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How Not to Start from Zero for New Startups

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How Not to Start from Zero for New Startups

Looking to start a business but are unfamiliar with the potential profitability in the industry, and don’t really want to start everything from zero?

This simple tool is the perfect one for you to start with — Porter’s Five Forces Model. It is an effective tool to evaluate the existing market.

And if sometimes you are asked to analyze a market and identify its major competitors but you are struggling on where to begin; or, if you are looking to raise your company’s competitiveness in the industry, the Porter’s Five Forces Models could then be your remedy.

What exactly are the Porter’s Five Forces?

The Porter’s Five Forces Model is named after Michael E. Porter, an economist. He proposed the model in his 1979 book Competitive Strategy. While there are different names for the five forces to different experts, they are essentially the same. Generally, the five forces are as follows:

    1. Threat of Substitution

    It concerns the availability of substitutes products or services from the competitors. Porter’s definition of substitute good in the model refers to a good in another industry. The goods or services are substitutes if they can be used in place of one another. This force is affected by various factors including the cost for customers to switch to a substitute, buyer’s propensity to substitute and price-performance of substitutes.

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    2. Threat of Established Rivals

    It considers the strength of the rivalry present in the current industry.There are a number of possible factors including number of competitors, pace of market growth and diversity of competition.

    3. Threat of New Entrants

    It refers to the potential threat posed by newcomers in the industry. It is also known as the barriers to entry as it measures the vitality of new entrants in an industry. Capital costs, branding of existing competitors and requirement of proprietary technology or patents are the major factors influencing the force.

    4. Bargaining Power of Suppliers

    It concerns the ease for suppliers or factor of production to raise prices. For example, the number of possible suppliers and whether they produce homogenous or differentiated products can influence the price to a great extent.

    5. Bargaining Power of Customers

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    It considers the ease for customers to push for a lower price. To illustrate, it is more likely for customers to demand a lower price if they purchase a large amount of goods or services. Number of customers and brand name strength also affect the bargaining power of customers.

    The first three forces are from horizontal competition while the remaining are from vertical competition.

    What’s good about the Porter’s Five Forces?

    Every owner and stakeholder of a business has a question in common: how to maximise the profitability?

    By evaluating the industry using the model, we can grasp a clearer picture of the overall environment of the industry. In fact, the model can also be applied to have a better understanding of the current major competitors. Identifying their strengths and weaknesses allows us to devise a better strategy to further boost our competitiveness.

    We can also evaluate the potential of our business by comparing us with other competitors to see if the market has been saturated or not.

    On the other hand, the model tells us on what aspect we are better. Thus, we can put more effort to expand our competitive advantage in order to always stay ahead of the counterparts.

    Besides, after analysing the current and potential future states of the five competitive forces, we can seek to manipulate the forces in our favour. Adjusting the strategy can change the impact of competitive forces on the organization. A proper shift in direction can lead the company to a bright future.

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    Anything challenging about the Porter’s Five Forces?

    Despite that Porter’s model may be applied to a lot of good use, it is a little too ideal to look at the industry. The model provides directions to evaluate an industry but such analysis is based on a perfect market assumption. In reality, the market is seldom if not never in such ideal conditions so it is impossible to perfectly evaluate an industry with this model. Instead, the model is only applicable to simple market structures.

    Morever, the model overlooks a sixth force – Complementors. Complementors refer to those who sell products and services that are best used in conjunction with a product or service from a competitor. Intel and Apple are a good example which they are in fierce competition yet there is obvious reliance of each other in the industry. Taking the sixth force in account makes the model more well-rounded.

    Lastly, the model also overlooks the technology component in today’s business world. As the model was proposed back in 1979, influencing power of technology was almost negligible compared to nowadays. Disregarding the technological aspect may render the whole analysis inaccurate. Hence, the factors in digitalisation or globalisation is usually added into the model now.

    When’s the best time to apply the model?

    When is a good time to make the best use of the Porter’s Five Forces Model? For business startups, it is unwise for entrepreneurs to start a company before exploring the profitability of a new entrants in the industry. In that case, the model can come in handy to analyse the market before putting in effort and investment.

