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