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Location Does Matter

One of the biggest mistakes that promoters make, is falling in love with a business idea and believe that the idea will succeed no matter where it’s based.

Many a time, entrepreneurs start businesses they “think” people want, and get so hyped up about it. So much so that, if they didn’t get the right place, they start anywhere available, believing that customers will come to them. And that might not actually happen. The business fails.

Promoters spend a lot of time, sometimes even years, trying to find that one big idea that will click. A business idea is an opportunity that has potential in a market. But having a ‘Eureka’ moment is not enough to jump-start it as a business. 

For a good business idea to win, it has to satisfy several criteria. In this post, the ‘Location’ is our topic.

What is the point of starting a business where there are no target customers? That is why, when it comes to location, the right market has to be selected. So what is a market? It can be a village, a city, a district, a region or a state, or even a country or several countries. But it needs to have the target customer segment in it.

Once the market is selected, comes the second step. The exact location of serving the clients. This is specifically important where customers or clients have to physically visit the premises. 

The location in the market is crucial. It has to be located where it’s closest to the target customer and is easily accessible and visible to them. That is the reason why shops that are based in the right street but the wrong building fails. Or based in the right building but the wrong floor fails. Or based on the right floor but the wrong area fails. Or based in the right street but wrong visibility fails. It’s a very important matter and it’s a shame when a great business idea fails just because the location was not right.

So why do entrepreneurs make this mistake when it sounds like common sense? Several factors can play here.

One reason is the non-availability of space in the ideal location. In which case, we as Management Consultants would advise not to start now and wait for the right location to come up, or move into another market where the right space is available.

The second reason is the high rental of the properties in the right location. This is a tough reality and one has to be careful here. When faced with such a situation, the entrepreneur has to evaluate how much rent is viable for the business. This might be complicated for most entrepreneurs. In such cases, it’s ideal to engage management consultants or management consulting firms (like AASC) to do a detailed analysis on the financial viability of the location, and check if that rent is viable. Sometimes, a location that has high rent can still be a profitable option.

The third reason can be impatience to do a proper study. Promoters or entrepreneurs can fall in love with an idea, that they simply want to start ASAP. They get hold of the first property and launch the business there. And as the days pass by and they witness lower footfalls, they realize that the location or the building or the floor is not ideal for their customers. Here we as management consultants, always ask our clients to take it easy and do a proper study. In fact, a typical study at AASC takes about 2-3 months to complete. With the market study taking about 30 to 45 days. With such a detailed study, the pros and cons are evaluated before making a final verdict of not just the location but the business itself. 

The fourth reason can be overconfidence. The illusioned belief that the product or service that the entrepreneur intends to provide to the customer is so much in demand, or the price is so attractive or the quality is so high that the customer will seek them, no matter where they are. In most cases, it does not work. And the business goes belly. But in some rare cases, it can work- for some time. This is when the customers really do need it and they take the pain of reaching you despite the trouble or the inconvenience. But the moment a competitor starts the same business in a more ideal location, all the customers will move to him. Why? Customers are not loyal to any shop or brand, they are loyal to those who provide them what they want, when they want, where they want it, and in the way they want it.

Conclusion:

Don’t kill a beautiful business idea by starting it in the wrong place. This is applicable not just to retail outlets, it’s applicable to any business be it manufacturing, hospitality, service, or education. Even online businesses, have to be careful of the locations they choose. And another place to watch out for is the location in Search Engines, as customers use it to search for businesses. If it’s not on the first page, it’s not in a good location online.

It’s always recommended to start a business after a proper study. Do good market research, select the right business model, design the right management plans and systems and assess its financial feasibility. And since entrepreneurs might get emotionally inclined towards their business idea, and because in most cases promoters are not trained to do these works professionally… it’s better to engage professional management consultants like AASC (aascglobal.com)

So location does matter.

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The Different Generations in Market & Why They Buy

It is a wrong strategy to sell everything to everybody. Our products and services have to be customized to the needs of specific customer segments. Each customer segment has different needs, different pains, different jobs that need to be done, and different aspirations.

They are NOT SAME, hence what they need is NOT SAME.

So what happens when you sell the same to all customer segments? They will buy from you as long as they don’t have an option. And switch to a competitor the moment the competitor arrives with customized service or products. That’s the story of “successful” businesses having sudden death.

A study by McKinsey found some interesting insights about what drives consumption among each generation. And it’s worth knowing.

