Before starting a new business venture, it is important to take into account the both the potential benefits and possible drawbacks of the new venture. The opportunities and challenges should be in appropriate balance for the business venture to be viable in terms of the future. When considering the InvestorSoft opportunity, a number of things present both opportunities and challenges. InvestorSoft offers many benefits that can be set in contrast to its competitors.
The greatest benefit that the venture might offer its clients is time savings. The service would, for example, offer significant time savings in terms of managing technical problems and waiting for IT revisions by professionals in the field. Investor relations professionals would be able to use the software to update their investor relations website without waiting for third parties to do so for them. The elimination of the wait time invested in this would then also result in more productive tasks and ultimately in a better efficiency in terms of time investment and returns.
Another benefit that the software would offer to clients is that it would provide companies with a better image in the investment community. Retail investors thinking of buying stock, for example, would be encouraged to do so by the professional image created for the company. Such an image creates a sound platform for future business. Existing and potential future professional relationships are therefore enhanced by the image created by a suitable web presence.
InvestorSoft would also enable companies to better meet the full disclosure requirements of securities regulators. The Web presence created by the software would better enable the company to provide easily accessible investor information to clients. This is particularly important in the light of the recent high-profile scandal cases that have plagued the world of investments. Hence, an easily accessible, public disclosure of the company's investor policies and principles would further serve to create a favorable image for the company.
All the above positive points can be used as selling points to gain an edge in the competitive world of investment software. Furthermore, they can also be promoted as an enhancement of competitiveness for clients. This does not, however, mean that there are no challenges. One of these is the relatively quick and easy way in which to establish a client account and integrating the software into a website. This might create doubts around the quality and value of InvestorSoft.
Currently, the greatest challenge is probably the fact that the company is somewhat unknown in the world of investments. This, along with the question of quality, could therefore make the initial marketing of the software somewhat challenging. Decisions regarding the target market and positioning will help to overcome these challenges.
There are several potential target markets for the company. In North America, for example, there are more than 8,500 publicly traded companies, of which 2,500 are based in Canada. One way to segment these companies is by market capitalization, which focuses on the total value of outstanding stock for each firm. Other decisions that might influence segmentation are short-term and long-term decisions that could influence InvestorSoft's marketing position and movement, as well as brand image building. There are several types of companies that InvestorSoft might choose to target its marketing efforts.
Micro Cap companies, for example, comprise about 50 per cent of those on Canadian stock exchanges. These companies have a market capitalization of less than $50 million. These companies tend not to be well-known, since their stocks trade in low volumes among a small group of investors. What could make these companies an attractive target market for InvestorSoft is the fact that they generally lack an advanced investor relations program. They could therefore benefit from InvestorSoft, creating for themselves a better brand image by means of better investor relationships online. Furthermore, these companies can then also be used in further building the brand name for InvestorSoft by creating a good reputation as a result of effective usage. Because of the position of these companies among their competitors, it would be relatively easy to convince them of the effectiveness of using InvestorSoft to gain a competitive edge in the market.
Small Cap companies are a little large than Micro Cap companies, in that their market capitalization lies between $50 million and $300 million, which comprises about 29 per cent of Canada's publicly traded companies. The basic aspiration of these companies is to grow their capital in order to become competitive among the large companies in the market. Like Micro Cap companies, these firms tend not be widely recognized, although some have gained some notoriety among the public. This is also a good segment to target, as most of these companies are already aware of the importance of managing their investor relations effectively. Furthermore, these companies are generally unwilling to assign many employees or capital on such efforts, which should make InvestorSoft a good option for them as well.
Mid Cap and Blue Chip companies, on the other hand, are large enough to invest significant capital and employee power into their investor relationship efforts. Hence, it is unlikely that InvestorSoft representatives would be able to convince them of the merits of their software. On the other hand, targeting these markets would create a much higher volume of brand awareness among companies and could ultimately prove well worth the effort in terms of the firm's longevity and survival in the market.
In the short-term, it is therefore suggested that InvestorSoft should initially target Small Cap companies, since it would take the least effort to convince such companies of the merits of the software and the need to manage their investor relationships. Furthermore, the fact that this segment contains some well-known entities can also function as a long-term vehicle for entering the larger target market. Once a Small Cap company grows to enter the Mid Cap and ultimately the Blue Chip segments, the software and brand awareness will follow. Once InvesterSoft is firmly established in this market segment, long-term targets can include Mid Cap and ultimately Blue Chip companies. Creating a sound basis for the brand at first will take less investment in terms of time and effort than starting right away by targeting Mid Cap and Blue Chip companies. Furthermore, another consideration is also that, when starting with Small Cap companies, the ease and small time investment of the software could be used as a selling point rather than basis for doubt about the company's validity in the investment market.
In terms of geography, it does make sense, once again in the short-term, to initially target the Canadian market, since this is where InvestorSoft is located. However, as brand awareness grows into the larger market segments, the United States market can become a long-term target, even as Mid Cap and Blue Chip companies begin to be an option for entry. Once this market becomes a target, the company should consider, once again, by starting its entry efforts at the Small Cap level, from which it can gradually grow to become Mid Cap and Blue Chip options as well.
Customers in the Small Cap segment is a good entry point, since they are aware of the need to manage their investor relations effectively. At the same time, they do not necessarily have the capital and human resources available to do this by either hiring external experts or creating an in-house investor relations department. Hence InvestorSoft can be positioned as the "perfect" or optimal solution for them, where the capital investment is relatively small, the human resources required to run it are at a very low level, while at the same time, all the necessary information and elements are in place to provide investors with the information they need regarding the company and its functions. As a short-term entry into the market, these companies are therefore the optimal target, since they are likely to focus on growth into the larger market segments and could also prove to be a vehicle for InvestorSoft to enter these markets.
As a start-up company, InvestorSoft would therefore do well to enter the market that seems most open to what it offers, while also providing ways to grow into potentially more profitable markets. Hence, Small Cap companies seem to offer the best way of market segment entry in the short-term, with great potential as a vehicle for bigger entry in the long-term.
There are several advertising and promotion options that InvestorSoft might consider to create awareness of its brand. When making marketing and promotional decisions, it is important to keep in mind the relative costs and benefits of each option. There are several options open to InvestorSoft.
One of these is direct mail. Direct mail is a method by which InvestorSoft could provide letters and brochures that introduce the company to potential buyers. While this is a relatively low cost method of creating a professional image for the company, one potential drawback is that companies might be turned away by this relatively "pushy" way of advertising.