Good business advice from a post @ Alibaba for newbies

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I can hardly do due diligence on others if my very own business planning is faulty. So, perhaps something called "Due Diligence" starts with asking myself this tough question ... will my marketing and business plan work?
First, a few insights into internet risks for newbies then a look at the basics of marketing and business planning. Following is the info in this Topic (about which your views are warmly invited) ... .
1. For Newbies: know your Internet Risks ...
2. For Newbies: never believe what you see on your internet computer screen ...
3. Nine out of ten new businesses go broke ...
4. For Newbies: get the Import-Export knowledge and identify the hidden costs ...
5. Financial Modelling ...
6. The difference between "Marketing" and "Sales" ...
7. A Marketing Budget is essential ...
8. The Business Plan ...
9. Work Diary ......
10. Summary of Essential planning tools
1. For Newbies: know your Internet Risks ...

In doing business on the internet we must rely on much more than our normal trusty "sixth sense". Some say anything less than "extreme care" is a certain way to lose money when dealing with a potential supplier (or buyer) over the internet, including here on Alibaba.
The internet is plagued with resourceful criminals who will spend months building a relationship under cover of professional looking websites complete with sending high quality samples they do not actually sell. They even steal the passwords of genuine suppliers' websites. So, at times, you don't know who you are really talking with on the other end. And, these criminals have been known to set up temporary real offices to give you the comfort of a real street address and phone number when you cross-check. Or, they copy the name and address of a real registered company onto a fake website, and so on. Variations in the criminal mind are endless in sophisticated schemes to steal your money.

Alibaba, like other business-to-business ('B2B') portals does not and cannot represent to you that all it's supplier members are genuine. On Alibaba you have thousands of very genuine and reliable suppliers - more genuine suppliers than anywhere else on the web. But, as elsewhere, Alibaba is infiltrated both by criminals and shoddy manufacturers.

The price to you of free membership in any B2B website is (a) take time to be aware of the unreliable nature of the internet (b) very carefully investigate a supplier once you enter into serious negotiations. Otherwise, B2B websites would have to charge big money for membership for themselves to check out all the listed suppliers for you. There are no free lunches in this world.

Good news is there are 1,000s of genuine suppliers on Alibaba. It's just a matter of using extreme care to sort the wheat from the chaff. And, more good news is that other topics in our Due Diligence forum aim to help you to learn how to self check suppliers.

Perhaps the best news is that trusty personal helpers are available on the ground in China for remarkably little cost. See here ...
2. For Newbies: never believe what you see on your internet computer screen ...

I searched for "Treo 700P phones" under "Selling Leads" at the top of our Alibaba page. Here's the search result:
Alibaba Manufacturer Directory - Suppliers, Manufacturers, Exporters & Importers

Now, here's what members say about those suppliers ...
Alibaba Manufacturer Directory - Suppliers, Manufacturers, Exporters & Importers

Get the point?

Go to our Fraud forum to understand that criminals are furiously at work in all countries, including in China, scheming to steal your money.
Safe Trading Basics-Safe Trading
That link is Alibaba's Fraud & Security forum moderated by renowned international expert on web fraud, Mr Jonas Anderson, based in Sweden.

Video: see the cops busting Nigerian scammers here:
That web site you think is in UK or even in China may well be a front for just another Nigerian scammer (to mention but just one country, as every country on earth harbours 1,000s of smart internet scammers).

And, here's just a few members' bad experiences of the past year ...
Alibaba Manufacturer Directory - Suppliers, Manufacturers, Exporters & Importers

3. Nine out of ten new businesses go broke ...

Nail a sign above your desk saying "9 out of 10 new businesses go broke in the first 12 months".

It's a statistical fact that around 85% of all new business start-ups in the Western world (save for old Europe) go broke in the first 12 months. That's for every sort of business, not just import-export. I am not colouring the subject - those are the hard cold facts.

If I had to pick just one key reason for that awful statistic, I would boil it down to living on hope rather than living on reality.

Were do I find reality?

It's all about putting precise marketing and business plans on paper. It's about bouncing your written plans off experienced people. Not "yes" people like friends and family. Bounce the plans off hard nosed business people who've made the grade - people who failed and came back and then failed and came back again. People who at the end of the day were successful.

