One of the responses I got back when I announced the 31 Days of Blog Awesomeness was from Partha.
PARTHA Says: I really want to know how you started your own venture as an entrepreneur. What I am looking for a step by step guide to start up and own a new business.
This is a big topic and and would not fit into a single post. What I will cover is how to look at products and ideas and quickly determine if it’s worth moving forward with. I’ve made the mistake, as I know many have, of moving forward on a project before doing enough testing or having sufficient data to determine viability.
I’ve said before that I’ll work on any product or project where there is a margin and a market. Those are my 2 M’s for a new product.
Step1. Determine if there is sufficient margin in the product to support the beginning phases of growth.
- What is the expected cost per unit to manufacture and get to market?
- What is the expected retail price?
- How many units would I need to sell per month in order to make money? This is the minimum threshold.
Step 2. Determine if there is sufficient market to reach the minimum threshold.
- What is my target market?
- Can they afford my retail price?
- What are they buying now, and how many of those are being sold each month?
Step 3. Determine how I can do it better.
- Can I beat their price?
- Can I beat their service?
- Can I offer more?
- Can I market better?
Step 4. Test. If you’re like me you don’t have a large marketing and R&D budget. You need to test your idea first before dumping money into it. It is always better to ask people to buy your product rather than ask them if they would. Allow them to act and measure what your potential cost per acquisition would be. I’ll cover more on how to test in a later post… maybe.
Step 5. Go big, or go home. If the test is big then it’s time to take it up a level and get serious. If the test were not favorable you can either quit the project or test some more variables. Don’t get too emotional at this point. If after a good amount of testing the market isn’t responding to your widgets for left handed people don’t be sad. It’s an opportunity to brainstorm again.
Starting a business is easy. Starting a profitable business is a little harder. Even harder is starting and maintaining a profitable business. Luckily Partha didn’t ask me how to do that, he just wanted to know how I started.