Zhungchengsu suggest entrepreneurs: Make sure these four accounts before you hit the road

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This article is from where to go online founder, CEO Zhungchengsu in the "Central European Business Review" (October 2013 issue) Oral body article:

"First step" settled market Size

Before entering the market, the entrepreneur first needs to make a preliminary estimate of the market scale. In theory, if an internet company wants to be successful, its market size must be at least 50 billion yuan, but a single internet company is unlikely to become the industry's 100% owner, generally 20% even if very successful, that is, can expand the market in 10 billion yuan.

Therefore, before doing "where to go to the net", I fully analyzed the scale of the mainland tourism market. According to our calculations, this market size is about 2 trillion, there will be many opportunities to become the industry leader, at the same time, Google's revenue has shown that the tourism industry is willing to advertise on the search engine. Based on these analysis prerequisites, we think that there is a great opportunity to do tourism search, the market size is large enough.

The second step captures the chance of a value chain mutation

After the market size is completed, the second step for the entrepreneur is to analyze the opportunities in the market.

In general, startups have two main opportunities. One is the value chain mutation, the big companies will lose focus on the mutation, so that the start-up companies to create a lot of new opportunities. Second, the opportunity comes from the subdivision of the brand, depending on the positioning.

In the first case, the value chain mutation sometimes brings a lot of unexpected opportunities. For example, an online travel agency (OTA) is also a product of a change in the value chain pattern. Today, savvy, internet-conscious consumers need a parity system, a platform that gathers the direct information of airlines and hotel groups to help them list all the products and prices. So it could be another chance to change the value chain, which is the chance to go to the net.

Is the "third step" unit economically standard?

The third step is to calculate the unit economy, that is, microcirculation. From where to look, every microcirculation is to help our partners out of a room or out of a ticket, our personnel, market, research and marketing costs, this cycle down, the theoretical net profit margin how many?

According to experience, as a new business, the unit economy must be able to achieve 40% or so, in the actual operation process can achieve about 25% net profit margin, otherwise this business model is very difficult to succeed.

It is important to settled whether the market to enter is profitable. Because when you set up a company, the worst is not the six months after the establishment of the failure, but to the end of the four years, found that the business does not earn money, this is the worst. Because everyone's life is very short, gold start-up time up to 15 years. So I always think that entrepreneurship is carrying a time bomb into the original jungle, you have to run out safely. So I'd rather wait until I figure it out before I get to the point where everything is pretty clear.

"The fourth step" to understand the value difference

Last but not least, consumers only care about the value differences that companies can bring to them. In terms of principle, the difference of value is divided into three kinds mainly. First, efficiency first, free, low price is the most typical value difference, it is also easiest to promote; the second, customer integration, that is, a full range of consumer care; third, a new user experience, such as the most typical company is Apple, including some of the most recent wearable equipment, to provide consumers with a new product experience.

Before entering a market, I will fully analyze these four conditions and finally calculate a total score. For entrepreneurs, "reckoning" can evaluate their chips and risk appetite. Do a comprehensive analysis of everyone before the start is very important, do not start and then analyze. Because if you take a time bomb and then turn the runway, the chances of being blown to death are 99%. Today there are many successful people, standing on the stage to tell the story, said that they can change direction. But it is a small number of successful careers like Zhou, most of which have disappeared in the industry.