Running a business is definitely not an easy feat. Often times you’ll have an amazing idea but find yourself stuck, not knowing what your next move should be. Other times, you could have just reached a deadlock. Entering the world of startups is definitely intimidating if you don’t have a clear idea on how to run your business. These days with the trend of market places making its way into the startup scene, it would definitely save you a lot of time if you were already equipped with the right practices to run your business.
Here’s a list of best business practices we have gathered to help you out!
It’s important to first properly define what your business model is. Some eager entrepreneurs dive right into their idea and find they are not making any profits because their business model is loosely defined. Ensure you and your partners come up with a solid business model foundation and stick to it.
The four components you should consider while building your marketplaces are: liquidity, customer critical mass, subscription model, retention rate and bypassing issues.
Your first priority for a marketplace, or any business, is liquidity. You will need the ability to carry out transactions and movements before you can pivot and focus on monetization and profiting from your business. Before focusing on a specific business model, ensure that this component is checked and ready.
It is important for market places to know what their customer critical mass is and aim to reach that. Critical mass is reached when there’s a steady organic flow of customers coming into your marketplace and thus increasing your buyer/vendor database and of course profits.
For this, initial traction is incredibly important because only with traction will you be able to attract investors to fund your ideas and buy-ins from big industry players. This will give you the flexibility to implement more features to your business and overall improve your customer’s experience and create revenue. As your company does better and attracts more customers, more funding will come in as well.
The two main questions you will definitely be bombarded with by merchants are:
– how many users/ how much volume do you have?
– Why should my company market through you?
Be prepared to answer these questions and prove to other businesses of your company’s value. If you have any collaboration with big players in their industry, be sure to drop that information in to give your brand a little boost.
Knowing the retention rate for your customers is critical for your company’s growth. By understanding this piece of information, you can gauge how much liquidity and cash flow is needed, as well as other further improvements you might need to make to improve your company’s retention rate.
This is in relation to your retention rate. How do you intend to avoid users from bypassing your marketplace? First you need to know what value you can provide to your vendors. This value has to definitely be a lot higher than the commission they’re paying when using your service.
Alternatively, you can build an entirely different system for lead generations. Create multi verticals in order to retain buyers. For example, Property Guru made a deal with major property players so that now only registered agents can sign up on the market place.
Lastly, you could also start an alliance for your vendors and lock them in with the possibility to upsell.
Like a well-oiled engine, a healthy functioning operations system will ensure that your business has the ability to continually grow smoothly.
It is important to first know what your customer’s journey is like when using your service. Be sure to collect data on the frequency of usage and pick up on points where they fall out, in order to make appropriate adjustments and improvements.
By understanding their behavior and preferences you can split your customer base into segments and sub-segments in order to serve these different groups better. Typically, you can segment them by categories, zones or price.
Here are some useful tools/software you can use for business:
1. SendGrid: for mass mail campaigns (ultra-high deliver rate)
2. Pipedrive: a CRM System that displays the different stages of lead generation
3. RocketReach: a tool to find email addresses and phone numbers
4. Yet another Mail Merge: a google sheets add on to personalize your mail merge easily
5. Import IO: an email scrapper
6. Slaask: a customer service app for all Slack users (incl. of a bot)
The fundamental of any marketing strategy is to properly understand your market and potential customers. So you should first ask yourself these questions: Who are your customers and where can you find them? How can you reach out to them? Where are the potential touch points?
Once you’ve established that, you can focus on other specific marketing strategies. With the heavy reliance on technology and the online web, you should try to focus your marketing efforts on digital marketing and improving your search engine optimization (SEO)
Some tips to improve your SEO is to take full advantage of content marketing. It is essentially the base of SEO, due to its heavy reliance on keywords. You can make use of Google Adwords to look for the best long tail keywords to use. You can read up more on digital marketing and SEO in our previous blog posts here. Also, a helpful software to use for SEO is moz.com.
The base for any business development is essentially personal relations and networking. Be sure to build your network of potential investors, businesses and important connections early on. Create close relations with them. This will give you some leverage if you ever need anything for your business.
Aside from networking with other businesses, you should also focus on creating a substantial buyer/user or vendor/supplier base. You can employ there tools to help you with that:
- Mass mailing
- Cold calling – name dropping helps a lot
- Use other marketplaces to get suppliers – carousel, tinder, Airbnb, etc.
- Hire professional telemarketer to find customers
- Use LinkedIn to connect with potential customers & interact within the specific groups of your industry
- Get the important people to endorse you publicly to their network
- Growth hacking :
- Find out where your audience is
- Find our where they interact
- Get in touch with them
- Or, contact admin
- Create relations and make friends!
Another important skill to pick up for business development is pitching. With good pitching skills you’ll be able to sell your product well and get more people on board your idea.
Some tips to pick up on pitching are:
- Know the decision maker, appeal to their personal interests
- Be aware of the cultural differences if you’re presenting to foreign companies or investors
- Prepare your KPI before hand to prove that you have access to the market
- Build personal relationships rather than hard selling your product
- When starting out, be honest and don’t make empty promises
- Keep it short and simple, provide free gifts as well
Finance and Legal Matters
You would ideally want to first build an advisory board to cover these four areas of expertise:
- Industry: advisor on industry behavior
- Startups: advisor on failure points in a startup
- Finance: advisor on funding and finance
- “Rolodex”: the connector between the different areas
When searching for funding, you might want to look for government funding and angel investors first for pre-seed funding. They provide a good capital base and will allow you to explore more options to grow your company. Alternatively, family offices are also a good resource for pre-seed or seed funding, as you would already have these connections.
Contract / legal documents
You would only need to hire lawyers if the vendors demand it. Typically, it depends on the industry you’re entering as well i.e. hotels, airlines
You can contact the following sites for free / good value legal advice:
– Business in a box – for tech legal documents
– Law guide Singapore – free consults with Lawyers
– First council, law canvas, Dragon law
– ACE to get pro bono lawyer consultations
This guide is definitely not limited to startups and businesses in the marketplace industry only. It can be adjusted to suit the needs of all budding entrepreneurs and their business ideas.
For more articles and tips on running your business, no matter the industry, head to our ThunderQuote blog.
ThunderQuote is the most comprehensive business services portal in Singapore, Australia and ASEAN , where hundreds of thousands of dollars of procurement contracts are sourced every month by major companies like Singapore Press Holdings, National Trade Union Congress and more.