“Instead of wondering when your next vacation is, set up a life you don’t need to escape from.” ― Seth Godin
If you are passionate about creating a product and business that you know will help other people, then I really believe that it’s your duty to share that with the world. No matter what you make, I would like to encourage you to look at it as potential business venture. You never know unless you try.
If you’re new to entrepreneurship, here are three things you need to know before getting started.
#1. Know Why You’re Starting.
There are many different reasons for starting a business and it’s important that you get clear on why you are starting. Running a business is hard work, so getting clear on your ‘why’ will really help you in those more challenging days. Of course, creating a profitable business is a big reason many people start, though we recommend that you go one step further. For example, Jaswant’s Kitchen was started because owners knew that the art of authentic Indian cooking was dying because it was just too hard for most to try to cook it at home. So the passion for simplifying Indian cooking not only solved a personal problem but it helped solve a problem for so many others who love Indian food who and want to be able to cook healthy Indian meals at home.
Maybe you also want to fulfill a creative passion or you really want to help people and make an impact in the world. What is the thing that drives you?
#2. Ask For Help.
If this is your first time stepping into the world of entrepreneurship or you’re creating something new, chances are really good that you’re going to need help along the way. This is not a sign of weakness, it’s a sign of self-awareness in knowing when to ask for help in different areas of your business.
On top of that, it’s a good idea to join a local entrepreneurship group, or business incubator in your area if you can. Connect with like-minded people that you can meet up with on a regular basis.
#3. Start Before You’re Ready.
There is never an ‘ideal time’ to launch your business. In order to create a profitable business, you will need to step outside of your comfort zone at times and be willing to learn a lot. Before going any further we encourage you to choose a launch date and mark it on your calendar. It’s even better if you tell some trusted friends or family about your plan so they can help keep you accountable.
There is a popular saying that if what you’re launching, whether it be a product or your website, doesn’t make you a bit uncomfortable, then you took too long! It’s better to start with something, then refine it over time as you expose it to the people who will be using it, instead of waiting and waiting until you think it’s perfect. Just get started, create something, launch it, then refine it. Believe me, you’ll get much further this way!
Lesson 1: How to Find Loyal Customers
Finding and keeping loyal customers will be the backbone of your business. You should first start out by sharing your products with friends and family.
Markets, fairs, shows provide direct feedback from consumers and you start figuring out who your ideal customers are and why they are interested in buying your products. Based on this information you can also refine packaging to meet the needs of customers and then slowly make the move to selling products in retail stores.
The first step in discovering who your ideal customer is, is understanding why a customer might be interested in buying your product. When we were first learning about this, we discovered a great video from Harvard Business School professor, Clayton Christensen. He describes how your product performs a job for your ideal customer and your goal is to understand what job that is. We’ve shared a link in the downloads below.
You can start by creating a Buyer’s Persona. It’s a simple exercise that will help you get clear on the type of person who you believe will buy your product. While this may seem like a simple exercise in answering questions, it requires thought as well as ‘trial and error.’ Once you know who that “customer” is then you can figure out how many of those potential customers actually exist in the world which will help define the size of your potential market.
Completing your buyer’s persona is a big step as you now have your ideal customer in mind. And remember, this persona will continue to evolve as you sell your products and discover more details about the customers who purchase it the most. So it doesn’t need to be perfect, just get something down on paper to start.
Lesson 2: Create Your MVP
It’s time to create your minimum viable product, also known as the MVP. An MVP is a product you create that has just enough features to satisfy your early customers to the point where they’d want to buy your product.
During their first food show Jaswant’s Kitchen sold about $3000 worth of product in two days. Also, they won an award for one of the best products at the show! From there, they knew that they had something people would pay money for and that it could actually become a business.
The product you have at this stage does not need to be perfect. You simply want to create something that will allow you to validate your idea. You’ll continue to make improvements to your product over time, but it’s important to just get started!
If you are not yet making your product and are still in the idea phase, now is the time to develop a plan on how to create your MVP. It’s time to roll up your sleeves and learn everything you can about your industry.
