I am surprised at how many people start a business without a lot of thought given to both customers and their potential competitors.
Sure we all plan and dream about how our product or service is going to corner the market and make us rich.
I am often surprised at how few new people to the business world, understand the dynamics involved in the market place. Most-- from my experience have given little thought as to why a customer would chose you over the other guy.
Some things to keep in mind, unless you have the only widget out there that is special, or are the first to offer some unique service, this will apply to you.
Customers come from only a few places. You steal them from a competitor or you create a desire for your product or service that the customer did not know he needed. True brilliance comes from that later, most of us get our business because they can sway people into trying their product and giving us a shot at making them happy.
As a new business owner you have to have an understanding of the market for your product or service. Who is already in business? How long have they been in business? What is the quality and price of their product.
As a new business owner it is reasonable to assume that you will be paying more for your basics than the guy who has been doing it 20 years. It would be un-realistic to assume a wholesaler will give you the same price break as a long time, high volume customer.
You will in order to get business either offer lower prices or better service to attract new people, all of which costs you more than the established competitor.
You will also have every dead beat customer that didn't pay his bill with your competitor and sees you as one more place for credit, that he is no longer able to get. You will also have a shot at the customer who is so demanding that the established competitor knows what it cost to take care of and it is reflected in the price structure.
You can get new business by either advertising, which is always expensive or opt for visiting potential customers and giving them your pitch. While it is the most time consuming, going to the customer is always the best bang for the buck. It can be through trade shows, personal contact or just finding out who would use your product or service and going to visit. I have found over the years, good customers never just fall into your lap you have to find them and earn them.
There are many good idea out there, many places, where just what you are offering is needed. Make sure you are working on a profit margin that takes all of your costs in mind
One thing that a lot of new business owners fail to see is the competitor. If you are thinking of opening a bakery, it is important to not have a successful bakery across the street, that has been in business for three generations. It is also pays to look at your competitors as someone you plan to do battle with, I can assure you that anyone who is already in business knows that he will lose business to you and this is going to effect his bottom line. It is wise to have an understanding of their business, how well are they financed? What slice of the market are they after. Is there room for you to take care of part of the market they are not after?
One of the things I share with anyone considering a business is to visit as many similar businesses, to see how they do it. If you are looking at someone's business they may only help you if they don't see you as a threat to theirs, keep this in mind while asking questions.
Understanding your customer base is the single most important aspect of any business, it costs less to perform than almost any other function and is often the key to success.
Or you can just invent the widget everyone just decided they had to have, and you are the only one with it....Good luck...Bob