Written by: Atul Oka, Senior Director of Strategy and Business Development, DUKE Heights BIA
September 01, 2019
In our last article, we discussed some of the initial steps when looking at starting your own business. We asked the important questions around the initial motivation for starting a business and getting an idea of our individual financial needs before starting a business. We left off with some questions which were aimed, at better evaluating the feasibility of our business idea, and gaining a better understanding of the possible business model for our business.
We should have had some time since the last article to mull over the question around what product or service we want to offer our prospective clients. If you haven’t, take a few minutes to think about it now.
Ready? Let’s now try to further define that so we know exactly what we are offering. First, create a short list of the products/services you are thinking of offering. Now ask yourself what business you are in or planning to be in.
Confused? Let me explain.
Most business people often think about identifying the product or service that they think will be in demand. Then source or create it, and finally attempt to sell that product or service to their customers. But this overlooks something very important – The real underlying need that they are trying to meet.
Take Amazon as an example. While Amazon creates a marketplace where you are able to find almost any product, their main business is not selling products (It’s true), but actually selling convenience. Stay with me here.
The convenience of being able to buy whatever you need, and have it conveniently delivered to your home without getting up and spending half a day moving from store to store looking for that specific item, is greater than any marginal product or delivery cost. In the age of convenience, Amazon has the lead while others are furiously trying to catch up.
If you can’t relate to that example, here is another. Have you ever bought or used a drill? At some point or other you probably went to the local hardware store, (or your neighbours’ garage), looking for a drill. It is a fairy useful tool, but what actual need did it fill?
Was the ability to make a hole or two? So, in essence you were not looking for a “drill” but a means to make a hole. If there was a competing product that could make a hole faster and at a cheaper price, you would be wondering why everyone was still using a drill and not this fancy new gizmo.
Charles Revson, the founder of Revlon famously said, “In the factory we make cosmetics, in the store we sell hope”.
Find your equivalent to Revlon’s “hope” and you will be well on your way to understanding your market and satisfying a real need.