HAVE YOU LOST THIS CAT?
FOUND 10 FEBRUARY
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What struck me most about the poster was that this was the first time - EVER - that I'd seen a poster advertising a cat that had been found.

You see dozens of posters every year saying 'LOST CAT (three -legs, one-eye, no tail, goes by the name of Lucky)' but never a poster that advertises a 'FOUND CAT'.

Usually if you lose your cat it's up to you to go and find it, put posters up, knock on doors etc.

And the same applies if you're starting or running a small business. You can't expect your customers to come knocking on your door. You have to find them. Just building a remarkable product or service isn't enough.

And that's the subject of today's brick . . .

Drucker's Three Camps

Peter Drucker, the forefather of all business gurus, had a crystal-clear way of looking at business problems.

He argued that every business problem he was called in to troubleshoot fell into one of three camps:

#1 Your Product
#2 Your Market
#3 Your Route-to-Market

For small businesses, the third camp, the route-to-market, is by far the most neglected – especially at the business plan stage.

Your route-to-market, just to be clear, is simply how you sell your product (whether through direct sales or indirect distribution channels).

So for example, the route-to-market for an importer of wines might be a combination of wine-tastings, local advertising, and sales to quality wine merchants.

The problem is this:

Many of us start with a bright idea for a new product or service, often something that solves a market need or caters for an emerging market niche (so far so good).

We devote a great deal of energy developing our product or service idea and researching our target market.

But in the rush to get started, we often neglect #3 on Drucker's list. How exactly are you going to get your customers (#2) to buy your product (#1)? What if that approach doesn't work? What do you try then? Remember - you can't expect your customers to come knocking on your door just because you've got a top product or service.

Many start-up business plans are full of product benefits and USPs, and full of market and competitor research. These plans almost assume that with the right product and the right market the business will work. This is wrong: you need to detail exactly HOW you plan to bring the two together; HOW you plan to sell your product to your market.

The difference between success and failure

Finding and exploiting your route-to-market can often be the difference between success and failure.

For James Dyson his big break wasn't the invention of a bag-less, cyclone vacuum - even after testing 5,000 prototypes.

No, Dyson's big break was finding his route-to-market. It took him 14 years to get his product into high-street shops like Dixons and Currys. When he did, they sold like hot cakes.

And for your route-to-market to be viable, it needs to be cost-effective. A family friend ran a sports shop in my home town. It was widely-regarded as the best stockist in the area, especially for racquet sports.

But he was still struggling to break-even. Eventually he found an additional route-to-market. He targeted tennis, squash and badminton coaches and offered a 30% discount on equipment they sold-on to clients (at a lower 15% discount). He made a killing! Effectively these coaches became a commission-only sales force for him.

Testing your route-to-market is the key. AOL hit upon its highly successful strategy of mailing free trial CDs, having realised that its niche was less internet-savvy than the average internet user.

AOL realised that if it could just get a CD in someone's hand, its task was a lot easier.

Now it blankets the globe with CDs in cereal boxes, Blockbuster videos, Sunday supplements and bank statements. For AOL it’s proven to be a much more effective route-to- market than display advertising or web banners.

30-Minute Actionplan

(1) If you're thinking about starting a business then write down, on the back of an envelope, one-sentence answers to these three questions:

#1 What is your product or service's unique-selling-point?

#2 Why is your target market so attractive?

#3 What is the most-cost effective way you will be able to acquire new customers?

When you can answer these 3 questions convincingly, you've got the basis of your first business plan.

(2) If you're up-and-running, set aside 30 minutes to think specifically about new routes-to-market that you can test.

What other products and services do your customers buy? Pick up the phone and ask colleagues, friends and family if they can think of any new way you can target your market. Don't dismiss any ideas out-of-hand.

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