Some general advice on penetrating markets is:
A Company Runs on Money
A company is not a salesman with a product. Rather a company is an organization consisting of marketing, sales, accounting, manufacturing, and product development employees. A company runs on money. There is no point in hiring people unless you have the money to pay them.
- Adequate funding. Penetrating a new market is expensive.
More businesses fail from lack of adequate capitalization, than from any other cause.
Resources are Finite
Your resources are finite. The longer you take to become profitable, the more dismal are your chances of survival.
- Act quickly. The time to market is very important. A plan which can be implemented in months is better than one which requires years.
Better to Hurry than to be Late
It is acceptable to blunder in hurrying into a market, there is little point in developing a product which reaches the market too late.
- Sun Microsystems took this advice to heart. Allows maximum use of market windows.
- Xerox in the 1980s was late in bringing its workstations to the market, and never was a significant workstation market participant.
Time When You are most Vulnerable
Your company will be the most vulnerable when you are out of money, your employees are exhausted, and your spirits lowest. At such times, your competitors will be eager to take advantage of your situation. In such situations, even the best executive will have poor hopes for success.
Recognizing How You Can Fail
If you do not understand the ways in which your company can fail, neither will you see the most advantageous ways for it to succeed.
Understanding that cash is the life blood of a company, without which it will fail, Seagate Technology takes whatever actions are required to maintains its profitability.
- Boston Consulting Group used to push the strategy of running down the learning curve. Make note of how Texas Instruments got fouled up here.
Entering a Market is Expensive
Expanding into a market is expensive. Making continual requests for money and resources will prevent your company from other necessary activities. If no restrain is shown, you will eventually no longer get the willing cooperation of your employees, they will be burnt-out.
- Always be profitable. Fund additional efforts by profits. Don’t expect additional money to support the efforts.
- Companies such as Apple Computer, Compaq, Hewlett-Packard, and Linear Technology have grown steadily due to their profitable operation.
Consider the failure of startups Ibis, Metaphor, Plexus, Synapse, Tolerant, et cetera, who never achieved consistent profitable operation.
Use Local Suppliers
When manufacturing a product, obtain your materials locally. The time and expense of obtaining materials from existing company sources will be much more expensive.
Reward Your Employees
Reward individuals. Early participants should be rewarded as initial success is achieved.
- Stock options are often used in United States startups to provide incentive to every employee. Some large companies have formed small spin-offs which may latter be merged into the corporate entity.
When you hire new people from competing companies, integrate them throughout your company and make them feel welcome, so that your company will be the stronger.
Profits are Crucial
What is essential in business is how short a time it will take to become profitable, not how long you were able to survive before becoming bankrupt.
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