Consumption is viewed differently by each generation. For example, Generation Baby Boomers (born between 1940-59, those aged now at 60 to 79) viewed consumption as an expression of ideology (influenced by the global political turmoil of those times).

Generation X (born between 1960-79, aged now between 40 to 59), views consumption as a symbol of status.

While Generation Y or more popularly known as Millennials (born between 1980-94, now aged between 25 to 39), views consumption as an experience.

The youngest generation, Gen Z (born after 1995, that is aged below 25), views consumption as a search for truth. Their search for authenticity generates greater freedom of expression and greater openness to understanding different kinds of people and views.

So What Does It Mean To Your Business?

As an entrepreneur, you need to know who your customer should be. Which generation they belong to. And what prompts them to like your business and why they will buy from you.

Avoid targeting everybody. It doesn’t work long-term.

Now you know why they buy. Customize your business accordingly. The drive ahead is profitable but never easy.

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Transforming Outdated Schools

“We Have To Teach Our Kids Something Unique…” Jack Ma, Former Executive Chairman of Alibaba Group

This quote is the trigger for today’s post.

As the world progresses by leaps into work getting done more cheaper, faster, and efficient- human jobs are at stake. It’s a reality. It’s time for humans, societies, cultures, and organizations to evolve to survive.

It begins with what we teach our kids. Our schooling system is so outdated, one wonders who prepares its syllabuses.

School management and parents have to move from the comfort zone of standardized learning to the new age of individualized learning.

So how do we teach our kids, what machines can’t do? We teach them to be “more human”. But what does that mean?

We teach them values, so that they never create or use machines, Ai and robotics to destroy peace, instead use them to create a sustainable peaceful world.

We teach them independent thinking so that they become creative in innovations, discoveries and become masters of the very technology that can otherwise be used to enslave them. Present schooling does not promote independent thinking- it’s only what’s in the textbooks.

We teach them cooperation and teamwork so that they love and believe in each other. Help and support each other. Remove the present mark-based mindset, where one has to beat down the other to get to the next level or is measured in comparison to others. Where a lion is compared to a dolphin, while their skills are different.

We teach them leadership and the ability to take responsibility. Characters that are fast disappearing in the pleasure-seeking, me-me, materialistic generation. Students should be not just taught but trained, to take up responsibility, be accountable, be able to motivate others, take the lead, walk the talk. Be men and women of their words.

We teach them to care for others. That care is what is going to help the world and inhabitants, be at peace with each other.

We teach them the knowledge that is needed for life rather than in-depth science, physics, maths, and geography that is not needed for the vast majority who might not seek those streams. Instead, teach them young, topics such as basic finance & investment management(everyone needs it in life to manage personal finances, personal investments), economics (everyone needs to know how the economy functions), basic law (everybody is bound by it), political science (that’s what governs them). These are more important topics as they affect everyone. Only those seeking careers in biology, physics, mathematics, geography, and other conventional topics need to go in-depth to them. For these special clubs in schools can be formed. So interested students can go much deeper than their peers, based on their capacity. For the rest who are not seeking such careers, they don’t need to be tortured to study them.

We teach them how to be healthy and avoid lifestyle diseases. It is funny that we don’t teach our kids what to eat and what not to. It shortens their life. That’s not in the syllabus. We should have in curriculum topics such as food habits, what to eat and what not to, sleeping habits, exercising, natural herbs, organic home farming, natural therapies, first aid procedures. This not only makes them capable of making and eating right, doing right exercises, curing themselves with natural herbs (avoiding side effect medication), and being capable of rescuing life’s in danger; but also have a profound effect on the businesses around them. Junk foods providers will disappear, harmful nightlife businesses will disappear, the illegal drugs/ prostitution industry will disappear, the healthcare industry will be more ethical and responsible. These changes will not be driven not by law, but by enlightened people.

We teach them the value of family and relationships. It’s a topic that should not get restricted to a chapter. It should be a subject that will be studied from kindergarten to post-graduation. Because relationships are the foundation of human civilization. We should teach kids how to understand their parents, grandparents, siblings, relatives, and neighbors & how to behave with them in various situations. Kids today, do not really know it. We should teach how husband and wife should understand each other and behave with each other (it’s not something that can be achieved with a few hours of pre-marriage counseling). This reduces divorces, broken homes, domestic violence, wrong relationships, etc.