Lesson 3: Validate Your Product and the Market
One of the most important aspects of building a business is validating that there is a demand for your product or service. There is nothing more discouraging than spending your time and energy creating a product that you think people will love, only to realize that there’s no interest when you launch.
There are many different ways to validate your product idea, and for each industry there can be a slightly different strategy. If you’re starting out, here are the top five strategies to validate your product that we recommend. Remember that some of these may feel like a big step outside your comfort zone especially when it’s time to actually start talking to potential customers.
Make a sale (or sales)! Nothing is more important than customers seeing the value in your product and exchanging money for it
Research the market and get clear on if there’s a demand for your product. Make sure there is enough of a market, not just a few people that like your product. You need to look at the market as a whole and understand what the overall demand is like. One of the ways you can start this process off is by looking at your direct competition. Find out what they are doing and how it compares to what you are or planning to do. If there are competitors out there, it shows you that there is a market for what you’re selling. Remember not to get discouraged when you see competitors that have grown big businesses. This will also give you a good sense of whether what you are offering is unique or different than what is currently in the market which can help you figure out what to focus on going forward. The easiest way to discover your competitors is a simple Google Search. You can also check out hashtags on Instagram or Pinterest or searching on Facebook. If you’re new to social media, ask a person in your life who’s savvy on social media for a little help! You can also check out your competition’s social media following to see how engaged their customers are with their posts and products. It’s a great way to check out negative feedback about a product and see if you can find a way to improve.
Analyze demand and search volume. Now that you know more about your competitors, let’s take a closer look at interest from potential customers. The easiest starting place is to go to Google Trends. This is a free tool that allows you to see how often people are searching for the product you’re selling. You can also see if your product idea is trending up, down or if it’s stagnant. The second tool you can use is Google’s Keyword Planner Tool. This tool allows you to search for keywords and phrases related to your product and then displays the total number of searches for each of the terms you choose.
Create a free survey to get feedback from customers or potential customers. Once you really start getting a sense of your customer base, it’s critical that they have a way to communicate and provide feedback to you. The quickest and easiest way is to provide friends and family with your MVP and then gather feedback using a free survey. We recommend creating an anonymous survey in a Google Form or SurveyMonkey. It’s a great idea to also include people in here who are not your direct family or friends, to ensure you’re getting honest feedback. Be resourceful here, and be willing to have conversations with friends or family to help you find ideal customer. Talk to other business owners to get ideas on how they did this as well.
Run a crowdfunding campaign. Another interesting and more modern way to validate your product is to run a crowdfunding campaign. A crowdfunding campaign is a helpful, proven option to see if there’s demand for your product. One of the benefits of a crowdfunding campaign is that you have a deadline and it requires all of your focus and efforts to reach your goal. If interested in running a campaign, it’s important to find the right service to launch. Indiegogo and Kickstarter are well-known platforms, though there have been many that have popped up in recent years. Do some research to ensure you have the right platform with the right community to launch your product. And definitely try to talk to people who have run successful crowdfunding campaigns for tips. I’ve also included a link to Shopify’s Ultimate Guide to Crowdfunding, in the lesson notes.
Sign up for a craft show or local market. This is a great way to gather quick, first hand feedback and impressions from potential customers. It also has the added benefit of having a strict deadline that you need to take action by, which is why we love it. You’ll get to talk to potential customers, see their initial reactions to your product, find out if they are willing to spend money on it. Do a Google search for markets and craft shows in your area to find ones that fit well with your brand and product. Use this opportunity to have a set of questions ready to ask customers such as preferences on colour, flavour, and what if any competing products they might currently be using and so on. Test different price points to see if there is a certain price that works best for your product, especially when you are in the early stages.
Validating your product idea is incredibly important so you don’t waste time and money in the future if you realize there isn’t an audience willing to buy your product.
Tools to Help You Validate Your Idea:
- How to Create a Survey
- How to Use Google Trends and Keywords
- Validate your Product. 3 Different Ways to Test
Lesson 4: Product Manufacturing
You’ve decided to pursue your passion and turn it into a full-time business. You’re a real entrepreneur now! The next big step is figuring out how you will produce your product.
Option 1: Make the product yourself. In the beginning, producing your product yourself is the easiest, and likely, most cost effective way until you have a consistent stream of sales.
