Big business in little boxes

May 31, 2012 by

What do The Police, Nick Cave and the Bad Seeds, The Arctic Monkeys, and Guns N’ Roses have in common? Despite being miles apart musically, the secret to their sound resides in a tiny metal box designed in New Zealand, and exported to stages around the world.

Meet the Red Witch ‘Seven Sisters’. 

Confused?

Like a magician relies on smoke and mirrors, guitarists use effects pedals to create an illusion. These little boxes come in many shapes, sizes and colors but every single one changes the sound that you hear through the speakers in some shape or form. Often it results in guitarists spending more time staring at their feet, or hunched over twisting dials with an engrossed look on their face, than striking a pose.

Some pedals are developed to make everything sound bigger, such as echo or delay (much of Pink Floyd’s catalogue), while some try to make the guitar sound like an organ or other instrument (My Iron Lung by Radiohead), or even as non-musical as possible including explosion sounds, or extreme feedback (anything by Sonic Youth).

Believe it or not, it’s all big business – with New Zealand being a well-established leader at creating these little boxes of joy.

Red Witch Analog is the latest SME to take off after experimenting with new technology from their humble garage-turned-factory on Wellington’s Kapiti Coast. Red Witch discovered a way of making pedals that were half the standard size and contained a rechargeable lithium-ion battery – meaning guitarists don’t need to carry piles of batteries or adaptors. With guitar stores in the US and Europe lining up to stock Red Witch products, the estimated revenue within five years alone is US$10 million. To top it off, they are now one of the top three pedal builders in the world.

As well as the artists listed in the opening paragraph, converts of Red Witch include U2’s The Edge (possibly the most ridiculous name for a guitarist ever?), who has given the pedals a permanent spot in his setup.

So how did Red Witch go from being a cash-strapped start-up to a major industry player?

Red Witch always knew their products were world class but the issue was sourcing capital to create the pedals cost-effectively and a good enough marketing strategy to get the pedals noticed by those who matter most. Along came Geoff Matthews, an award-winning marketer and investor whose previous successes include New Zealand companies Mount Cook Salmon and TaxRefunds (a wee bit less rock and roll than Red Witch).

Matthews’ marketing direction included developing Red Witch’s award-winning website, While Red Witch Electronics founder Ben Fulton honed the aesthetic design of the pedals, making them look as good as they sound with custom graphics and color for each model. With extra funds available, Fulton took the pedals on the road – visiting events in the US and trying to meet famous musicians, who became his most effective marketing tool.

So, what lessons are there for the average start-up or struggling SME?

Refine your product

Red Witch put a lot of time and energy into refining their offering before taking it to market. From extensive research, they identified a need for their product and stuck with the idea despite initial (pre-investment capital) manufacturing costs. If your product isn’t the best it can be, now is the time to refine it and get it right – after all, you’ll be committing the majority of your time and energy over the following years to making it work.

Get noticed

You might have the best idea ever, but it’s no good if no one knows about it. Go dust the calculator off and figure out if it’s financially viable, complete a detailed business plan, and get your idea out there. Talk to your bank manager to see how they can help, track down an experienced mentor and find out what investment opportunities there are waiting to be discovered.

Get smart with your marketing

Rather than focusing on a few quick sales, think about a long-term sales strategy that will set you up for growth. In the case of Red Witch, having famous musicians interested in their products boosted the company’s profile without spending any money. If you are strapped for cash, think about how to generate interest – online forums and social media are a good start, but also think about a demonstration event to raise your profile. Seeing a new, innovative product in the flesh and the excited business owner behind it will generate more sales than a sterile YouTube video or online marketing spiel.

Postscript:

For those interested, New Zealand’s most successful pedal is the Crowther Hot Cake – designed by ex-Split Enz drummer Paul Crowther. Paul was a great inventor and developed his own effects pedals that he gave to his (often reluctant) band mates. One became a permanent fixture for guitarist Mike Chunn when Paul decided to glue one of his weird boxes on the back of his guitar. Possibly for this reason, Paul was fired from the band. He kept experimenting with new pedals in his garden shed, eventually developing the Hot Cake, one of the most popular effects of all time.

