An entrepreneur must have a thorough plan of planning in order to avoid a failure to execute new business. The plan includes: What business is owned, Starting your own or buying an existing company, Knowing what and where the market for the product or the service.
Starting is not easy because of many challenges that must be faced. Note Tips for Starting a New Business below.
To be successful at the beginning according to Harper (1991), it requires:
1. Very solid business opportunities.
2. Skills and abilities in the field that will be practiced.
3. The correct approach in running the business.
4. Sufficient funds to start and operate a business, so that can stand alone.
In starting a new business, we have to study the market situation and industry situation that will be entered. The market situation may have been met by other competitors, so that not easy to get into, maybe also the target market has been saturated.
Production and marketing orientation era likely soon pass into new era that is competition era. For that, it is essential to analyze the situation of the competitor forces existing in the market carefully.
Michael Porter (1895) stated that there are five competition forces determining in the industrial sector:
1. Threat of newcomers.
2. Threat of substitute goods or services.
3. Bargaining power of supplier.
4. Bargaining power of buyer,
5. Competition among existing competitors.
To deal with the market situation in the industry, Porter also suggested some generic basic strategies.
For the industrial market with a wider target, it can be applied the following strategies:
1. Different products (product differentiation).
2. The advantages of cost (cost leadership).
3. Cost of focus (cost focus).
4. The difference in focus (focused differentiation).
Companies can launch a product that is different from other competitors by producing innovative products or at least no differences but more beneficial as compared to other competing products. Another strategy is to take advantage of the cost.
This cost advantage can result in lower production costs so that we can sell at a more competitive price.
