Episode 4: Do You Have A Business Or A Hobby?
When you first start to examine what it is you actually have, if indeed you actually have a viable product, there are several things to fully consider.
And this is where you learn if you have a real business or just a hobby.
Before we factor in all that is necessary to make your product available to the public, consider this: There are some things, that although a good idea, are too costly to make. This will make it so expensive that almost no one will buy it. So just keep that in mind.
Now, onto the factors you need to consider to realize viability.
What is your cost? (Cost of goods)
Do you know how much you have to spend on everything, to get that product to the consumer? Because if I may, for just a second, please realize that incidental costs are still costs. You still have to pay for those things. So if something like shipping is part of your product, if you aren't going to eat that cost, your customer will need to know they are paying for it. In today's world, most have come to accept that they are going to pay for the shipping. So just write all of that out and perhaps even do a test sale to a friend or family member, and look at what it cost to get them your product.
Did you forget something as simple as packing tape or how much fuel you used driving to UPS and back? Again, all of that is money spent.
Most businesses fail in the first few years because they don't consider everything.
After you have that in place, now you have to determine the price of your product.
How much do you charge for your product?
This part can be a little more tricky, but it doesn't have to be. With some crafty research, you can certainly get pretty close. Now here, price something too low, and you'll be working really hard and making little to no money. Price something too high, and you'll be sitting around twiddling your thumbs wondering why you have no customers.
Chances are, there is a product close to something you are offering; just ask google if you have to. See what it is going for. The more unique it is, the greater potential you have with that product to offer it at a better price.
Why would someone buy your product or service?
That is the question you have to answer. If it is a necessity in some ways, well that's pretty easy. If however you are either creating something completely new or putting a twist on an existing item, there are several things we would advise you to consider. Showing your product at a Trade Show is a pretty effective way to see what the general public thinks.
You can answer questions, show it off in many ways and see if people will buy it. Even better than that, ask them to participate in a survey for you. If they'll allow you, get their contact information and go back to them in a month or two and get their response to some targeted questions... questions you create that will tell you if the price is right, if the product delivered on its promise and a space for some general feedback.
Take it all in and don't be offended if there are negative reviews. Those may be the most helpful. If they're all pretty similar, perhaps your product needs some fine tuning. Just because you think your product is a good idea does not mean you have a viable product. In fact, you may have a good idea, but it needs to be refined in some way.
We are always here to listen and let you talk things out. We'll offer our opinion if you'd like and hopefully coach you to an informed decision on whether you have a viable product or not. Just shoot us an email today!
Cost of your product, setting the right price is important
Cost to create...everything
Cost to the customer
Break it all down
Investigate why your cost and your cost to customer aren’t equal to the profit margin you have estimated
Don’t spend any money until you have worked through your questions and issues
Try to learn about your product
Test market your product
If there is nothing like your product, either…
There is no audience
You may have to create one and create a need for your product
You may have to educate an audience
Is your product sustainable?
When seeking product feedback, friends and family may not be best
Product feedback people need to be open-minded and objective
Will you be the only employee or will you need a staff
If I need a staff, can I lead others
Can I adapt to market and customer changes