[Part two of a series – The Yahoo Smart and Simple Guide to Starting a Business. Part one is here: Is it time to start up that startup business? and The Yahoo Smart and Simple Guide to Starting a Business: Part 1- Goals, Values and Ideas and Resources for the Yahoo Smart and Simple Guide to Starting a Business: Part 1- Goals, Values and Ideas]
Now that you’ve made the decision to start up a business, you must pinpoint your product or service. If you’re an entrepreneur, you are most likely confident that you can make your idea work, but success for startup businesses lies in the details, so let’s take care of some of them.
Since you are the boss, basically the CEO of your company, you get to call the shots, right from the start. But even though I’m the first to suggest that people push their comfort zones as far out as possible, you must be true to yourself and not force a round peg into a square hole.
Radical innovation or safe increments?
One of your first decisions will be whether to come out blazing with an idea meant to rock the world or stick with an increment to an existing concept. As you can imagine, the radical innovation approach can be risky, whereas the slightly new and improved version of a proven commodity is easier and safer.
Take the 2011 Ford Explorer’s new rear inflatable seat belt, which was designed to reduce the pressure of a seat belt on a body, with children and elderly in mind. Would this innovation sweep the world?
Tracing back the history, when the three-point model of the seat belt was patented in 1955, it was an innovative breakthrough in the world of car safety. This development prevented the paralysis that lap belts sometimes caused. Today all cars have the three-point belt.
The new belt was a risky move. The question boiled down to, would people be willing to spend the extra $595 to have this belt in place? It’s not a done deal yet but two years later the belt isn’t really common.
There are other ways to strike out in the world of commerce without taking so much risk, without demanding that your customer base take a leap of faith with you. When I lived in Los Angeles I was taken with a frozen yogurt shop called Humphrey Yogart (cute, isn’t it?). They have been around for decades now.
They encouraged customers to take any blend of toppings and yogurt flavors to mix in their large blending machine. My favorite flavor was chocolate, espresso and cinnamon. The business concept was different, but not too radical to throw people. The small parlor was always packed and today there are many copycat shops around, similar, but not quite the same.
Since you are devoting considerable time and money to your new business, you probably want to take whatever product or service you are offering to the next level. What is your risk tolerance? The size of the step or leap is up to you!
Build your business concept
You need to set yourself apart one way or another from your competition. You will build your business model based on a number of factors. Start by listing out answers to these questions:
Who are your competitors?
Some people glibly say, “I don’t have any. My product is unique in every way!” Although you may very well have a wonderfully innovative product, you must have a competitor. Everyone has competitors. And if you don’t, then maybe it is because it really isn’t a very good idea? Take the time to analyze your competitors. How do they go about getting clients? How do they handle their niche?
What opportunities do your competitors leave?
Once you know your key competitors, look for opportunities. What gaps did they leave? Are they missing part of the market? These are areas you may be able to fill.
In Derek Halpern’s article, “How to Learn From Your Competition (and Steal All Their Best Ideas)” he points out that if you are playing the Black side of a chess game, and always just copy White, you’ll lose, because you’re one step behind.
When I was in my twenties I spotted that there were many stores in the mall selling silver jewelry. It was pricey, above the budget of the average college student. I lived in Los Angeles at the time, which had a hub of silver wholesalers downtown, so I purchased rings, chains, pendants, etc. and set up shop in the courtyards of college campuses. I could undercut the malls by 50% and still make a huge profit, because I didn’t have an expensive lease. Colleges let me come in for free.
How can you differentiate yourself?
When you’re starting a business it is wise to be able to answer the question, “What makes you different?” quickly and easily. This will define your niche in your chosen field and will help you devise a pitch later on.
Look for ways to differentiate from your competitors, improving on their product or service. For instance, if you’re opening a preschool, consider doing something like offering chess as part of the curriculum. It might sound crazy, but young children can learn the game and gain amazing benefits.
What are your available assets?
Make a list of all your resources. These might help you build a more successful business. Physical assets like a van have obvious uses, and don’t forget your home – anything from using the garage for storage to fully setting up your business at home.
Make sure to include connections. They can be your strongest assets when you’re starting out. Sometimes you can create a synergy with your competitors, working together in some way to increase both businesses. For instance authors often team up to give book signings. It can be more interesting for the customers and bookstores.
Do you have a strong social media base? That can be a strong asset. It’s free to create and you can continue to build it over time. You may find vendors and clients through Twitter, Facebook, LinkedIn, etc.
What are your personal skills and achievements?
Another category of assets are your unique skills and achievements. List them all out, even if they seem small or inconsequential. It might spark a creative thought.
For instance if you’re a member of Toastmasters and have won awards for public speaking, your business model might include regular lectures. You can sell books or classes/courses based around public speaking besides the obvious publicity benefit.
Or if you’re handy with a camera, you can add photos regularly to Pinterest and Facebook, which will draw more potential clients to your pages.
What would you like to avoid?
When building your business concept, it is also important to list things you do not wish to do. If you don’t enjoy your new business, it is unlikely you will succeed.
Of course we all need to face the unavoidable activities that are a must, but if you note down the things you dislike, you might be able to steer clear of them or hire someone else to handle that aspect for you.
Now that you have read this introduction, read the more in depth article and worksheet on defining your business concept and also take a look at our resource list for more reading on this topic.