Terry Xiao Blog
Finance and Business
Planning to Start a Home Business? How to Make Sure Your Idea Will Work
If you’re thinking about starting a small business or a home business, it’s vital to consider several things to decrease the chances of failure and increase the chances for success.
Many years ago, Saturday Night Live did a sketch with John Candy and Dan Akroyd. They opened a store in a mall that sold one product – cellophane tape. All the walls were filled with that one product.
On opening day, the partners were elated. They knew they were going to clean up. But of course they didn’t.
It was easy for the audience to see that the business venture would be a flop. They had to pay a very high rent for the mall location, but they sold a product that was very cheap. There was no way to make the sales be more than the expenses.
An obvious reason for the inevitable business disaster is that a roll of tape lasts a long time in most businesses and homes. If you sell houses or cars, that’s not a problem. But retail stores usually must rely on having repeat customers who buy from them frequently.
Third, there was no way their business model could work. Tape is available in so many places — big box stores, grocery stores, drug stores — and on and on the list goes. It was simply not convenient for people to make a trip to a specialty store when they needed more tape. They could find it almost everywhere.
So keep this lesson in mind when considering a new business, or before you invest too much time, money, sweat and emotion in a small business that may not be viable.
You may want to ask yourself some of the following questions before investing any time an money:
Who are your prospective customers? Have you defined them?
Is somebody else already filling this need?
Can you sell your product or service with enough profit margin to make it worthwhile?
Have you determined your unique selling proposition, also known as the competitive advantage?
Do you have enough money set aside to meet business expenses for several months and to live on ?
Once you have taken time to consider and ask these questions, you will have a better understanding of how viable your small business or home business might be.
Danek S. Kaus is a business journalist and the author of You Can Be Famous! Insider Secrets to Getting Free Publicity. Want more publicity secrets? Read his Find out about his Publicity and Writing Services
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