Careful research is critical in developing any great business idea; therefore, in order to come up with a business idea that has a better chance of success under your command, here are five factors you need to understand well:
1) Your business (and its industry)
2) Your target customers
3) Your competition
4) The current market trends
5) And your passion
First, let’s start with your business (and its industry). To enter into any business you need to evaluate its business model and the products and services it will provide. You should project at least 3-5 years into the future to see whether the industry you’re about to enter has room for growth. Does what you are about to sell have a growing demand? You don’t want to start a business that is trending downward. For example, if you open a bookstore today to sell traditional books, you would find it very challenging to survive because digital copies of your books are selling online for a fraction of your prices. Although many of us (including me) still like to read traditional books more than digital ones, the big difference in price between the two have persuaded consumers to choose digital books. Understanding your business model and industry before you open your business is very important to your success.
Second, if your research provides you with a promising niche, the next step is to understand your target customers. Since the secret to any business success is to meet and exceed customer expectations, by understanding the roots of your customer’s needs, (or better yet by understanding needs that even your customers not yet realized) – how well you do this will help determine many aspects of your business’ success. One good example of this is Apple with its iPod (then followed with a variety of other popular mobile devices such as iPhone, iPad, etc.).
Before the birth of iPod in Oct. 2001, tech companies were just trying to fill their customers’ needs with CD and MP3 players (which stored between 10 -100 songs per device). Along came Apple, and they dug deeper into the roots of customer needs to come up with something that even its customers weren’t aware they needed; a small device that could store thousands of songs (or the entire music library of an average customer). This out-of-the-box-thinking placed Apple on the front line of innovative companies, and the rest is history.
The point I want to make here is the importance of understanding your customers’ needs. You don’t have to come up with a genius idea like Apple to be successful, but you do have to understand your customers and provide products and services that address their needs effectively, and in a timely manner.
Third, besides understanding your customers well; you also need to understand your direct competitors. This will help you understand their strengths and weaknesses, which in turn will help you to gain advantages as you plot your approaches to compete with them. If your company is small compared to many of your direct competitors, you may want to utilize the web more because it is the lowest-cost, most effective and popular marketing channel that can help position your business professionally among your competition and in front of customers.
Fourth, you need to understand the current market trends to see whether they favor your business. As a small business startup with a limited budget, you’ll want to start a business that can leverage market trends to its advantage, rather than fight against them. When I say current market trends I mean popular demand among today’s consumers. An example of a current “market trend” is the growing demand for mobile devices and the popular use of search engines like Google and Bing to find information quickly. If you build your business while leveraging this market trend, you will have a much better chance of success.
An example to help illustrate this point is NewEgg.com. NewEgg sells electronic products, similar to BestBuy and TJ-Max, but since it didn’t have the budget to match retail stores like its competitors, NewEgg leveraged the Internet by opening an online E-Commerce store where it sells products to customers across the world. By not having to pay or rent many store spaces, NewEgg makes a good profit selling electronics at a price that is competitive with BestBuy.
With more and more consumers comfortable purchasing online, NewEgg’s sales numbers are improving in its “digital” stores. This is a good example of a business model that leverages the market trends (prevalence of consumers using the Internet to make purchases) to its advantage.
Fifth and the most important of all, find your passion. You need to find something in your business idea that you like or enjoy doing because at some point in your business only your passion can help you go the extra mile to overcome some of the greatest challenges without giving up.
Good examples of successful businesses that were developed from passion are Apple, Dell, and Microsoft. This reminds me of a quote about passion that goes something like this: “If you love something enough, it will reveal its secrets to you.” Thus, passion is very important to the resiliency and long-term success of a business. If you build a business around your passion, you will enjoy doing what you do so much that it will make you feel like you are not working at all, but just having fun; fun that people actually pay you to have.
These are five important factors that should help you to have a much better chance of success in business. Startups should research and understand each of these factors, prior to starting one. I hope you found this article helpful. If you do, please feel free to share it with your friends who might be considering starting a business themselves. I wish you and your friends all the best.
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