The problem with a lot of would-be entrepreneurs who believe they have a brilliant idea for a product or service is that they want to do it on their own. Yet in today’s highly competitive product and service markets competitive positioning, knowing how to develop a product or service that creates value for prospective customers and knowing how to commercialise a product or service including marketing and selling as well as distribution can’t be learnt overnight or at a drop of a hat.
A pioneer Internet marketer recently surveyed his customers and email followers to find out what range of income they were returning from their online businesses. The results were surprising. Only a small percentage were making any money online and even fewer were realising an income that could make them self-supporting. The majority of his followers had started businesses but unfortunately had made no income. Their businesses, if you could call them that, were actually no more than a hobby.
The other problem is that many would-be start-up business owners believe that they have the perfect thing but enter markets where the competition is exceedingly high and there are few barriers to entry. Take for example, the e-book publishing market. The growth in electronic self publishing means that thousands upon thousands of people who would in the past not have had access to being able to publish their books are now able to do so in numbers that are outstandingly high. Small business owners also confuse being able to produce a product such as an e-book (which is relatively easy now with Internet publishing tools) and marketing and selling a product or service. The Internet has become so crowded with information that it is hard to stand out and difficult to find your market of customers.
I recently saw a survey of the most profitable small businesses and was surprised that most of those that the small business magazines and Internet websites consider as being cash generation machines don’t appear on the list. The data that was used for the survey was drawn from the financial statements of almost 300,000 companies, most with under $10 million in annual revenues and was based on their average pre-tax margins. Whether you like it or not, the business that topped the list was the offices of certified public accountants, followed by chiropractors, medical services, accounting services, dentists, tax preparation services, orthodontists, lawyers and businesses that finance sales. It just goes to show that you need to be careful about the markets you select; know which markets have reasonably inelastic demand (that in simple language means where people really want to buy your products or services); and run them without incurring huge overheads and labour costs, which are ever rising.
What then is the answer to finding a promising business idea for a product or service and giving it the best chance of succeeding in the marketplace and generating respectable income for you? Many people, especially small business owners, won’t like this answer but it’s really to get the best advice you can to develop and commercialise your new product or service. Research on small business owners shows that more than 75% of small businesses are started from scratch rather than from people who buy a business from a family member or from an existing owner. Many entrepreneurs succeed at starting a new business from scratch but they comprise a very small minority. Business incubators and accelerators as well as entrepreneurial education can help with starting your business from scratch but the fastest way out of the gate to success is obtaining the help of a seasoned, hands-on, practical business person who has started and run small businesses.
Selecting such an adviser means that you should get the best advice possible. Bad advice can be very risky. Make sure that you speak to at least two or three business advisers to assist you with taking your idea or concept for a business and turning it into a financially-viable reality.