Many of you may have thought about starting a business at some point in time. Many of us have thought about a new invention, process or production improvement that we may be able to patent and call our own. But before we can expect to make some money on our idea and build a business there are some things that we must investigate before we venture out and spend our own money and the money of others to start a business.
We also need to know what makes a business, company or project interesting to an investor. Why would an investor put money into one business and not another. What is the attraction?
One of the things we must look at is what are the trends that are happening today? What situation is developing where consumers are buying items that are creating a trend. What are the needs of today's society and what are the characteristics of that society? What is happening in your region or in the United States? If we are catching a trend from the beginning of the trend, then we can be assured that our sales will be growing with that trend as the trend catches on. Trends last for a period of at least 10 years. So we can be assured that our sales will be growing and we will be around for 10 years.
An investor would look at the trends and compare the potential market growth to your sales trend. Are your sales increasing and growing in market share? Are you and your management team capturing the market with your product, and are you capable of maintaining that growth with your expertise and acumen? Would you gain the confidence of an investor or a banker?
Another thing to think about is whether we are able to change the way people do things. Are we making life easier or more convenient for them with our product? Take a look at Amazon.com. Amazon.com changed the way people purchase books. Consumers no longer have to go to a "bricks and mortar" store to select their books. They merely go to the Internet at Amazon.com and put in a title or author and all the books available are listed as a result of that search. The customer orders the book and it is delivered within a week to their door. You don't even have to go outside! After you read the book, you can sell it on Amazon.com, and you can read critiques of the book and offer you own. With this direct mail ordering, Amazon.com can afford to offer their products at a lower price than the competition.
Think about Starbucks, the coffee vendor. Starbucks started in Seattle, Washington where people were developing and acquiring tastes for flavored coffee. Starbucks' management realized the trend was growing in Seattle and grabbed onto it. Now Starbucks locations can be seen in many cities across the United States. Starbucks hit on the fact that Americans were interested in flavored coffees and developing a taste for good coffees. Not only was this taste developing, but Americans were willing to pay the premium prices that Starbucks charges for this richly brewed java! Starbucks provided an environment where patrons could read their daily newspapers, read their email on their lap tops while sitting and enjoying their coffee at their leisure.
Market Research Required
Another consideration that we must think about is whether someone out there would be interested in purchasing our product or even visiting our retail store. We have to do our market research from two perspectives: who is our consumer and who is our competition. Who are the consumers we want to attract? Do they have the right demographic profile: age, gender, income level, education, etc. to be able to purchase our product and even enjoy it? Moreover, what do they buy, what motivates them to buy, and why would they purchase your product? Competition can be fierce or weak. We must know what we are up against in the way of product offerings and also become aware of potential changes to product development which may threaten our own product offerings.