Everyone has a Hot Cake – Keith Richards even has two. I also have one (see above). It’s battered, chipped and is with me when I practice at home, at band practice and has even graced the (small, local) stage. It’s not pretty – it wouldn’t win any design awards but it’s a great product and has set Mr Crowther up for a comfortable retirement.

So what does it do? It makes old, tired amplifiers sound better, new amplifiers sound older, bad amplifiers sound less bad and good amplifiers sound great.

(Still confused? Here’s a serious video of Murray, from the children’s super group The Wiggles, talking about his effects pedals.)

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Tips for a better Facebook business page

May 24, 2012 by

Over the past 18 months, I’ve helped maintain a Facebook page for a small business. I believe we’ve honed the page into one that is professional, welcoming and more useful than the average Facebook business page, yet still reasonably low maintenance, time wise. Blowing my own Facebook trumpet? Perhaps a little, but it would be dishonest to say there aren’t Facebook business pages out there with copious, scattershot updates that say a lot but tell you little.

I haven’t taken a course in social media for business and I haven’t even read many articles on it. I’ve simply listened to what both strangers and friends have to say regarding what they like and don’t like on Facebook business pages; checked out what the competition are doing and evaluated it; brainstormed the pros and cons of different approaches before trying them (or binning the idea); and used Facebook’s ‘Insights’ data to evaluate successes and failures along the way.

In the last three months, we’ve had a 25% increase in our ‘Likes’ and potential customers now use the page’s message system to seek advice on products the business sells. In addition, our weekly reach (the number of people who’ve seen content associated with our Facebook business page even if they haven’t ‘Liked’ the page) has grown by around 30%.

Here are my tips for a better Facebook business page.

Pick a number

While I believe less is more when it comes to status updates, this might not be true for all businesses. However, I think it’s smart to pick a number of weekly updates to aim for, and stick to it. This way, your fans know what to expect and when, your page feels reliable, and it’s easier for you to plan and maintain your updates when you have a routine.

People love photos

Every time we post photos on our Facebook page, our reach increases substantially, as does the interaction on our page (likes, comments, shares). But coming up with photos can be easier for some businesses than others. A skydive operator, for example, probably has no shortage of great client action shots to publish. But what about a book store? How about introducing a member of staff (including, say, your store’s pet gold fish) each week via photos, or showing just how many boxes of books arrive when an order comes in? You could use photos to show the cover of the ‘Book of the week’, as chosen by a staff member. Even something seemingly unrelated, like a big snowfall in your town, is a great opportunity to show your business looking different and reassure customers you’re open for business and it’s cozy inside.

Offer something useful

Savvy Facebook business pages offer weekly or even daily tips. For a nutritionist, this could be a daily health tip, for a DIY store, it might be a weekly home renovation tip. But you don’t have to offer tips to be useful. One yoga studio shares a weekly link to an article on a psychological aspect of yoga practice, for example. Think about questions your customers frequently ask or problems they often have, and use this as a guide to making your page more useful.

On the topic of freebies

Some businesses offer giveaways to everyone who ‘Liked’ their page that week or month. All I will say is, if you need to offer freebies to get ‘Likes’, you might want to re-evaluate the purpose and usefulness of your page.

Keep a list of ideas

Keep a list of status update ideas for those days or weeks when you feel stuck for inspiration. The list could include pre-written tips for your weekly or daily tips; links to glowing online reviews of your products or services; links to inspiring or educational relevant blogs or short videos; or links to the websites of non-competing businesses relevant to your customers who you’d like to spread good word-of-mouth about.

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20 reasons why I won’t buy stock in Facebook

May 24, 2012 by

According to some pundits, Facebook could reach a post-Initial Public Offering (IPO) peak value of around $135 billion, a whopping $31 billion more than its initial value, which all its shareholders will be able to revel in (no doubt by building huge safes, pouring their cash in and practicing their backstroke Scrooge McDuck-style).