Say to a successful business person "Here's a business plan. Pretend you paid me $5,000 to write it for you. What do you think?"

You won't find a better way to avoid going broke than that method.

Bottom line ... get rid of "hope". Work on "reality" and you're looking good.

4. For Newbies: get the Import-Export knowledge and identify the hidden costs ...

Before making business plans or even talking seriously with potential suppliers we must learn the basics of Import-Export along with the meaning of key Trade Terms and the usual sort of Documents, Payment Methods and Shipping ... it's all here on Alibaba's several good forums. Your research on those forums will also help you uncover all the hidden costs involved in Import-Export.

Now you need to assemble your many costs on a financial model.

5. Financial Modelling ...

The many different costs in the whole activity chain of buying something out of say China for resale in your own country must be punched into a financial model on your computer. Typical software lets you automatically calculate % costs etc and see the bottom line projected profit. Change any line item and the bottom line profit automatically changes. Such software and the skill to use it is essential in even the most tiny trading business.

About 5 hours of your time spent learning the basics of financial modelling, on something like Excel, is essential. Without those skills, you're back in the "nine out of ten go broke" league.

6. "Marketing" and "Sales", the difference ...

"Marketing" is not "Sales". It's critical to know the difference.

Broadly, Marketing creates the atmosphere to make it easy for sales to happen. Marketing consists things like:
Marketing Strategy: your product must be aimed at consumers in one only of the Mass Market, Mid-Market or High End (only one product in the entire history of marketing has ever succeeded in all three of those consumer areas). Aiming your product at all three in a shotgun approach confuses consumers resulting in your business going broke.
Target Market: strategy includes identifying a specific group of consumers (age bracket, etc) within your one Mass, Mid or High End market area. The better we identify our target group, the easier it is to make sales.
Research your competitors - "know your enemy".
Point of Difference or Unique Selling Proposition (USP) as it is sometimes called. Why should a customer walk past my competitors to come to me?
Writing our marketing material: brochures, adverts, websites, etc, all precisely pitched to our Target Market.
Developing our brand names and good reputation ('Image'). Chasing free editorial.
Devising tactics to turn first time buyers into repeat customers.
And, the list goes on and on ... marketing is anything that creates atmosphere to make it easier for sales to happen.
"Sales" obviously is getting out and writing the orders ... tough disciplined work. This involves skills like "closing" the sale - very different skills to Marketing.

A marketer is a creative person, a law unto himself, a person with few boundaries, a person who lives inside the head of your customer, a person who dreams and creates at any/all hours of day and night, a person who can send normal disciplined people crazy. For a marketer, the thrill of the chase is creating original thinking / products - original ideas that work, ideas that nobody else thought about. Top marketers are some of the world's highest paid professional people.

A salesperson, unlike a marketer, is a well disciplined person who works within a tight set of conventional rules to get the sales orders. A salesperson is motivated by the thrill of closing a deal and the attendant cash bonus. You drive a good sales person crazy when you don't give him/her sound marketing back up.

Good sales people do not make good marketers and vice versa ... Selling and Marketing are very separate disciplines involving very different ways of thinking.

7. A Marketing Budget is essential ...

Chaos occurs when (particularly) a mid-size business instructs its salespeople to do the marketing. It's happening in most mid-size Chinese manufacturing companies today. It's sending both Chinese salespeople and potential Western buyers crazy - the clear lack of defined Mission, Image and professional Marketing Material is causing chaos between staff salespeople and potential buyers. The same happens in Western countries when a business owner tries to be both seller and marketer.

Mum and Dad shop-front small business happily gets away with no marketer because these businesses thrive mostly on word-of-mouth where customers themselves do most of the marketing. They sensibly get marketing help for things like Glossies and Image.

Too many small biz websites don't work because they are designed / written by a good owner or salesperson instead of by a marketer. The salesperson sees the world from his/her viewpoint whereas a marketer sees only what the potential buyer sees. In particular, owners like to start by talking about themselves - the very last thing a potential buyer wants to hear in opening paragraphs.

Unless you have extraordinary talents, you cannot be both a Seller and a Marketer.

No matter what your business, you will likely not succeed unless you pay money for outside marketing help even in some small way.

