June 12, 2013, by Malvika Johal
My guide to starting your own business – Part 5 “Selling”
Written by: R L (Bob) Hall (BSc, PhD; University Of Nottingham ) Owner & MD of Top & Jeffries Limited; Co-owner & Chairman of Fuel Additive Science Technologies Limited, Shropshire, UK
Welcome to the fifth in the series – “Starting your own business – what I wish someone had told me 25 years ago.”
Start by selling something different that people really need or die trying. It is no good selling a “me too” product or service unless it is approx half the total cost of the existing competition. Even then there will have to be a totally unique “protected” advancement at the core of the offering, as the competitors will catch up very quickly. I continue to be amazed by the fast food outlets that start businesses with a similar menu to others on the same street. Why are the new owners surprised when their shops close down only after a few months trading? Niche products or services are the way to go for small start-ups.
The best ones are those that cannot easily be replicated as they take some real know-how to provide them. Buying and selling items others have produced (e.g. eBay) is a business model for folks that do not have your skills. They are probably likely to be better at this trading activity than you will ever be. I have personally never made any money out of selling pieces of equipment others have made. The margins are too low and the maintenance/guarantee hassles are the downside. Adding a unique input of your own that upgrades what others have produced so that you can sell at an increased margin is also valuable. Products or services that “fix” problems quickly and efficiently can also be lucrative. Sometimes businesses are forced into action and being a credible alternative is a great starting point as it focuses your product/service offering.
Figuring out what niche product/service to sell and how to make a profit while keeping the competition at bay takes a lot of time to think through the alternative options thoroughly.
Understand thoroughly why customers make “buy” or “no buy” decisions. Most business advice you read talks about thorough market research. This pre start-up research is vital to help you think things through thoroughly, but in my experience this early research is often flawed. What people say they will buy and what they end up actually buying after you have started up can be 2 different things. Furthermore, I have had to change my product/service offering and target market a few months after starting up in order to survive. Once you are trading, however, you need to ask your customers why they did not buy from you, the answers to this question will be more insightful than any pre start-up market research.
Most people assume that the most common answer will be price. In my experience this is sometimes the answer given, because it is less uncomfortable than talking about other things e.g. your lack of experience, not able to understand your offering properly. People buy from folks they like and have confidence that the product/service will actually do the job you say it will. Keep an eye out for the next in this series entitled ‘Money’.
Bob, I am linking these through on the Malaysia R&KT blog (https://blogs.nottingham.ac.uk/malaysiaknowledgetransfer/) as I think they are very. It would be useful if each one could link back to the previous article or (and ideally and :-)), a category could be used to link them all together.
Best wishes and very useful series of posts.