A small business that specialises in a range of products made from honey had a small stand outside a large Dis-Chem pharmacy, a health and beauty discounter. There were so many products made from raw honey and beeswax, together with the other ingredients, that the stand looked confusing. No potential customers were visiting the stand. What went wrong?
Buying a stand in this shopping centre is expensive. If you don’t appeal to the shopper profile, your financial outlay will be worthless. Where I think this small business went wrong is to display so many of their products that it became confusing for potential customers. So they just walked past. There was no signage calling out the market such as people, for example, with skin ailments or wanting specific beauty treatments.
A new small business like this climbs onto the honey products bandwagon and assumes that everyone will accept their claims about the health properties of honey and beeswax. In this tight economy people are more skittish about spending the money on products and services where they don’t know if they will work or not. Sure, generally we know that honey is good for one’s health but when it is used in products such as face and body butter, anti-ageing scrubs, cuticle creams and heel balm we wonder if they will really work.
Compared to this small business selling honey-related products, there is one in Cape Town which has developed a range of milk and honey products. When the small business promotes itself in shopping malls and morning markets, it has clear messaging about the health properties of honey and milk and clearly states which ailments could most benefit from these ingredients. A smaller range of products is displayed so that the potential customer is not confused.
The problem with new start-ups is that the founder or owners can make the wrong assumptions about the products and the market.
As one of the leading lights in the lean start-up world from Australia says, a start-up refers to releasing something “new under conditions of uncertainty”.
What this means is that you can’t assume because others have been successful at a product or service that it is still successful under present conditions. Customer demand is often one of the “higher risk assumptions” because without sales you don’t have a business.
This means that you have to test with the right questions that will quickly establish whether potential customers will buy or not.
As the lean-startup expert says, founders have confirmation bias which means that they already believe that the product or service will do well but they haven’t confirmed those assumptions in the marketplace. You need to ask the right questions and not just the ones that will give you the answers that you want.
Only by asking the right questions before you rush out into the market will you be able to confirm whether you have a competition killing product or offer.
I wrote “Breakthrough Ideas” to thoroughly test new business ideas. Here’s the link.