    Also, the model can be a good tool for an operating businessto fine-tune its strategies for better growth. It is especially useful when the business is experiencing stagnant progress and has no clues where goes wrong. The model may provide the answer for the dissatisfaction.

    Here we demonstrate how the Porter’s Five Forces Model can be used to evaluate a business. Two world-renowned business, Facebook and Nike, are chosen.

    Example 1: Facebook

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    The social networking market is significantly competitive and is constantly under rapid changes. Due to frequent introduction of new technologies, Facebook has to cope with the situation by continuous innovation and adaption to the ever-changing environment. Besides, the social networking market is unlike other market for its ease to enter the industry.

    Consequently, increased number of competitors intensifies the competition further, making the Threat of New Entrants and Established Rivals greater. Lastly, as the mobile market is emerging while the switching cost for users from computer to mobile is low, the Threat of Substitution is also great.

    Example 2: Nike

    The Threat of Established Rivalry is the major worry for Nike, as there is established as well as upcoming counterparts in the market. The low barrier to entry also poses a big threat to Nike as the large number of competitors will significantly impact the profitability. If Nike is unable to adapt to the customers’ trends, the growth can be severely impacted or even recorded in negative digits.

    Besides, the Bargaining Power of Customers is also worth consideration as the wholesaler can request for greater discounts for their tremendous demands.

    Featured photo credit: Flaticon via flaticon.com

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    Jeffrey Lau

    Editor. Sport Lover. Animal Lover.

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    Last Updated on August 25, 2021

    Why Personal Branding Is Important to Your Career

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    Why Personal Branding Is Important to Your Career

    As a recruiter, I have met and interviewed hundreds of candidates who have no idea who they are.

    Without a personal brand, candidates struggle to answer the question: “tell me about yourself—who are you?” They have no idea about who they are, what their strengths are, and how they can add value to the company. They present their CV’s believing that their CV is the key to their career success. In some ways, your CV still has its use. However, in today’s job market, you need more than a CV to stand out in a crowd.

    According to Celinne Da Costa:[1]

    “Personal brand is essentially your golden ticket to networking with the right people, getting hired for a dream job, or building an influential business.” She believes that “a strong personal brand allows you to stand out in an oversaturated marketplace by exposing desired audiences to your vision, skillset, and personality in a way that is strategically aligned with your career goals.”

    A personal brand opens up your world to so many more career opportunities that you would never have been exposed to with just your CV.

    What Is Your Personal Brand?

    “Personal branding is how you distinctively market your uniqueness.” —Bernard Kelvin Clive

    Today, the job market is very competitive and tough. Having a great CV will only let you go so far because everyone has a CV, but no one else has your distinct personal brand! It is your personal brand that differentiates you from everyone else and that is what people buy—you.

    Your personal brand is your mark on the world. It is how people you interact with and the world see you. It is your legacy—it is more important than a business brand because your personal brand lasts forever.

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    I have coached people who have very successful careers, and they come to me because they have suddenly found that they are not getting the opportunities or having the conversations that would them to their next role. They are having what I call a “career meltdown,” all because they have no personal brand.

    A personal brand helps you become conscious of your differences and your uniqueness. It allows you to position yourself in a way that makes you stand out from the pack, especially among other potential job applicants.

    Don’t get me wrong, having a great CV and a great LinkedIn profile is important. However, there are a few steps that you have to take to have a CV and LinkedIn profile that is aligned to who you are, the value you offer to the market, and the personal guarantee that you deliver results.

    Building your personal brand is about strategically, creatively, and professionally presenting what makes you, you. Knowing who you are and the value you bring to the table enables you to be more informed, agile, and adaptable to the changing dynamic world of work. This is how you can avoid having a series of career meltdowns.

    Your Personal Brand Is Essential for Your Career Success

    In her article, Why Personal Branding Is More Important Than Ever, Caroline Castrillon outlines key reasons why a personal brand is essential for career success.

    According to Castrillon,[2]

    “One reason is that it is more popular for recruiters to use social media during the interview process. According to a 2018 CareerBuilder survey, 70% of employers use social media to screen candidates during the hiring process, and 43% of employers use social media to check on current employees.”

