Sunday March 14, 2010
Believe it or not, these products were not only conceived, but also trotted out to market. Now they're on proud display at a museum for bizarre, failed products (and a few successful ones too), which is maintained by NewProductWorks, an Ann Arbor, Mich.-based marketing and consulting firm. Among the 85,000 displays: toothpaste dispensed from an aerosol can; Gerber's singles (baby food for adults); and for those suffering from an infestation of those pesky under-the-bed creatures, there's Hey! There's a Monster in My Room spray. (Click here for the details.)
It's easy to laugh — until you lose your life's savings trying to launch your own wacky idea. While your concept probably isn't as farfetched as City People/Country People Shampoo, it might not be as great as you think, either.
So how do you know if your idea will fly? Research, research, research. Here are a few tips on how to get started.
Talk to Friends, Family and Strangers
If you've got a lousy idea on your hands, who's more likely to tell it to you straight than your family? (Siblings in particular can be a reliable source for brutally honest criticism.) Start by bouncing your concept off those closest to you, including trusted friends. When talking to anyone — be it Cousin Al or your best friend from childhood — be sure to ask if he or she knows anyone who can help you, either by offering advice or providing start-up funding.
Next, talk to people in the industry you're targeting. Be careful, of course, but don't be paralyzed with fears that these people will steal your idea, says Peri Pakroo, author of "The Small Business Start-Up Kit." Most of the time your business idea isn't as novel as you think it is, and other entrepreneurs — particularly those in businesses similar to the one you'd like to start — can offer valuable information about the buying habits and concerns of customers in your area.
That's precisely what Elissa Breitbard found in the late 1990s when she began researching her idea of launching a spa in Albuquerque, N.M. One of her most useful resources was a spa owner in nearby Santa Fe, who offered advice on everything from where to find a good attorney to how to install plumbing in outdoor hot tubs.
You might also want take your business idea to a chapter office of SCORE, the Service Corps of Retired Executives. The program, which is supported by the Small Business Administration and several major corporations, has 389 chapter offices around the country. At each chapter office, you can schedule a free interview with a member, who can either offer general business advice or direct you to a veteran in your particular field. David Kramer, a retired restaurant executive in Boca Raton, Fla., says he consults with roughly 400 aspiring entrepreneurs a year through SCORE — and there are more than 60 SCORE counselors in the Boca Raton area alone.
We'll be blunt: Market research is essential. This kind of information-gathering can include everything from paying a research firm to prepare a sophisticated industry report to passing out a questionnaire on a street corner.
Aldis Jakubovskis, who coaches St. Louis-area entrepreneurs through the University of Missouri's extension office and the St. Louis Business Development Center, says plenty of people know what kind of business they'd like to run, but they haven't sorted out the details — like how their business would differ from the competition. "What we suggest is concentrating more on the business concept and the details — what makes it distinctive from other businesses — not just that I will open a daycare [center] or restaurant," says Jakubovskis. "It's like Southwest Airlines vs. all the others. They're an airline, sure, but they have a distinct business concept. They have a distinct way of doing almost everything."
The simple process of writing a good business plan might help you sort out some of these particulars, says Pakroo. If, for example, your elaborate décor or high-quality organic ingredients will set you apart from other restaurants, you must factor these higher costs into your business plan. If you decide, after tallying your costs, that you can't actually afford the chichi decorations or ingredients, then your business may begin to look a lot like someone else's. That could mean you may have trouble convincing customers that your product or service is better than one they're already using.
To get a handle on your industry of choice, consult the Internet Public Library, which offers a directory of industry groups and associations. Becoming a member of local and national associations can help you keep tabs on what's going on with businesses in your particular niche or geographic area. You can also use the "Ask a Librarian" service of the Library of Congress for historical and economic information about a particular region, or businesses like yours. And the Small Business Administration's Office of Advocacy offers a research function to small-business owners, which can help you keep tabs on the regulations that apply to small-business owners in your state.
If you're looking to copyright or patent an invention, it might also be wise to look up similar ideas at www.copyright.gov. And if you're certain you need to invest cash to research an industry or idea, Pakroo recommends HighBeam Research, which offers specialized database searches for a relatively cheap annual subscription fee of around $100 a year.
No matter how great your business idea looks on paper, you won't know how your target audience will react until you give it a trial run, says Gene Baynes, a Gilbert, Ariz.-based certified financial planner who regularly consults with small-business owners.
Don't be afraid to start small. If you're selling mousetraps and wondering how much to invest in producing them, try spending enough to make only 10 mousetraps, and see how they sell on eBay. The Internet has greatly decreased initial-investment risks for business owners, Baynes says, and eBay is a great way to test products and ideas. "It might sound simple," he says, "but if you've sold 10 mousetraps, what you have is a proven track record."
There are also easy real-world options for test runs, such as setting up a kiosk at the mall, or a stand at a local farmer's market or crafts fair. Selling your items in person has the additional benefit of allowing you to ask customers what they like and don't like about your product.
Naturally, trial runs and even the most basic of market research cost money. So don't go overboard — you probably can't afford it. Existing businesses usually spend about 2% of their annual budgets on market research, according to the SBA. But when you're launching a new product or business, the SBA advises that you increase your marketing and research projections to as much as 10% of your expected gross sales.
Trust us: If the best idea you've come up with is rabbit jerky, you'll be glad you started small before betting your life's savings on expectations of huge demand.