Part 5 ~ Acey Gaspard’s Guide to Starting a Small Business – Made Simple
Working Without a Plan is Planning To Fail!
Researching your idea before you move ahead can save you time, money, and unnecessary stress.
Once you have an idea, you need to do some research because no matter how good you think your idea is, if you don’t research, you could miss out on opportunities and just move steadily down a dead end.
Jenny thought she had the greatest idea in the world: she wanted to create a website where she could match up people who were compatible for dating, and her dating profile was what really kept her optimism high.
“It’s a 100% sure bet,” she thought. “I have no time to lose. I must get this to the market ASAP.” She immediately got in touch with a programming company and started to create the programming module. She also had a website design company begin the design. After a few weeks, the site was ready for testing.
During the testing period, Jenny looked to place ads for her new creation. While reviewing the ad market, she discovered that online dating was one of the most competitive industries on the Internet. She would be competing with million-dollar companies doing the same thing she was, only better.
Her heart was broken. She couldn’t compete at this level, and she had just wasted $3,000 in programming fees and $750 in design fees because she hadn’t done her research at the correct time.
Time spent planning is time well spent. If you want to save time, then spend a lot of time planning and researching.
Tips for Getting a Business Idea Together
Make sure there’s a market for your business idea.
Creating a product for a market that doesn’t want it is a plan for failure. You may think you’ve just created one of the most beneficial products or services in the world, but if no one wants it, then you’ve wasted your time, effort, and resources.
Is there a market for your business idea? To find out, investigate like a detective. Look in the yellow pages. Perform an online search. Ask questions.
If you find a lot of businesses, that may suggest there’s a healthy market. See if you can identify any similarities in the businesses you research.
Is the market saturated or is there room for more?
If you find hundreds or even thousands of businesses, then the market could be saturated, and you’re going to be up against heavy competition at lower profits.
The better options here would be to look for a different idea. Find something related to this industry that has less competition, or find something that’s missing in the industry that you can provide quickly. This may allow you to break into the industry with a bang.
But if what you find missing is easily replicable, you may risk giving away the idea to a strong competitor. Your discovery must be something you can dominate quickly.
A successful business must be profitable. Is your idea profitable?
Even though you may find your dream business, it must be profitable to have lasting success. Running a business at low profits means you have to work a lot harder just to stay afloat.
Higher profits and lower expenses mean your chances of success are greater. Keep in mind that it’s just as hard and, in most cases, costs the same to get a low-profit customer as it is to get a high-profit customer. Or, put into other words, it’s tough getting customers. So with high customer acquisition costs, make sure your profits are high margin.
Imagine selling books at a profit of $3 per book. It’s going to take a lot of sales to pay the rent. Compare this to selling courses on the same topic at a profit of $170 per course. For the same profit, you would have to sell more than 56 books compared to one course. Which is easier?
The customer is the same person because we’re talking about the same topic. Sure, it may easier, once the customer has the product in hand, to buy the $3-profit book. But the point is that the expense of getting that same customer to the final step of choosing between the two products is the same.
Also, here’s another issue to keep in mind: people will go for the best solution they can afford. So in the example above, if people have a problem and believe you have the right solution, they’ll buy the $170-profit item as opposed to the cheaper $3-profit item.
One other important fact is this: if it costs you $12 in marketing for each sale, then the $3-profit books won’t even cover the marketing as well as other expenses. You will have failed before you even got started.
Can you operate the business?
You may have the right profitable business, but can you operate it? Do you have the skill, know-how, and resources?
All of these can be learned or acquired, but you need to get the right people for the right task. This needs to be considered when doing your research.
One last note on the topic of research: you can have someone create a report for you.
There are companies that specialize in this, and it may be worth the few dollars you spend now as opposed to lost investments, time, and effort in the future.
Type “market research service” into your favorite search engine, and you’ll get a list of services you can look into.
The time you take to do research beforehand will save you time, money, and heartache later.
Action Steps to Properly Plan for Your Business
- Research your business idea by checking if there is a market for your intended product/service. If there is a market, find out if it is already saturated.
- If the market is saturated, find the best way to break into the market. This can be by modifying your product/service or providing something that is needed (but not yet available) in the market.
Important Questions to Properly Plan for Your Business
- What research have you done so far to support the financial success of your intended business?
- Is your data up-to-date?
- Compute your potential earnings based on the data you have. For many people, looking at actual/potential figures is the only way to convince them of whether they should indeed go into a specific business or not.