    The first thing I do as a recruiter when I want to check out a candidate or coaching client is to look them up on LinkedIn or other social media platforms, such as Facebook, Instagram, and Twitter. Your digital footprint is the window that highlights to the world who you are. When you have no control over how you want to be seen, you are making a big mistake because you are leaving it up to someone else to make a judgment for you as to who you are.

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    As Jeff Bezos, the founder of Amazon, once said, “Your brand is what people say about you when you are not in the room.”

    In her book, Becoming, Michelle Obama writes about the importance of having a personal brand and her journey to defining her personal brand. She wrote that:

    “if you don’t get out there and define yourself, you’ll be quickly and inaccurately defined by others.”

    When you have a personal brand, you are in control. You know exactly what people will say about you when you leave the room.

    The magic of a personal brand is that gives you control over how you want to be seen in the world. Your confidence and self-belief enable you to leverage opportunities and make informed decisions about your career and your future. You no longer experience the frustrations of a career meltdown or being at a crossroads not knowing what to do next with your career or your life. With a personal brand, you have focus, clarity, and a strategy to move forward toward future success.

    Creating your personal brand does not happen overnight. It takes a lot of work and self-reflection. You will be expected to step outside of your comfort zone not once, but many times.

    The good news is that the more time you spend outside of your comfort zone, the more you will like being there. Being outside of your comfort zone is where you can test the viability of and fine-tune your personal brand.

    5 Key Steps to Creating Your Personal Brand

    These five steps will help you create a personal brand that will deliver you the results you desire with your career and in life.

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    1. Set Your Personal Goals

    What is it that you want to do in the next five years? What will your future self be doing in the next five to ten years? What is important to you? If you can answer these questions, then you are on the right path. If not, then you have to start thinking about them.

    2. Create Your Unique Value Proposition

    Create your unique value proposition by asking yourself these four questions:

    1. What are your personality features? What benefit do you offer people?
    2. Who are you and why do people enjoy working with you?
    3. What do you do and what do people want you to do for them? How do you solve their problems?
    4. What makes you different from others like you?

    The answers to these questions will give you the information you need to create your professional story, which is the key step to creating your personal brand.

    3. Write Your Professional Story

    Knowing who you are, what you want, and the unique value you offer is essential to you creating your professional story. People remember stories. Your personal story incorporates your value proposition and tells people who you are and what makes you unique. This is what people will remember about you.

    4. Determine Which Platforms Will Support Your Personal Brand

    Decide which social media accounts and online platforms will best represent your brand and allow you to share your voice. In a professional capacity, having a LinkedIn profile and a CV that reflects your brand is key to your positioning in relation to role opportunities. People will be connecting with you because they will like the story you are telling.

    5. Become Recognized for Sharing Your Knowledge and Expertise

    A great way for you to promote yourself is by sharing knowledge and helping others. This is where you prove you know your stuff and you gain exposure for doing so. You can do this through social media, writing, commenting, video, joining professional groups, networking, etc. Find your own style and uniqueness and use it to attract clients, the opportunities, or the jobs you desire.

    The importance of having a personal brand is not going to go away. In fact, it is the only way where you can stand out and be unique in a complex changing world of work. If you don’t have a personal brand, someone will do it for you. If you let this happen, you have no control and you may not like the story they create.

    Standing out from others takes time and investment. Most people cannot make the change by themselves, and this is where engaging a personal brand coach is a viable option to consider.

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    As a personal brand coach, working with my clients to create their personal brand is my passion. I love the fact that we can work together to create a personal story that defines exactly what people will say when you leave the room.

    Other People’s Stories

    Listening to other people’s stories is a great way to learn. In his article, 7 TED Talks About Personal Branding, Rafael Dos Santos presents the best Ted Talks where speakers share their stories about the “why,” “what,” and “how” of personal branding.((GuidedPR: 7 TED Talks About Personal Branding))

    Take some time out to listen to these speakers sharing their stories and thoughts about personal branding. You will definitely learn so much about how you can start your journey of defining yourself and taking control of your professional and personal life.

    Your personal brand, without a doubt, is your secret weapon to your career success. As Michelle Obama said,

    “your story is what you have, what you will always have. It is something to own.”

    So, go own your story. Go on the journey to create your personal brand that defines who you are, highlights your uniqueness, and the value you offer to the world.

    Featured photo credit: Austin Distel via unsplash.com

    Reference

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