (6th ed.). Routledge.
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Hussain, S., Kniel, J. and Sharma, K. (2018). DANK SHOES – BSG Presentation. [online] Google Docs. Available at: https://docs.google.com/presentation/d/1BTEnaSnlDHAbnfJyt7N-XGfoKypWPiKivqh3L8bQj3A/edit#slide=id.g49ba6d39a3_0_179 [Accessed 18 Dec. 2018].