Once a month, our panel of mentors answer your practical business questions. Send us your questions!
Dear BAM Mentor,
I’m developing a business plan for a BAM company. What are some ideas, tips or resources you would suggest as I conduct market research and analysis, especially in a BAM setting?
~ Anticipating Analysis
The basic idea of a business plan is to help you think through all of the different issues that will make a strategic difference to your proposed business. There are literally hundreds of issues to think about and that can be daunting. The business plan helps you structure your thoughts, assess the risks and opportunities and, perhaps most significantly, helps you see what you still need to research and learn.
I’ll try to address some of the most significant issues for a cross-cultural BAM startup.
Almost everything in a business starts with the market:
- Are the people out there who need your product or service?
- Are those people able to pay?
- Are they willing to buy it?
- After they buy it will they pay for it?
Many have gotten enticed by a significant market need and missed the fact that the customers they identified don’t have the resources to pay (think third world wheelchair users) or aren’t willing to pay because they don’t see the need that is so obvious to you. Our business sells a really great product to farmers. Almost every farmer we talk to thinks it’s brilliant and would like to have it, but almost all of them think it’s too expensive, even after we show them they can amortize the investment in less than three months. Your business model should be structured around market realities that include a proper assessment of the local culture. Sometimes you need to work differently, perhaps selling to charities who will pay you to provide the product to needy users.
Cross-cultural issues are very complex. As you evaluate the market make sure you have local people actually talking to potential customers and testing in every way you can that the market is real and will pay. Making sales without collecting the money doesn’t do the business a lot of good, so understand local practices on collections and your ability to enforce payment if needed.
Another major area is legal and regulatory issues. Make sure you know if there are permits to be had and if so, what they’ll cost. Will you be required to pay a bribe for a permit? You may need to think through how you’ll respond to that.
Personnel and employment law and practice are other major areas to evaluate. Understand how people are treated. Make sure that people with the required skills are available and, if they are not, that you can legally and cost-effectively employ foreigners to fill those gaps. Remember that employer-employee relations are highly sensitive to cultural expectations. Non-western societies tend to be much more paternalistic toward employees and a new business owner needs to have resources to help her understand what that means. Sometimes it’s highly effective to break cultural norms, but you should always know when you are doing it!
Make sure you work through your cash flow and profitability projections. You can be sure they’ll be wrong, but work through them anyway! Everything is always more expensive than the plan says and cash runs out quickly. Sorry to break that bad news to you, but remember it. Be extra conservative in your planning and remember that many profitable businesses go bust for lack of cash!
The last major topic I’ll address here is the spiritual aspect of the business. All of the above are spiritual; don’t make the mistake of dividing this too far from the rest of the business. But as a BAMer you want a clear and explicit impact for the Kingdom. Do your research. Talk to experienced foreign workers, to other BAMers, to national church leaders and like-minded national business people. Learn from them. Be aware of what God is doing in the country and what the needs are of the society and the church (in the grandest sense of the word!) Then assess your own gifts and calling to see where you can fit in.
The assumption that you can work out what is needed for the Kingdom in Central Asia or the Middle East without listening to locals is a dangerous arrogance. You should research diligently and humbly, asking many questions and listening carefully. Don’t expect a single tidy answer; people don’t see things the same way. But look for patterns in what you hear. Then you can start to work out where you and your business can be a part of the broader work of God in the country.
You will also do well to think about how the business will grow. In the early days the impact you have will be yours personally. Almost all the work of a new business is the work of the owners. But as you grow you extend the reach and become a company – a group of people working together. Over time the company or business develops a culture that ideally carries the values of the Kingdom of God with it. It’s never too early to start planning for the development of this Kingdom culture because changing an established culture is extremely hard.
You will stay with your business for a number of years – maybe 5, maybe 25 and maybe even 50. But one day you’ll leave. The business should last 100 or 200 years and should continue to make an impact long after you’re gone. Start planning for that now. A successful exit is the key part of a long term impact that blesses the whole society.
More Responses on this topic:
The question of market research comes up constantly and is both a very important part of a business plan and at the same time can be a big waste of time. Let me explain.
If you are doing a business plan to guide your launch and actions, then all you really need is to figure out a few basic things:
1. Who else does what you plan to do?
2. In what ways are you better, faster, cheaper, easier to access, etc.?
3. What price point will your potential customers accept? What do your competitors charge?
4. Where, how, when will you distribute your product/service? Does it fit with where, how, when people want to buy?
5. How many potential customers are there? How many of them will you be able to convert into actual customers?
6. What laws, taxes, licenses, etc. exist that will affect your business?
Beyond these few things much more research will not give you ROI. So don’t do it. [Read More…]
If I could ask you to understand anything about this, I would encourage you to understand the “why.” Motives determine outcome. If the company motives don’t line up with solid business principles, undergirded by correct biblical understanding; your hard work may never get past a good read by the intended audience. It could end up in a desk drawer. Or worse, it could alienate an entire culture, damaging years of relationship building. And please, whatever you do…don’t spiritualize motives. Just because we choose to spiritualize a motive does not justify it in God’s eyes. Nor does it guarantee successful execution. The sage advice of noted author and TED speaker Simon Sinek provides great clarity on the reason we want to start with the “why.”
Lesson Learned #1 – Ask lots of bad questions which lead to really good questions, and Google comes in handy at this point. [Read More…]