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A small business blog featuring tips to help entrepreneurs succeed in the small business world. Topics include family business, human resources, marketing, money, networking, operations, ownership, startup, taxes and technology.
Starting Your Own Business, Part 4 of 4
FINALIZING YOUR PRODUCT AND YOUR BUSINESS ACTION PLAN
FINALIZE YOUR PRODUCT
There are a number of items that need to be considered in the development and finalization of your product or service. The first thing to remember is that “finalizing” does not mean eternal. Your product should always grow and develop as the need presents itself.
Use Focus Groups
A focus group is simply a group of potential consumers that test your product and give you honest feedback. Your personal passion for your product can cloud your judgment and leave you “selling only to yourself.” A focus group will help provide fresh ideas on how to better your product and meet the needs and desires of the consumer.
It is important to keep an open-mind and not become defensive; remembering that the feedback you receive will generally be the same from any consumer. Write down every comment and rely on those that are most useful to perfect your product. It is also recommended that you use a focus group any time you make significant changes to your product.
Determine the Price of Your Product
The price of your product must entice the buyer, as well as cover overhead costs, production and distribution of the product, labor, marketing – everything it takes to run your business. The price needs to do more than make your business come out even. A successfully priced product should result in profit!
To determine a viable price for your product or service:
1) Define your financial goals.
Examine the income which is required to provide for you and your family, outside of supplying the business (living expenses, etc.). It is often best to observe your monthly spending trends, because the profits of your company will likely fluctuate on a monthly basis.
This will help you to determine the minimum profit you need to sustain your business and an acceptable income. Also, examine your long-term financial goals, such as savings. You want to determine how you can you realistically adjust the price of your product to provide for your financial needs and desires.
2) Research current market trends.
Supply and demand will always effect how well your product sells. If it is priced too high when the demand is low, it will not sell. If it is priced too low when the demand is high, you take the risk of not breaking even. It is important to determine a “safety range” for the price of your product based upon recent market trends.
3) Compare to the Competition.
Shop around via the internet and local stores or service providers and compare the prices of your competitors. Get in the head of the consumer and determine what price you would be willing to pay based upon the competition.
Your price will need to be competitive with other businesses producing the same product or service in order for it to sell. Your product should only be substantially more expensive if it has significant features that the competition does not offer.
4) Assess Business Expenses.
You need to determine how much it will cost to run your business and how much it will cost to product each product. Obtain price quotes from manufacturers. Determine how much your supplies will cost. If you have employees, how much will you pay them? What are the costs of marketing and distributing your product?
All of these are a part of what it takes to run a successful business and the price of your product should reflect that. Start with estimated costs in the beginning and use real costs as your business grows.
Determining the right price for your product or service is a system of trial and error. If your product is not selling, the price should be the first aspect of your product that you re-exam, simply because it is the easiest aspect to adjust.
Develop a Marketing Strategy
Your product will do nothing for you without a marketing strategy. It is imperative that you reveal your product to the public in a honest and attention-grabbing manner.
In order to target the correct audience for your products, you must:
• Define your customers.
• Research and discover the best medium (i.e. television, radio, billboard, magazine, etc.) with which you can reach your customers.
• Brainstorm ideas for your advertisements, enlisting help from others including focus groups, and asking them what would catch their attention.
• Implement your favorite idea, because, if you like it best, you will follow through with it.
• Finally, test the marketing strategy. If it doesn’t work, try a different one and try, try again.
FINALIZE YOUR BUSINESS ACTION PLAN
you will find that your business action plan has developed as you go through the startup process that we have covered the past few days. Your business plan is not only for today, but helps to coordinate the future of your business. I refer to it as a business “action” plan because, once you reach this point and have established the following items, you are ready to take action and become a successful entrepreneur:
Revamp and Redefine.
Make the final revisions to your sales script and clearly define your business.
Develop Process Sheets
Process sheets will eventually serve as your “operations manual.” Basically, process sheets detail the what, how, who and when for each aspect of your functioning business.
What: Determine each process of your business, such as order placement, packaging, etc.
How: List the steps to complete each process in a satisfactory manner.
Who: Determine who will be responsible for each process.
When: Decide on the appropriate amount of time for each process to be completed.
Operation and Administration
You will also need to determine all of the “departments” that will keep your business running smoothly, such as accounts payable, accounts receivable, legal department, sales, marketing, etc. For each department, provide an explanation of its function, list the information you have collected during your business research regarding that department, determine what results you want from that department, and what is necessary to obtain those results.
I highly recommend that you visit the link to the Small Business Association’s website below. It has an outlined example of a business plan that should be very helpful. Always remember that your business plan, any many other aspects of your business that we have addressed this week, will continually change and develop as your business does.
Reevaluate and revise your business plan as often as necessary to provide a stable and sufficient structure for your business.
I have taken you through the basic principles for starting a successful business, so now I want to hear from you. Have I covered aspects of starting a business that you have tried? What were your results? How have sales scripts and focus groups (or anything else I covered) helped your business develop? If you are just starting, what about the topics I covered most interests you? Did I leave something out that you found crucial to starting your business?
Please feel free to share your thoughts.
Part 1: Focus and Brand Impact
This week’s source:
• Entrepreneur.com: Starting a Business
Today’s Related Sites/Readings:
• MarketingPrinciples.com: Small Business Market Strategy
• Bizhelp24.com: Unique Selling Points of Your Product
• SiteSell.com: Pricing Your Product
• Business Toolkit: Marketing Your Product
• Small Business Administration: Writing a Business Plan
Related Small Business Buzz Posts:
Starting Your Own Business, Part 1 of 4
Starting Your Own Business, Part 3 of 4
Starting Your Own Business, Part 2 of 4
Testing New Marketing Ideas
Starting a New Business