Doing Business Backwards- 4 Considerations BEFORE Starting a Business

I’m often asked by business owners, “How can I get more clients?”  Fair enough question, right?  I’m a marketer, I always have ideas.  However, occasionally I am faced with the task of explaining to that business owner how they have been doing business backwards.

A true entrepreneur sees a need in the market first, and then creates a product or service.  Unfortunately, many small business owners do the opposite; create a product or service first and then attempt to find a group to sell it to.  An extremely unfortunate circumstance is when a person is sold on the idea of selling a product or service based on its bells and whistles or perks associated with being a part of a team.  While there is nothing wrong with selling an in-demand item in this fashion, far too often people find themselves unable to move inventory.

Items to consider before starting a business that will make marketing your product or service more feasible:

1.  Is there a demand for the product/service and who is currently meeting this demand?   Is there too much competition or is there an under served niche?

Example- For years there were many cosmetic companies, but few that catered to brown-skinned ladies and fewer provided good coloring for brown-skinned ladies.  Starting a cosmetics line for the general public would likely be much less lucrative than focusing on an undeserved subsection.

2.  Can a reasonable profit be made providing this product/service and, if so, how should I position myself price-wise?

Explanation- Are you catering to the price-conscious consumer/ good quality & fair price consumer/ luxury goods consumer.  Each of these groups have different buying habits.  During a down turned economy, companies that offer inexpensive goods (McDonalds, Wal-Mart) tend to fair better than others.  However, in a bustling economy, one could be leaving money on the table catering to the price-conscious consumer.

3.  What is the best means of distribution (direct sales, vendors, online, etc.)?

4.  How will I reach potential clients to let them know about the product/service?

Explanation- If one’s target market are women 45-65, the Internet is not the most effective means of marketing.  Likewise, mail outs will not likely be the best method for twenty-somethings.

There are many things to consider when starting a business, but considering these items, also known as the Four P’s of Marketing- Product, Price, Placement & Promotion, will make selling your product/service much easier.