Yet I won’t ever be one of them. Here’s why:

  1. Facebook already takes up too much of my time – checking its stock value would make my day even more unproductive.
  2. I wouldn’t be able to sleep at night knowing I’d contributed to the vast wealth of a billionaire who only likes to spend money on grey T-shirts.
  3. I’ve seen The Social Network, so I’ve formed a vaguely negative view of someone I’ve never met entirely because Aaron Sorkin had to find some tension in the script. He’s now doing the same for Steve Jobs.
  4. Time recently reported that a fifth of Facebook’s 2011 revenue was derived from virtual payments for gaming apps like Farmville, and I think that’s a bit sad. Open the curtains.
  5. I no more want Facebook to rule the world than I do Google, Cyberdyne, Weyland-Yutani, or those people who make Crocs. Blood would be spilt on the streets.
  6.  I actually liked MySpace and I tend to hold on to grudges the same way most people do classic vinyl.
  7. I need space to think. That’s why I use Google +.
  8. I’ve gone to Pinterest because a picture is worth approx. 13,000,000,000 Facebook status updates.
  9. Investing in a tech IPO ranks on the financial good ideas scale somewhere between borrowing money from a Mexican drug lord and playing high-stakes Texas hold ‘em while on acid.
  10. I have this really persistent stranger who keeps asking me to be their Facebook friend and I don’t think anyone should profit from that.
  11. I “like” bricks and mortar.
  12. I put all my money in Boo.
  13. My mother’s maiden name is Winklevoss (it’s not really).
  14. Western culture has been going downhill ever since people stopped using personalized stationery (but I’m not sure if there could be a third variable in that).
  15. My knowledge of the stock market ranks up there with Homer Simpson’s, George W Bush’s and my neighbor’s cat’s.
  16. I could never have my money managed by a professional who refers to champagne as “poo”. That’s just weird. Why can’t you just say “shampoo” like every other mockney in the City?
  17. I have a curmudgeonly great uncle who thinks computers are the work of the devil, and I like the cut of his gib.
  18. Facebook never got back to me when I suggested introducing a frenemies classification for the sake of accuracy.
  19. Status update! I’m poor.
  20. What’s Facebook’s actual turnover again? Oh, that’s right…

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Is crowdfunding the future?

May 1, 2012 by

Imagine being able to raise funds for your new business venture online. No need to clear the hurdles that bankers may raise before advancing the funds you need for your business. No need to jump through the hoops that angel investors or venture capitalists set up.

Instead you bypass all these difficulties by posting a compelling blurb about your world-changing idea on a crowdfunding site. You back this up with a campaign to generate wider awareness and excitement through social media such as Facebook, LinkedIn and Twitter, perhaps with a YouTube video thrown in to demonstrate the idea.

You’re aiming to get 10,000 people willing to subscribe $50 each to your project. If you hit this target, hey presto, you now have $500,000 development capital in hand for your new venture!

Better still, there are no lenders or investors bothering you for regular reports or wanting to interfere in your decisions.

It all sounds too good to be true. Perhaps it is.

Crowdfunding is in its infancy but seems to be gathering steam, with a multitude of crowdfunding platforms springing up. No doubt some will endure and grow, while others will disappear. Sites such as Crowdcube offer a glimpse of how the field is developing.

One factor delaying the growth of crowdfunding is that it’s not yet legal in some countries. Proposed legislation in the United States may allow wider use of crowdfunding. If this happens, then crowdfunding will get a major boost. In New Zealand too there are suggested changes to provide some exemptions from full compliance with the Securities Act.

The worry from an investor’s point of view is how to distinguish fraudulent ventures from genuine businesses. Governments will undoubtedly have this concern in mind when they frame crowdfunding legislation. Seasoned investors know that far more ventures fail than succeed, and trying to assess online the merits of a venture situated in any part of the world will always be a difficult task. Traditionally, investors make their decisions after face-to -face meetings with business owners, and angel investors in particular prefer business ventures within easy travelling distance.

Crowdfunding ventures to date have often been for creative projects, like financing a book, a documentary or an art project. Rather than the promoter offering any shareholding in the venture, rewards have been more along the lines of investors being named in the credits or being offered free products or services in return for cash. For example, a free copy of the software program the business plans to develop.

Investment can also take the form of straight donations (perhaps for a worthy social cause), loans (also known as peer-to-peer lending) or cash in return for expected future royalty payments.

