Four Rules To Follow When Starting Your Own Business
Perhaps the hardest and most critical part of starting a small business is figuring out which product or service to sell. Choices are unlimited but possibilities for success aren’t. Small businesses often start and shut down within a couple of years, which indicates how challenging the economy is these days. Assuming you have a small budget, the following four guidelines promise to help:
Product or Service Should Have Unwavering Demand
Considering the current shape of the economy, it’s wise to sell a product or service that is constantly in demand (also known as inelastic demand, in the geek world). Filling a basic necessity, like food, clothing, medicines, shelter, delicious cheese & garlic filled pizza from heaven, ensures people keep coming back to you despite thinning wallets. Some luxury brands continue to do well during economic downturns but that’s because of niche marketing, established prestige and large promotion budgets, something that start-ups don’t always enjoy.
The Entrepreneurs Expertise Matters
Starting a small business about something you know little of wastes your time and possibly money. The entrepreneur spends too much time learning tricks of the trade and not enough time fine tuning operational efficiency and marketing. Profits will be meager to begin with and grow slowly (if you’re lucky) because you’re doing too many things at once. If you’re interested in entering a new market with little or no experience, go work for another small business in the same segment and learn how things are done. Then use those lessons to start your own business!
Brimful of Motivation
Money and your family’s well-being are great motivators, but when things look dull for your business, it’s easy to lose hope and rethink your steps. There’s nothing wrong with changing your product or service, but persistency is important properly test the product/service and market. For that, you need to not only have a faith (your inner gut feeling), but also have a hobby-like interest in the business. If you’re an avid photographer, setup a small wedding photography studio instead of a grocery store.
Be Specific About Your Product and Service Range
It’s never a good idea for small businesses to heavily diversify their product range hoping to cast a wide net in the market. Grocery stores often do this by selling everything from edibles to clothing to household products, and that just makes your cost structure complex and cost base really vast.
Such businesses must pay a multitude of suppliers for everything they propose to sell to customers and that requires excellent cashflow management. It will be difficult for the entrepreneurs to support such levels of investments without good bookkeeping and heavy investment, especially if market demand were to fall.
By Fehmeen Khan