It seems that everywhere you go there are people that you meet that have come up with an idea to start a business. They sit with you at the coffee shop and tell you the idea they have that just can’t miss. The polite respondent that you are, you nod your head in agreement knowing that this concept will be the last time you hear of it.
This is the reality of ideas and the way that they relate to conception, or rather lack thereof, of starting a business. This doesn’t mean that you shouldn’t bounce your thoughts off of others before commencing, but there is much more to it than sitting on the couch in your living room saying that you have the next best idea for an app.
As one who has been involved in start-ups, both successfully and not, certain questions are better asked before launching your new endeavor than later. The obvious first question is why are you doing this?
Seems fair enough. Have you come up with a way to solve a problem in your life? If so, this is a classic setup for beginning a business. Nothing succeeds more than a problem solving product or idea. Is this area a niche that you are familiar with? You should be.
According to Mark Cuban, you need to be the most definitive go-to source for your product niche. You need to be the expert and sell that expertise to the market. Do you have a passion for this idea? If not, you probably won’t be successful. Passion doesn’t have to equate to love, it just needs for you to know that you will be the best one to sell this product initially. If you can’t, it won’t work.
Think about the age, financial status, gender, interests, and most importantly, what would motivate people to buy your particular product. This is the beginning of branding, so to speak. This is how a new online retailer becomes successful when there are 657,879 already in existence (made up that number).
Tuckernuck is a classic example of this. They have carved out a brand in upscale preppy clothing and have turned it into a lifestyle. You must be able to have name recognition to survive in such a cutthroat industry. If you peruse their website, tnuck.com, you will see that they are an up-priced product in a niche market.
By definition, creating a niche such as this means you are going to lose customers right from the start. I have heard criticism of the Tuckernuck product line that it just doesn’t work for the average person, as most of the models on the site are quite attractive. There is nothing wrong with that, just know that it will not be inclusive of all audiences.
You don’t have to have an MBA in finance to understand how to price your products. It certainly doesn’t hurt if you have one though. You know your costs, both fixed and variable. This is the break-even point where price needs to go up from. Determine what price the market currently bears for similar products, and price accordingly. It really comes down to how much your customer is willing to pay. This can obviously be tweaked as you go forward. A couple of basic bullet points to consider when pricing:
- What is my basic cost?
- How much profit do I want to make?
- How much do my competitors charge?
- What is the market trend?
- How much will my ideal customer be willing to pay?
Jumping in with both feet first has worked for many an entrepreneur. However, if you are the type that would like to have a little more concrete data before jumping in, utilize these points and then get ready to run.