We should teach how parents understand and behave with their children. This opens up strong bonding. This prevents kids from drugs, depressions, suicidal tendencies. All these need to be learned when they are in their schools and colleges.

We should teach them about all religions in-depth. This helps understand every religion better and have a deep-rooted understanding that ultimately all religions are about peaceful co-existence and it’s evil people who divide people on religions.

We should teach them empathy and sympathy. It goes a long way.

Visualize a world where this is what people learn and do. Feel the peace and happiness. This is what we need to teach. The present syllabus has failed to create a good world. We witnessed all the world wars, civil wars, unethical corporations, corruption, exploitation- all by people who spend most of their childhood learning stuff that never was useful in their real life and decisions they took.

In these schools, it will be less of books and theory. More of exploration, activity, and doing. And the traditional marking and grading system? It will be in the dustbin- where it rightly belongs.

This should be the vision and strategy for schools, educational institutions, education boards/organizations, and education ministries.

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Government Departments Need To Transform Customer Journey

“when government agencies offer a better customer experience, they deliver measurable impact across multiple priorities. Public-sector leaders should pick their spots and be bold.”- McKinsey Research

This is a thought-provoking statement from one of McKinsey’s articles, and my today’s post is on the same.

As businesses become more customer-centric, they start to see more sales and profits. So what will happen, if the Government departments and agencies become customer-centric? Let’s explore.

“Customer Journey” is the complete series of interactions and events through which a customer goes when dealing with a business while buying a service or product. The pleasure or displeasure at any interaction point determines the overall satisfaction of the customer. The businesses that offer the most pleasurable experience wins the market.

Usually, Government departments do not think from the customer point of view. Here “Customers” being the people living in the country who have to deal with various Govt agencies. Govt departments think from their own convenience point of view. They either have to get something from the public or give something to the public. And they structure their system and policies in such a way, it’s easy for them to do it- even if that is not convenient for the public.

This approach makes dealing with Government agencies a pain for the public (customers). Quite often, the customer’s time, effort, inconvenience is ignored. The impact of such dissatisfaction by customers results in lack of trust in Government agencies, disrespect for Govt officials, protests, lawbreaking, corruption, etc.

Changing this situation is an opportunity for smart politicians who are in power to score and win public confidence, and keep winning elections. A satisfied public will trust its leaders and Govt agencies.

So how can Government Departments, create that customer experience and win their trust and confidence?

[1] Change in Attitude: Govt employees should be aware of their responsibility more than about their authority. Their responsibility is to solve the customer’s pain, not complicate it. This shift in thought can be a major transformation. Shifting the employee culture is not easy. Hence encouragement and punitive measures have to be implemented. Customer feedbacks have to be taken by electronic means and its results should result in awarding the good employees and punitive action against the bad ones.

[2] Respect the customers. Many a time, the public (the customers) get bad treatment from Government officials. This has to change. The Government departments and their staff should realize that they are to serve and not be served. Even simple measures like avoiding waiting periods, smiling, kind words, explanations in layman terms, comfortable seating areas, etc, go a long way.

[3] Bring Clarity. Many a time there is no clear idea as to what a customer needs to do to get approval or a certificate etc. Resulting in days spend moving from one department to another. Each department should have its own website with videos explaining the common queries of the customers, and the complete procedure to be followed. This should be mobile-friendly as well. Apart from these, inquiry counters (not reception counters for diverting customers) at each agency where those with queries can get a token and ask their questions directly. If a situation is complicated, they should take initiative to get back with the answers within a specific time. This can even be a paid service.

[4] Reduce Human Interactions: Human interactions are time-consuming and depending on the individual employee. All that can be automated, should be. Online applications, online approvals, and online certifications go a long way in creating a good experience.

[5] Avoid Complication: Avoid all unwanted paper works, attestations, signatures, approvals, documents, and proofs. Govt departments should learn to trust their people and earn back that trust. Make things simple and peaceful.

[6] Healthy Competition Among Departments and Their Branches: Awards and benefits should be given to departments that get rated highest for customer satisfaction.

[7] Outsource: Customer satisfaction at the passport office increased dramatically when its customer service was outsourced. Similarly, such outsourcing of routine and non-sensitive matters can provide a better experience to the public

[8] Mobile Apps: Introduction of mobile apps to rate each Govt department and its officers from the comfort of one’s mobile, and having the ratings available to the public and the politicians will help the Govt employees be rewarded or action was taken against. The app can also be useful to know if an officer is available at his desk, and book appointments.