8. The Business Plan ...

A Business Plan can be written anyway you want it. This design works for both tiny and large business:
Mission Statement
Mission statement, in my book, is one precise single sentence stuck in the brain, like "I shall be the leading supplier of Widgets for the mass market in my State".

Mission clarity and precision makes all future decisions much easier. Any issue at hand either fits the Mission or it doesn't. For example, the above Mission says "mass market" so product quality is hardly an issue - all that really matters in the mass market is price. Having a clear simple Mission statement eliminates time wasting thoughts. A generalised Mission of "I am going into the import business" is a recipe for doom.

Importantly, our sub-conscious mind does wonderful things when we have a clear long term goal. Our subconscious automatically keeps us on track - guides us along the shortest path to our goal. In absence of a clear simple goal we tend to wander in a criss-cross path covering maybe 10 times more area than necessary. Little is more powerful than our subconscious mind at work on our goal - it ticks away while we are asleep at work or at play. Know your clear goal and your subconscious will somehow make you get there ... just keep the Mission words simple.

Objectives is the general master plan to achieve the Mission. It's the steps to reach the top of the ladder. It's a spreadsheet of number of years / product variations / geography or whatever as necessary to achieve the Mission. Like, year 1 = $x sales at Timbuktu / other. Year 2 = $x at Whatchama. Timing to complete each objective is important. But, go easy on objectives for the first year where just achieving break-even is a prize.

We periodically review /adjust/change our Objectives according to actual found conditions from year to year, but our Mission itself never changes. Our Objectives should consume no more than one page - a sort of general 3 or 5 year plan if you like.

Milestones - the same as those mileage stones you whiz by on the side of a highway journey. Each marks one mile of a journey. This is short term detailed planning for the first year ahead.

Go to the year one Objective. Compile a list of the various elements of marketing, finances, etc necessary to reach that year one objective. Each one of these elements is a Milestone - one step closer to the end of the journey. Research / work out / write down what must be done to get past each Milestone while noting the costs.

Budgets. Year one Budget now automatically falls into place - each budget sub-heading is one of those Milestones. We see these milestones whizzing by once we get the business up and going.

9. Work Diary ...

The only thing I have ever seen in common between top self-made successful people is that each runs a superior diary system for staying organised. I have noticed that things like education, background and IQ seem to have nothing to do with breaking through to top echelon level of business success.

However, I have never seen a single top echelon self-made person who does not run a superior diary system for staying organised.

A proper diary system results in a permanently clear mind free of those nagging "What did I forget" sort of feelings. It frees the mind to deal with real business in a very organised way.

The way to start a diary system is to empty the head of every specific thing to do that is on the mind. Scatter these items through the diary days, weeks and months ahead. Things like phone calls to be made, physical things to day both in the office and outside. Particular things to ask particular people. Then, whenever something comes to mind that must be done, just write it in the diary - both personal and business matters. After a week or so this becomes an auto habit without second thought. The head becomes completely empty of "What must I do" stuff.

Importantly, a good diary must also contain promises made by others to get back in touch. For example, in a phone discussion today, the other person promises to ring back with info in a day or day. Immediately go a few days ahead in the diary and note the persons name in the phone call section on the diary page. Denote the difference between calls expected from others and calls you must make by using simple little symbols. Business life, to a great extent, relies on promises made by others. These promises must be tracked / followed up.

Critically, each diary page must be closed off each day. Transfer things not done today to future days and then slash a line through the page. That way, it's impossible to ever forget to do anything or forget to chase people who made promises to you.

10. Essentials ...

If I had to start a new business limited to the most basic tools, I would select in this priority:
Clear Mission statement
Proper Work Diary
Budget and Financing
Point of Difference or USP (why a consumer should walk past my competitor and come to me).
Repeat Customers (devising tactics to turn first time customers into repeat customers because a repeat customer is pure gold).
Image (business and/or product image and consumer packaging because consumers buy "image" they do not buy "product").
I trust my thoughts help somebody in some little way. It comes, not from books, but from many years of experience in managing both tiny and large scale complex projects. I have never seen even a small project survive without full and proper planning.

You are invited to post your own ideas and questions about marketing and business planning below.
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