How to Start a Product-Based Business

October 21, 2012 | By | 3 Replies More

Some of the entrepreneurs start out after developing a new product that they think will be successful. However, many aspiring entrepreneurs do not know how to transform their product from an idea into a successful product-based business.

If you are a would-be small manufacturer, here are some considerations you need to take when starting a product-based business:

product-based business

1. Check your idea.

Before plunging head-on to your entrepreneurial venture, your first step should be to ascertain the viability of your business. After developing the product, check your potential competitors in the market, both direct and indirect. If you have created a unique Mexican sauce, for example, you need to check out your indirect competitors including makers of other Mexican sauces. How will your sauce be used and what food products go along with it? Why will people use your sauce? It’s one thing to have a good idea, and another to create a demand for your idea.

2. Check the market for your product.

You may have a great product, but are you in the right market? You may have a great idea for winter gear, but if you live in sunny California, you may have little demand for your product. How will you reach your market? What are the buying behaviors of your consumers? How many of your products do they buy in a month? Or is your product seasonal? If so, how will you survive the lull season? Your market (perhaps you could open an online store instead of a retail store) will define your distribution mechanism, pricing structure, and other business variables.

3. Know your legal structure.

Your legal structure will depend on the liability you are willing to take, the number of investors, the tax structure, etc. If you are 1-person business, you may start out as sole proprietorship. But if you have partners or investors, you can either start a partnership, LLC or corporation. Learn the pros and cons of each structure and pick one that is most suited to your circumstances.

4. Availability of financing.

Even w/ a great idea & a ready market, you are bound to fail if you do not have adequate capital. Know your manufacturing & operational, & other start-up expenses. Determine where you will get the money – from your savings, relatives and family, friends, bank, angel investors, or SBA. If you are planning to invite partners to the venture, clarify the roles and responsibilities of each and make sure that all agreements are made in writing

5. Plan out your operations.

Look for suppliers & distributors. Identify where you can get your ingredients and raw materials. Think how the packaging will be done; many great new products languish in store shelves because of poor packaging. How well your product or service is presented will determine the initial consumer acceptance or rejection. Determine where and how you will sell the product. A specialty product, for example, must not be overly distributed as it could lose its perception as a specialty good. A mass-market product, on the other hand, must be distributed with consumer convenience as the prime consideration.

6. Develop your marketing program.

How will you move your product? How will people know that your product exists? You need to think how you will market & promote your product. Will you advertise in a publication that reaches your market? How much will that cost? Your marketing strategy should be based on how your product will reach and affect your target market. Your product must be designed and marketed to clearly demonstrate how it will satisfy an unsatisfied need.

7. Write a business plan.

After doing steps 1-6, you will have enough information to help you need to write a business plan. This is essential as it helps you think through your business and what you really need to do. If you are looking for investors, they will also want to see your business plan.

8. Know the zoning regulations, if you are planning to do your business at home.

Some counties may have limitations on what you can do inside your house for commercial purposes. Zoning considerations usually include the amount of traffic, disturbance levels, and safety considerations. Take this time to check out the licenses and permits that your business may require. If you will be selling food products, consult your government’s food administration office.

9. Initiate the business registration process.

Depending on the complexity of your legal structure, you may need to consult a lawyer. After you have filed your business registration and fictitious name, open a separate bank account for your business. You may also need to get an Employer Identification Number.

10. Get insurance to protect your property from damage, theft or other unforeseen circumstances.

Risk and entrepreneurship always go hand-in-hand, and your goal is to minimize your risks. However, beware of “overprotection” or getting too much insurance for your business. The rule of thumb is to carry insurance only on what the business cannot afford to cover in the event of misfortune.

11. Protect your product.

If you created an original Mexican sauce or a new thermal system for mittens, protect it with patents. It may be expensive and time consuming, but it reduces the risk of someone else claiming your product as their own.

12. Get your business cards ready, as well as brochures, stationary and other business forms.

If you are planning to promote your product on the Web, start creating your online presence.

You’re now ready to open your business! Set a starting date, and plan out this event. You may send press releases to local newspapers about your great new sauce. You can take this opportunity to spread the word about your business.

Starting a business is not easy as 1-2-3. There will be a lot of challenges along the way. But if you believe in yourself and in your product, you will go a long way.

Recommended Books on Starting a Product-Based Business:


Nach Maravilla is the President and CEO of LLC. He has over thirty years experience in sales and marketing of various products, which covered as he jokingly describes, “from toothpicks to airplanes” He also had extensive experience in International trading and he always excelled in special promotional ideas for retail outlets.

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Comments (3)

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  1. Viola Spidell says:

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  2. Dannie Urbas says:

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  3. candelaria werner says:

    Thanks very interesting blog!

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