What do you think will happens when our Govt Departments shifts from being employee-centric to customer-centric? What impact will it create?

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Real Estate: A “Barcelona” Model for Kerala Real Estate?

World Economic Forum recently published an article about how Barcelona (a Spanish City) has solved the problem of air pollution (which killed approximately 667 people every year), by daring to test a new city plan.

The model they used is not only successful. But it made the city more enjoyable, stress-free, safe, and relaxing.

The best part, we can also do it in our State, District, or City.

This article explores how our real estate developers and Govt officials in City Planning can do to make our cities “more healthy and enjoyable”. It’s an opportunity we should not miss.

So what did Barcelona do?

It created “Superblocks” within its city. Superblocks are small clusters of inner-city streets, measuring approximately 400×400 meters which form mini neighborhoods. These neighborhoods are closed to vehicles and ground-level parking. Meaning no pollution for vehicle emissions, vehicle noise, risk of passing vehicles, heat from vehicles, etc. Barcelona is planning 503 such blocks!

As a result, it became open spaces for people to walk, sit and interact with other people. They became spaces for culture, leisure, and community.

The traffic is routed around the superblocks, not through them. Creating all the positive differences.

So what can our Developers do in Kerala?

Instead of focusing on small buildings and single units, focus on building township blocks like the Barcelona Model.

This requires land in a square or rectangular shape to be more effective. And small land patches are not enough. If acquiring land is the problem, try creating a company and including nearby landowners as partners (and give them a profitable opportunity). Use the land to master plan and build such blocks.

This is a strategy that can be used even in cities. In most cities, there are clusters of old small buildings that are of no real value to their owners as rents are low or volume is less. Such building owners can be taken into confidence, create a single company and build a cluster there.

The open area created can be a park or an open space with plenty of trees and greenery. Such properties will attract significant “footfalls” and be good retail, entertainment, office, and residence destination. Resulting in a better return on investment.

Developers can attract customers to buy these properties by showcasing how tenants will be interested to do business, work, and live in such blocks.

If more blocks come up nearby, it gives a cozy feeling to that locality, resulting in tourist flows. Which means more business, more profits, and more value to properties.

A similar scheme is planned in Seattle (US).

If the Superblocks are built at one-floor height or start from the first floor onwards. Then the whole ground floor can be used for parking, with the capacity to house hundreds or thousands of cars. Resolving to park also results in lowering the traffic jams in cities. Lack of parking is a perennial headache to Government. This can be a great solution for it.

If Superblocks are developed next to each other, and the community life starts at the first floor (with the ground floor for parking and roads), then bridges from one Superblock to another helps in people avoiding crossing roads and cycling becomes practical. Reducing accidents and injuries and deaths thereby.

So Builders, Developers, and Government- how about building Superblocks as Kerala’s Future Model? If Yes, should Govt stop all simple constructions and motivate people to join together to form such clusters?

Share your ideas, views, and comments. Thanks.

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Next Retail Disruption: Brands Will Facilitate Sale of Used Products & Renting Them

We are all familiar with people buying second-hand cars, mobiles, books, etc. usually these are sold by third parties – not the companies themselves.

A major shopping and lifestyle cultural shift will happen. It can disrupt the way we shop.

Possibly this could be the next major disruption after online shopping came into existence.

So What Is Driving This Disruption?

New business models are disrupting the old models, as the customer preferences are changing. Generation Z and Millennials, who are inclined towards sustainability, experiencing life, and less inclined towards amassing assets, are embracing the idea of buying quality used products and selling them back (when not needed, instead of keeping them forever) or renting used products.

The success of Uber, Airbnb, Patagonia, and many others are good examples. This trend is soon to catch up, in all other industries, including furniture and even cloths & accessories. Buying used products or renting dresses etc are not seen with interest by customers who are Gen X or those earlier. But with Gen Z and Millennials (the growing customer segment) are very much open to using rented or used products. This is going to be a cultural shift in the shopping.

But the disruption is when, the brands themselves buy their unused products from customers and resell them in the market as seconds or on rent, by ensuring quality and certifying it. This is the major disruption to happen across the industry.

A McKinsey report states that the best data out there shows that 33% of the Gen Z and Millennials did some type of resale purchase or rental in 12 months. Now that’s a huge business opportunity.

Participation in that market is growing by 40% year over year. That’s fast growth.