Here are a few other things to keep in mind:
When you make your own product, you have low startup costs, full control of your brand, full control of your price, and the all-important quality control. A major benefit to making your own product though is agility. That’s where you can adjust quality, features or even your entire product on the fly based on feedback you get from early customers. Doing it yourself allows you to save on costs such as hiring people (who often want more stable work) and only producing as needed based on your sales.
While these are all strong benefits to making the product yourself, you need to consider a few challenges you will face. Making your own product can be time consuming. Whether you still have a full-time job or even as you start to spend more time on your business, production takes you away from the business related tasks that are also critical to running an effective company. Being an entrepreneur isn’t always easy as you have to juggle the many demands on your limited time.
That said, it can be incredibly rewarding.
Option 2: Outsource the manufacturing of your product. When sourcing a manufacturer, you have the option of sourcing a local manufacturer or one from overseas. When you look for a manufacturer, it generally means that you have validated your product and are ready to scale. Since you often have to have enough sales to justify the upfront costs associated with manufacturers, you won’t want to engage possible partners until you have a steady amount of sales coming through. Here are the pros and cons of outsourcing:
First, finding a manufacturing partner means that you free up a lot of time so you can focus on other aspects of the business. More time to market, develop your brand, support your customers and focus on your business’ long term growth. When selecting which manufacturing partner to go with, you must be very critical as you are now going to be giving up some of the control over the production which could ultimately impact the quality of your product. Ultimately any issues with quality will reflect on your business and your brand. Things like proximity of where it is being produced so that you can validate quality from to time is definitely something you want to keep in mind especially at the beginning. It may be cheaper at a factory overseas but it’s also harder to keep an eye on things.
Another aspect of working with an outside manufacturer is that there will likely be minimum order quantities, potential ‘bad batches’ or fraud, especially if you’re working with a manufacturers overseas. Minimum order quantities, sometimes referred to as MOQ, is the minimum number of units you need to order at one time. This is often because it can be difficult and costly for large manufacturers to retool their systems for your product. Manufacturers need to know they’re going to get a certain amount of business that makes it worth their while as well. Remember, your manufacturing partners are business owners too! It is important to find a manufacturer that is in line with the size and stage that your business is in. In the early stages it might make more sense to find a smaller manufacturer that has smaller Minimum order quantities even if it costs a bit more. It allows you more flexibility to make changes as needed and ensures that you don’t have product sitting in a warehouse for ages if you don’t have the sales to support it yet. And lastly, remember the process of finding the right manufacturer can take some time so keep that in mind as you plan.
We highly recommend that if you do choose to work with a manufacturer that you visit their facility before signing a contract, perhaps check references with other customers of theirs and ensure you have done your due diligence. Even once have selected a partner to work with keep in mind that you also must have a backup plan. What If something goes wrong in the production cycle with your chosen manufacturer, how will you handle the backlog of orders? It’s always good to maintain relationships with a couple of different manufacturers that you have vetted in the early stages. There’s a chance you may need to call on one of them for help in the future. One other important thing to mention is that before you get started with manufacturing your product, research all the relevant regulations in your region and country as related to producing your type of product. For example, food products are highly regulated and there are many rules and standards that need to be followed for consumer safety reasons. Make sure you understand and comply with these rules.
Depending on the type of product you have, you’ll need to weight the pros and cons of doing things yourself or outsourcing to a manufacturer. This is a huge topic, so talking to other entrepreneurs in your industry can be a great way to learn a lot. As long as they don’t have a product that competes directly with yours, we find they are usually very open and willing to help out!
Questions to ask yourself before deciding your method of production:
How much time can you realistically dedicate per week to making product?
How much money can you budget to create your product?
Do you envision running your business with a small team over the long-term or you anticipating creating and scaling a business with a large workforce?
Figuring out how to manufacture your product in a way that’s profitable and scaleable is an important step to turn your hobby into a business. It’s important to know that as you grow your manufacturing method will naturally evolve.
- If you’d like to learn more about how to approach manufacturing (including scripts for reaching out to manufacturers) read How To Find a Manufacturer or Supplier for Your Product Idea.