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How to use Smuse

The first step to using Smuse to Start, Run, Grow and Fund a Business in South Africa using what you have is to understand what is going on [Framework]. You have to read, apply your mind, process and understand the framework. Read the next section on mindset [Mindset] if you feel the need to cut corners to see the problem with this mentality. If you feel that your mindset is not right you are unlikely to find success with Smuse as Smuse helps people to help themselves. If you don’t have the willpower then Smuse can’t help you.

Once you have assessed your mindset and rid yourself of whatever limiting beliefs you had, the next part is to understand the business plan format [BusinessPlan] we use, we use a planning technique called “lean planning”, that will not only help you quickly prototype your business but you will also understand what is going on. On our home page, each component of the business plan has the prefix of Write/[BP].

Starting a Business

Come up with business idea
The next part is to come up with a business that you want to start [Business Idea Generation] (you can use Khoi Capital, Niche Business, Luxury Business, Township Business or Side Business to help you generate a business idea). If you still cannot come up with a business idea you can use the Khoi.biz community “Business Idea Generation” section to help you come up with an idea.

Understand  business & Industry – Supply Value Logistics Chain
Then you need to study the chosen business’s Supply, Value & Logistics Chain [Supply Value Logistics Chain]. This will help you understand the industry you want to enter and where you fit into your value chain (the skills, equipment and materials needed to carry out your value proposition). You should also try to find a gap or niche [Prerequisites] that is not very competitive.

Test business idea
When you know what business you want to start and understand the industry and what is required, you then need to test your suitability for the business [Test Idea Internally]. To see if the chosen business is right for you, you can use Effectuation Theory.

Look at:
Who you are, what you know and who you know (Bird in Hand)
As well as the time, the effort and the money you have at your disposal (Affordable loss)

This is where you stop and analyse if you have the capabilities or know someone and have the resources to carry out the value proposition.

If you do not have the capabilities and resources to carry out your desired business, you need to go back to effectuation theory and:
– If you run into problems leverage contingency to come up with a plan b that will work (Lemonade principle)
– If you still cannot do it on your own – establish partnerships to enter an existing value chain (Crazy Quilt). See business circles to help you find partners in your value chain.

If you reach this point and you still cannot find the capabilities and resources, then it’s time to start over, perhaps at a lower point of your supply value logistics chain

Make sure you know what you can and cannot change in your chosen business (Pilot-in-the-plane)

Write Value Proposition
Now is the time to write the first section of your business plan: Value Proposition [Value Proposition]. Describing the gist of your business.

Test Market (for Value Proposition)
Then you need to refine your business idea to establish the problem you are solving. Why do people need your product/service? Do they really? [Problem Worth Solving]

This is the external testing of the idea/value proposition (Idea Validation). Depending on the outcome rewrite the Value Proposition if you have to.

Write Market Need
If you are satisfied that your product fulfils a need or a want, you can write the next section of the business plan: Market Need [Market Need]. The “problem” your product is responding to by being in the market.

If you run into any problem’s with the above, use the Khoi.biz community “Help with Business Ideas” section for help. Only once you have already done your supply value logistics “homework”.

Running a Business

Determine Business Model & Write Your Solution
Next, you need to add your value proposition and market need together and determine your [Business model]: how you are going to make money. How you are going to be positioned within your industry’s value chain. You have already established the problem you are solving, now you are establishing how you are solving that problem to write the “Your Solution” [Your Solution] part of the business plan.
Here you can use Porter’s Generic Strategies to determine a primary business model: are you going to be a:
Low-cost Provider
Broad Differentiator
Best-cost Provider
Focussed Low-cost Provider
Focussed Differentiator