But if the thought of being free from lender or investor constrictions seems quite heady, all that apparent freedom comes with some challenging issues. Although crowdfunding could in theory raise money far more quickly than traditional investor routes, how do you preserve secrecy or confidentiality about your business model? It’s impractical to get everyone to sign a confidentiality agreement or to expect that your idea won’t leak out to the world.

Perhaps you’re not too worried about the confidentiality issue. In that case, remember (sticking to the example above) that you now have 10,000 stakeholders in your enterprise. How will you communicate with them? How much time will you need to spend answering innumerable questions about progress?

Another limitation is that crowdfunding can be fickle. You may spark considerable initial interest in your project, but start-ups often require multiple capital injections to overcome tough patches. How do you maintain interest and momentum? Remote investors may well lose interest in a project that’s not producing quick results.

Perhaps the most important limitation is that you’re unlikely to get the governance and management expertise that lenders and especially angels and venture capitalists can offer. Although regular financial reports and KPI monitoring may seem irksome to those more interested in the creative side of their ventures, these requirements do provide structure and discipline to many business ventures that might otherwise drift into failure.

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Does your company need a website?

April 18, 2012 by

With the rise of Facebook, Twitter, YouTube and Google+ providing clean, simple and free options for hosting and sharing content, is there any need for your company to actually own a website? There used to be a time when creating an online presence meant you had to secure and buy a domain name and hosting plan, and then pay someone else to design, build and maintain the website.

Not anymore. If you have something worthwhile to say, content to share or followers to attract, you only need to spend a few minutes setting up profiles on Facebook or Twitter and you’re ready to go.

Consider this scenario:

  • you set up a company profile on Facebook and Twitter
  • you advertise these profiles on your products or services
  • you post new photos that point people to Flickr or Picasa
  • you post new videos that point people to YouTube
  • you use Facebook or Twitter to encourage customer feedback
  • you post a new blog post on Blogger or WordPress, and share it to your Twitter feed.

If you choose the purely social media angle, the advantages are:

  • no hosting or domain fees
  • most free services have unlimited bandwidth
  • an established audience of millions
  • no need to pay for a designer or programmer
  • reliable performance and free maintenance.

There are of course disadvantages to not owning your own site:

  • need to set up several profiles and maintain all their passwords
  • no control over service maintenance and downtime
  • creating a successful presence in social media can take time away from other business activities
  • no single focal point
  • free Internet services will change according to the market, for better or worse
  • it’s hard to predict which social networks to invest in, and which ones to drop.

So what do you think? Of course the easy answer is to have both; set up a domain and simple company page and move all your activity to social networks. But my question is; can you do without the dedicated website altogether?

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Moving to TDD

April 12, 2012 by

TSBC’s software development team have recently taken up the challenge of writing their tests before writing the functionality for which the test was written. In software development, this is known as Test Driven Development or TDD.

TDD is a hard concept to get developers to embrace. It’s often as much of a paradigm shift as persuading a procedural programmer to start creating Object Oriented designs. Some never get it. Fortunately, at TSBC we’ve got a very talented bunch of developers, and they’ve taken to it like fish to water.

The first thing to clear up is that TDD is not primarily about testing, but rather it forces the developer to write code that is testable (the fact the code has tests written for it and running regularly is a side effect, albeit a very positive one).

This is why there is often some confusion about TDD and the fact it or its derivatives (BDD, FDD, etc.) are primarily focused on creating well designed software. Code that is testable must be modular, which provides good separation of concerns.

  • Testing is about measuring where the quality is currently at.
  • TDD and its derivatives are about building the quality in from the start.

red green refactor

TDD concentrates on writing a unit test for the routine we are about to create before it’s created. A developer writes code that acts as a low-level specification (the test) that will be run on the routine, to confirm that the routine does what we expect it will do.

To unit test a routine, we must be able to break out the routines dependencies and separate them. If we don’t do this, the hierarchy of calls often grows exponentially.

Thus:

  1. We end up testing far more than we want or need to.
  2. The complexity gets out of hand.
  3. The test takes longer to execute than it needs to.
  4. Thus, the tests don’t get run as often as they should because we developers have to wait, and we live in an instant society.

