| Most home business entrepreneurs start-up | | | | fact that competition exists in that market |
| with very little money and a strong belief | | | | proves a demand, or at least a need for what |
| that success will come to them if they work | | | | you offer. However, test for market |
| hard enough and offer a quality product or | | | | saturation. Unless you are offering a |
| service. While this positive attitude is | | | | groundbreaking product, stay away from market |
| essential, it is not enough to guarantee | | | | with extremely few competitors. Lack of |
| financial success. A lot hinges on your | | | | competition could mean that your business |
| management and marketing skills - and your | | | | idea is not profitable to begin with, or that |
| product or service. | | | | your idea is so new and unique that no one |
| | | | has thought of it yet. Few players in the |
| You can either choose a product-oriented or a | | | | market could also imply that the market may |
| service-oriented home business. A | | | | be controlled by a monopoly or a cartel, the |
| product-oriented business allows you to | | | | barriers to entry are too high for a small |
| either create or manufacture the product | | | | firm, or that the demand is too limited to |
| yourself, or resell products that are made by | | | | sustain another entrant in the market 6. Have |
| others on a direct sales or drop-ship basis. | | | | you priced your product competitively? The |
| On the other hand, you can opt to engage in a | | | | right price for a product or service is one |
| service-oriented business where you perform | | | | of the essential elements in a solid business |
| services at your home (work generally | | | | model. Don't do yourself injustice; the wrong |
| performed at home after sale of service) or | | | | price tag is like a ticket to disaster. |
| perform services from home (some or all work | | | | Economic survival is the primary |
| performed away from home after sale of | | | | consideration underlying all pricing |
| service). | | | | decisions. Ideally, a price should meet three |
| | | | requirements: it should match the |
| Before you begin to develop your business | | | | competition; it should be attractive to your |
| idea, you need to determine its strength and | | | | potential customers; and it should earn a |
| viability. Below is a checklist of criteria | | | | profit for you. Set your prices, not by |
| to help in evaluating ideas that is | | | | competition, but based on the needs of your |
| particularly well suited for you and your | | | | business. |
| goals. Ask yourself the following questions | | | | |
| when evaluating an idea for a business or | | | | Depending on your products, consider pricing |
| product: 1. Does it satisfy or create a | | | | yourself on the higher side: the higher you |
| market need? Introducing a new product | | | | price yourself, the higher you position |
| without first testing the market is like | | | | yourself. |
| jumping off a cliff blindfolded. In fact, | | | | |
| many businesses fail because there is no | | | | 7. What is the level of difficulty in the |
| adequate market for their products or | | | | creation or implementation of the product? |
| services. Before you risk your resources on a | | | | You need to consider the economic factors in |
| new venture, it is necessary to get an | | | | the execution of the product, such as time, |
| objective picture of your prospective market. | | | | capital investment required, and marketing |
| Although accurately determining the customer | | | | costs, personnel needed, among others. Also |
| reaction to a new product is difficult, a new | | | | determine if you have the engineering, |
| business owner must try to get hold of as | | | | production, sales, and distribution |
| much information on the market as he or she | | | | facilities adequate for the product's |
| can either through a formal market research | | | | implementation. You may have an excellent |
| or through secondary research. | | | | business idea, but if you do not have the |
| | | | economies of scale to produce it, then you |
| The rule is: find a need and fill it. To the | | | | might be better off to consider other |
| extent possible, do not offer a product or | | | | products (or at least a scaled down version). |
| service so new or unusual that people cannot | | | | |
| understand why they should buy it - unless | | | | 8. What are the growth possibilities? Your |
| you want to spend most of your time and | | | | business model stands to succeed if the |
| resources educating the public. Big | | | | demand for your products or services can be |
| companies, with their deep pockets, can | | | | expected to grow with a change in the |
| afford to launch a massive educational | | | | economy. Check if your product can survive a |
| campaign for breakthrough products. Home | | | | major technological surge or obsolescence. |
| businesses, given their size and nature, | | | | |
| often do not have the resources (capital, | | | | 9. Can I get backend sales? Back-end sales |
| personnel, technology) to mobilize such | | | | are all the products or services you sell and |
| campaigns. | | | | resell to customers or clients after they |
| | | | have made their initial purchasing |
| Also, do not offer a product you love to make | | | | transaction with you. |
| but whose market potential is weak at best. | | | | |
| | | | Determine if your product or service will |
| 2. Will the product maintain market appeal? | | | | warrant repeat sales. There is real business |
| Beware of fads and fleeting trends as these | | | | value in building a pool of repeat customers. |
| markets change quickly that your business | | | | The bulk of the sales, cash flow and current |
| cannot achieve a sufficient volume or a | | | | profit comes from utilizing and then better |
| sufficient share of the market. If your | | | | utilizing a back end. |
| product, however, is a fad, make sure that | | | | |
| you can move fast enough to capitalize on it | | | | 10. Is the product safe? The safety of a |
| before it dies. Also determine if your | | | | product use is an important consideration for |
| product or service can be used nationally, or | | | | many consumers, particularly for manufactured |
| is it simply limited to your geographical | | | | products. |
| area. | | | | |
| | | | If you are in the service business, you need |
| With the increasing globalization of | | | | to make sure that your personnel are properly |
| business, you may need to look at the | | | | trained with the goal of satisfying your |
| international market and see if there is | | | | customers foremost in their minds. Educate |
| significant foreign competition. | | | | your consumers on how best to use the product |
| | | | and include clear instructions to avoid |
| 3. How unique is your product? The goal is to | | | | costly legal entanglements. Make sure that |
| be able to differentiate your product from | | | | your business is insured against various |
| your competitor. You need to show why your | | | | forms of liabilities that may arise. |
| products and services are unique, distinct, | | | | |
| or of considerably superior than your | | | | 11. Can my product be promoted with strong |
| competitors. Every product in the world can | | | | advertising copy? Emotion sells. |
| be sold or presented in a new way. If you | | | | |
| seriously intend to capture a significant | | | | People are often motivated to buy a product |
| market share, your potential customers must | | | | or service because of some emotion, whether |
| find more value from your product. | | | | it is greed, fear or want. Response to |
| | | | advertisements often increases whenever you |
| 4. How useful is your product? Many new ideas | | | | inject these elements into your ad. Sit down |
| and products are successful because their | | | | before you write the ad and ask yourself what |
| creators identified an unmet need in the | | | | you want to feel. Then translate these |
| market. Identify at the onset how your | | | | feelings to written words for your |
| product or service will be used, and | | | | advertising copy. Stress what people can gain |
| determine the frequency of product use. | | | | from ordering your product or service |
| | | | (financial reward, becoming the envy of |
| Some business ideas fill a real need, but in | | | | others, knowledge to get ahead in life) or |
| some cases the need have to be created | | | | tell them what they lose if they do not order |
| through promotional advertising and | | | | (loss of time and convenience, discounts for |
| promotions. This information can help build | | | | ordering before a deadline). |
| your marketing strategy. | | | | |
| | | | 12. Will you be left with an inventory? Avoid |
| 5. How much competition exists? Remember, | | | | inventory risk; make sure that even you will |
| there is never a "no competition" situation. | | | | buy the product. If you have inventory, |
| You product will always have its competition. | | | | consider getting homeowner's or renter's |
| Determine the kind of competition you will | | | | insurance policy to protect your business |
| have - locally, regionally, and nationally. | | | | against all possible disasters, be it fire, |
| Look for heavy or moderate competition - the | | | | tornado, hurricane or earthquake. |