A key question often asked by start-up entrepreneurs is what to sell in the business. What products or services could you sell that will make you money?
The selection of the right product or service is critical. In fact, the choice of a product or service for your business can make or break your business. Choose a product that requires significant production capital when you have none and couldn’t find any, and your business is compromised from the start. Offer a service that a hundred other entrepreneurs offer in your locality and you may find it hard to get noticed above your competitors. Or select a product with an extremely specialized market yet you do not know how to reach the potential customers, and your business can go kaput.
Your products or services define your business. Your products are your business! If you want to turn your business into an income-generating machine, the first step is to choose the right product or services to sell.
With the right products, you even stand a better chance at keeping your customers. The idea is to keep your customers forever by continually offering them a valuable product or service, thereby diminishing your costs of reaching and appealing to them. Wise product selection is therefore critical to your business success.
How do you choose the right product to sell? Here are a few questions to help you narrow your focus and hopefully select the product that will work for you:
1. What are your primary considerations for choosing a particular product?
Make a list of your selection criteria, and what you think are important to you in identifying what business to engage in. There are a myriad reasons for selecting a product, and these reasons can include: financial benefit to your business, relatively low investment requirements, positive return on investment, fit with present strategy, feasible to develop and produce, easy to source and procure, relatively low risk, and time to see intended results.
2. Can you meet the needs of the customer and solve a specific problem?
Your product must address a need or an opportunity. You need to know how your products or services can assist customers. It must have a real value that customers can recognize, want and need. Include in your product information and sales materials how your products can benefit the customers, e.g. help reduce time, effort and expense.
3. How capable are you to produce the product?
Just as an athlete needs to know his physical condition before he enters a race, you must also know if you have the time, resources and capability to produce your product. Many entrepreneurs make the mistake of going forward with a business idea only to find that they cannot afford the manpower required, or do not have the resources to outsource the product development. As a result, many experience slippage in release dates making the mistake of launching half-finished web sites. You must also evaluate at the onset how you can scale up the production if there is a strong demand for the product.
4. What is the size of your potential reachable market?
You need to at least get an idea of the size of your market. Know who are likely to use or benefit from your products. If you are selling an information product on how to sell at eBay, define who will be your potential customers you think will be interested in your product. Many small and home business entrepreneurs view market research as an unnecessary and expensive cost, but understanding who and how big your market can pay off in the long run.
5. Would you need to comply with government rules and regulations?
New laws or government rules and regulations can impact your product. Some products can be sold immediately without the need for government approval. Others, however, require permits, licenses and approval from the government.
6. If a similar product exists, can your product be superior in its functionality, presentation or marketing?
This entails knowing and understanding your Unique Selling Proposition. Your unique selling proposition is the one thing that makes that your product different than any other. It’s the one reason they think consumers will buy the product even though it may seem no different from many others just like it. It may be that the product has a lower price or more convenient packaging, or it may taste or smell better, or last longer.
7. What barriers must be overcome for a potential new product entry?
Barriers to entry include high research and development expenditure, high presence of start-up or sunk costs, and international trade restrictions such as tariffs and quotas. Patents are likewise important barriers for many small and home-based businesses, where your competitor may hold legal protection for an integral component of your product and hence may prevent you from manufacturing your product. Other barriers to entry include predatory pricing of competitors that will force you to operate at a loss, high advertising and marketing costs to compete with established brands in the industry, and the cost advantages enjoyed by your competitor that allows them to set lower prices.
8. What are the potential sales, growth, profits, and time for payback?
Before starting your business, run your numbers first. Get a clear idea of your cost structure, how much sales you need to have to breakeven and post a profit, and what your return on investment will be.
For more information, read the following articles:
- How to Choose the Products to Sell in Your Small Retail Store
- Choosing the Right Product Lines
- Increasing Your Product Mix: How to Decide
- Using eBay to Test Your New Product
- 5 Ways to Test Your Business Idea Affordably
Recommended Books on Selecting the Right Product:
- Choosing What to Sell Online: A 4-Point Formula for Profitable Product Selection
- How and Why Large Companies Make Product Selections: You Know How to Sell, Now Learn How Companies Buy
- What to Sell on eBay and Where to Get It: The Definitive Guide to Product Sourcing for eBay and Beyond
- How to Sell What You Make: The Business of Marketing Crafts, 3rd Edition
- Top 10 Ecommerce Mistakes
- Marketing to the Right Audience
- 5 Keys to a Successful Business
- 12-Step Template to Write an Effective Sales Letter
- How to Raise Money to Finance a Franchise