This allows us to ignore how the dependencies behave and concentrate on a single routine. There are a number of concepts we can instantiate to help with this.

We can use:

Although TDD isn’t primarily about testing, its sole purpose is to create solid, well designed, extensible and scalable software. TDD encourages and in some cases forces us down the path of the SOLID principles, because to test each routine, each routine must be able to stand on its own.

SOLID principles

So what does SOLID give us? SOLID stands for:

  • Single Responsibility Principle
  • Open Closed Principle
  • Liskov Substitution Principle
  • Interface Segregation Principle
  • Dependency Inversion Principle

Single Responsibility Principle

  • Each class should have one and only one reason to change.
  • Each class should do one thing and do it well.

Single Responsibility Principle

Just because you can, doesn’t mean you should.

Open Closed Principle

  • A class’s behavior should be able to be extended without modifying it.
  • There are several ways to achieve this. Some of which are polymorphism via inheritance, aggregation, wrapping.

Liskov Substitution Principle

Interface Segregation Principle

  • When an interface consists of too many members, it should be split into smaller and more specific (to the client’s needs) interfaces, so that clients using the interface only use the members applicable to them.
  • A client should not have to know about all the extra interface members they don’t use.
  • This encourages systems to be decoupled and thus more easily re-factored, extended and scaled.

Dependency Inversion Principle

  • Often implemented in the form of the Dependency Injection Pattern via the more specific Inversion of Control Principle (IoC). In some circles, known as the Hollywood Principle… Don’t call us, we’ll call you.

At TSBC, the development team strives to create good, clean code and constantly monitor technical debt, and TDD streamlines the path to good quality design.

Additional info on optimizing your team’s testing effort can be found here.

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Quick procrastination killers

April 5, 2012 by

At The Small Business Company we all blog. Yes, young and old, we blog (it’s ok, as a company I fall into the ‘old’ bracket). For some time it was glaringly obvious (to me at any rate) that my name was absent from the ‘blog roster’. Did I put my hand up? Nope! I considered whether it was a deliberate omission. As Company Accountant, I’m surrounded by clever, witty writers and programmers – and I’m well aware of the accountant stereotype and their perceived social skills and ability to engage with others…

While I briefly considered why my name was absent, I certainly didn’t bring it to anyone’s attention. Enter Bruce Young and his attention to detail and here I am, a few weeks later, procrastinating and wondering what to write about.

This got me thinking. Procrastination costs small businesses in many ways – missed deadlines, inefficient time wasting, loss of clients and so on. Of no less cost to the business is the impact on the employee’s health and wellbeing while procrastinating – the annoying little voice in the background or feeling in the pit of the stomach that something needs to be done that you don’t necessarily want to do or feel capable of doing.

Procrastination is neither a new problem nor an uncommon one. Yes, I’ve experienced it before and yes, I’ve spent some time working out how to overcome it. Buried deep in the recesses of the hard drive, I discovered notes I’d previously made for myself titled Procrastination Tools. (Granted, it wasn’t buried too deep. I’d titled it so aptly it popped up pretty quickly!)

They are brief but potentially useful.

Procrastination Tools

Deal with issues as they arise

  • Do it now
  • Deal with it later but schedule time for it
  • Delegate it
  • Ditch, Dump or Delete

Schedule tasks in planner

  • Reminder pop up

Focus on how you’ll feel when the task is completed!

Break issues down into Action Plans

P.S. I know when my next blog is due – I’ll Deal with it later but have scheduled time for it in my Planner. Apparently, I don’t have an option to Ditch, Dump or Delete it ;-)

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Online readability: Are you chasing Internet traffic to your opposition?

April 3, 2012 by

Is readability still a major problem on the Internet? The answer is “YES”.

By readability, I don’t only mean the readability of the content but include other associated factors that affect readability online. The Oxford English Dictionary defines readability as something that is easy, interesting and enjoyable to read. The definition highlights three important keywords:

  • Easy
  • Interesting
  • Enjoyable.

Let’ look at each of these qualities from a web development point of view.