Business Strategy & Write Competition
Then determine your business strategy [Business Strategy] which is how you are going to achieve your objectives outlined in the value proposition business model / your solution considering your competition [Competition], you can use Porter’s Five Forces to guide you: a method for analysing competition of a business.
Threat of new entrants
– Profitable industries that yield high returns will attract new entities. New entrants eventually will decrease profitability for other firms in the industry. Unless the entry of new firms can be made more difficult by incumbents
Threat of substitutes – A substitute product uses a different technology to try to solve the same economic need.
Bargaining power of customers – The bargaining power of customers is also described as the market of outputs: the ability of customers to put the firm under pressure, which also affects the customer’s sensitivity to price changes. Firms can take measures to reduce buyer power, such as implementing a loyalty program. Buyers’ power is high if buyers have many alternatives. It is low if they have few choices.
Bargaining power of suppliers – The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw materials, components, labour, and services (such as expertise) to the firm can be a source of power over the firm when there are few substitutes.
Competitive rivalry – For most industries, the intensity of competitive rivalry is the major determinant of the competitiveness of the industry. Having an understanding of industry rivals is vital to successfully marketing a product. Positioning pertains to how the public perceives a product and distinguishes it from competitors‘.
Competitive Analysis

Write Target Market
And factor in your target market [Target Market]. Starting with a primary target market: B2B, B2C, B2G, B2M, C2C and narrow it down from there to more specific metrics.

Day to day management
Business management is implementing value proposition, solving the problem, executing on the business model, organising, planning and directing your strategy to accomplish your goals.

Growing a Business

How you will market and sell products, write Sales Channels & Marketing Activities
You know your strategy, which will have a bearing on where you sell your product or service [Sales Channels] whether brick and mortar or online. And your target market will dictate the types of marketing activities [Marketing, Advertising & Sales] you use to get your product or services in front of them. This will be used to write the Sales Channels & Marketing Activities part of your business plan: How are you going to communicate the benefits of your value proposition and business model to your target market. How you are going to get your target market to your sales channel to buy your product or service.

Business Operations: Putting all the above together.

Now you look at the resources and people that you have, need and want to execute the vision you have set out above.

Then you look at the financials: budgeting and forecasting. This with resources and people needed will partly determine your funding needs. Funding Needs & Use of Funds

Look at the initial funding [Initial Fundraising] needed to start, the working capital [Working Capital] needed to run and the debt [Debt] and equity [Equity] sales that may be needed to grow the business.

 


How to use Smuse

Smuse is the name of the framework that we use to start, run, grow and fund businesses. Here is how to get started using it.

When you start a business, you need to know where you are going to fit into that industry’s value chain and supply chain. However Smuse dictates that you start with what you have. So how does that work? And what about the end-goal “dream” business that you originally wanted to start?

We go back to our starting framework: Effectuation Theory
Bird in hand & Affordable loss
Who are you?
What do you know?
Who do you know?
How much money can you afford to lose?

The least you have the lower you need to start in the supply chain. Usually the further you go up the more expensive it gets. You need some money to start a retail business, and you need even more to start wholesaling, and you need even more to be a distributor and to manufacture and extraction of raw materials are often the most capital intensive. This is not the case in all industries, but it is a guideline to use.

Here is our complete Supply Value Logistics chain.

If you have no money and no skill. Then you need to get in right at the end: recycling. Essentially as par of the collection network, collecting waste generated by consumers and businesses and selling it further down in the recycling value chain.

If you have a little money and nothing else. Then you need to start at the lowest point before the consumer: Retail  (the sale of goods to the public in relatively small quantities for use or consumption rather than for resale), this usually means buying products in bulk and reselling single items. Read the Retail page for more information.

If you have some money the you can move up the supply chain depending on resources and what your “dream” business is. You might very well want to open a retail store, or you might want to open a wholesaler and sell in bulk to retail outlets.

If you know someone and have no skills you can try to become an agent for that person where you work only for commission. Why I say if you know, is that not everyone will allow strangers to represent them.

If you know someone and have a skill you can integrate into someones value chain that know and trust you as a way to get started (Crazy Quilt).

 

Interdependence

Relationship Between

Your idea is what you are (your identity)

Your business model is your solution to the problem
Strategy implementation the solution

Your target market (and competitors) will guide your sales channels and marketing activities.

Your competitors will drive your strategy

Your sales channels and marketing activities will impact your sales and revenue

Your solution will guide your funding needs and be guided by the budget and sales goals

While it’s true that a business plan and business model are two separate documents,

the reality is that the business plan cannot live without the business model.

While a business plan can describe the structure of a business’s financial goals,

the business model explains how the money will flow – from customer generation

to marketing to sales, and finally, to customer retention. The business model must

have room to grow and adapt. Consequently, if the business model changes, so must the business plan.