But will brands offer to take back their products and reselling them, affect the sales of their new products (cannibalization, as it’s called) or affect cashflows as they buyback?

Not necessarily, if properly planned.

Companies need not buyback. Instead, they can offer gift coupons in return. This means the customer will use the coupon to buy something new as well. This is a win-win for both the buyer and the seller. Besides, it is a good opportunity to be connected with customers always.

As for cannibalization, it need not be so. The fact that the products can be given back to sellers after using, reduces the decision barrier for customers to try new things. The worry of “will it be a waste”, doesn’t bother them anymore. This could create an explosion of experimental buying from the customers. Thereby increasing sales and profitability.

So how does this affect the present business models of businesses?

Be proactive: Explore how you can enter this space. What can be bought back and resold? What can be rented?

Customer Segment:
Which customer segment should be attracted to this? Can a present “non-customer segment” be targeted? How to customize the business and its shopping experience to attract them? Will it affect the sales from the existing customer segment?

Product Quality Review: If a product has to be sold and resold, it has to be of good quality. Do your products have it? How many cycles will it go? What can be done to improve it? Businesses have to build products that are more durable and sustainable – so that they can have a long life. This can be a shift from the present “use and throw” products to more sustainable and durable products. This can save the environment.

Process Change: Study what process changes need to be implemented? What new activities need to be undertaken? Does it need resources and infrastructure? Businesses have to have a team or department, to accept the customer goods, quality checks them, make repairs or cleaning, repackaging it, new showrooms for it or dedicated places in existing showrooms, branding and marketing it, etc.

Re-Branding: The new service and its impact on the public should be structured to ensure brand images are not destroyed overnight. It has to be planned well to sync with the Gen Z and millennials who will be its main customers. Strong brands will have a boost, as more customers will opt for branded products as it available even on a rent basis.

New Channels: Businesses and entrepreneurs have to be ready with the channels for the new product line- the resale buying and selling.

Embrace Technology: Technology will also have to be involved to manage its e-commerce sale.

In short, for customers who are premium brand lovers who can’t afford them, good times are ahead.

For entrepreneurs, who are struggling to get a higher market share, this is a good opportunity to disrupt and penetrate the market.

Study -> Structure -> Disrupt ??

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Economics: Why Your Business Should Be More “Social”, “Caring” & “Humane”

Businesses of the past and present focused more on profits, by providing goods and services that customers liked. It can be at the cost of environment, exploitation of weaker sections of society, unethical practices, creating health issues etc. The customer usually didn’t care- and so businesses also didn’t care.

But in the last few years, we have witnessed a shift. Customers are becoming more concerned and vocal about how companies produce what they produce.

This shift is a result of the new generation in the market. The Gen Z or customers who are currently aged 24 or less. They are considered as the generation of truth and openness. They do not follow the values of the other generations. They have their own values.

Their values, preferences and tastes are quite alien to the Generation Baby Boomers (customers aged 60 and above) and Gen X (customers aged between 40 and 60).

And interestingly, when compared to Gen Y or millennials (aged between 25 and 40) they are less idealistic, believe in savings and job security than higher salary.

The Gen Z is more open, more tolerant to differences, nature loving, more ethical. They seek the truth in matters without perhaps diplomacy and compromise. A trait that older generations might find unacceptable.

They are also more active in opposing companies, governments, establishments that are against their values.

It is important for businesses that plan to stay long in business to know the Gen Z, as they are the youngest and growing population. Ignoring them is digging own grave. Knowing what they like and don’t like will help businesses to,

  • Design products and services that most suits them
  • Source raw materials from places that their customer does not have a problem with
  • Brand their products in ways that appeals to the new generation
  • Market their products in channels that they like to use and are available
  • Sell in a manner that appeals to them
  • Get more new generation to work in their businesses
  • Get more new generations to be interested in investing in their businesses

The list goes on as to why this new generation should not be ignored.

Among the various factors that Gen Z is concerned about is the ethical values and openness of companies to diversities. With the Internet and the information it provides at finger tips, they do study more about the companies and brands they use.

They prefer companies that,

  • Are honest and not do cheat
  • Does not exploit the nature nor people
  • Does not discriminate against different people based on sex, religion or ideologies
  • Does something for bringing goodness in the world

So if your business is not what they like, then be ready to close down in few years. As over the years, the percentage of Gen Z will increase in the market. And the percentage of other generations influenced by the Gen Z values will also increase.