Easy

By easy, I mean the ease with which content can be read. Web page design is something that affects the readability of the content. We all know the important roles that font and color play in readability. But there are other things to consider such as content layout, User Interface (UI) controls, and annoying links.

Large blocks of dense text intimidate the reader and cause information overload.

Look at the above two images. A reader will lose interest half way through the first page. The second page, on the other hand, has less information, is clearer and easy to read and engages the user more easily.

Nowadays, most websites have ad-based revenue models. These adverts are presented in ad slots as gif images, or in pop-ups as flash images, etc. They appear when the page is loaded or when a user’s mouse moves over a certain section of the page. These fancy ads annoy the user because they have to take action to close the advert, or because ads pop up at regular intervals, slowing their access to the information they’re looking for – until annoyance eventually drives the user to close the page. Sites with this revenue model need to come up with better design by creating slots for ads in places where they won’t affect readability.

Another factor that affects readability is the controls used to present the information. Annoying tooltips, modal pop-ups, JavaScript alerts, and confirm boxes should be avoided. These controls are far less attractive to the eyes and irritate the user. Simple design with basic controls increases readability as people are used to traditional, simple designs that they understand.

Interesting and Enjoyable

These two qualities go hand in hand. To some extent, they rely on content but the way information is presented on the screen also drives these qualities. Tablets and e-readers are successful because of the way information is presented. Reading books on Kindle, for example, feels like reading a physical book. This goes back to my previous point that traditional designs are easy to understand, and people enjoy traditional designs in new formats. Hence, basic content layout styles keep the reader on the page.

Conclusion

To make a good website, we don’t need colorful images, fancy styles and pop-ups. A simple design that is neatly presented with easy-to-read information and less redirectional links drives traffic. I go with the saying “Old is gold”. Traditional styles need to be preserved and followed, with some tweaks when necessary.

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Money for money’s sake

April 2, 2012 by

You sometimes hear the phrases “Art for art’s sake” or “Knowledge for knowledge’s sake”, referring to the creative and academic realms of fine arts and innovation unaffected by commercial considerations.

But after observing the fallout from Greg Smith’s op-ed in the New York Times – now surely the most famous resignation letter of the burgeoning 21st Century – the phrase “Money for money’s sake” springs to mind.

If there’s one thing Smith was espousing in his frank assessment of what he saw as a toxic, client-unfriendly culture brewing at Goldman Sachs, it was that the global financial behemoth was now simply aiming to squeeze as much profit out of each of its clients (or should that be muppets) as possible, rather than looking to provide a service.

In other words, simply making money for money’s sake.

Some of you might say, “So what, that’s what we all do as small business owners and operators” but really, it’s not. You chose your pursuit – or in many cases let it choose you – because you have a passion for the possibilities of making it a success.

Even if you’re only burning the midnight oil because you love the feeling of success, you still chose a vocation or an industry that would let you achieve success in the most productive and personally satisfying way. And you can’t make that choice if you haven’t got passion in the first place.

Even the most sharp-nosed angel investors get hooked on an idea and the possibilities entailed with helping to make it happen. So I would say no one, at least at the outset, aims to make money just for the sake of having more of it. Even if they tell themselves that.

Which is why I find the message of the derivative executive’s resignation letter so compelling. Goldman Sachs is already looking at a PR profile that puts it somewhere between Rupert Murdoch and Joseph Kony in the eyes of the average Joe, yet in many ways that doesn’t really matter because it’s still making money hand over fist.

In fact, it has taken less than two weeks for Goldman Sachs shares to regain the losses suffered from Greg Smith’s PR uppercut in the New York Times.

Yet, if Smith’s point of view is to be taken at face value, surely there are bigger internal clouds forming on the Goldman Sachs horizon?

Small businesses that have no reason for being, no conscious goals or ideals, rarely last. Staff – just like Smith – get bored, frustrated and fed up, while the people at the top cry out for direction almost as much as their teams.

And I defy anyone to say that won’t be the same – just multiplied a thousand-fold – with a multinational Wall Street monster like Goldman Sachs.

What is its real reason for being in this day and age? What are its long-term goals? What does its board actually want to achieve? Call me naïve, but if any of those answers just contain $ signs, I don’t hold out much hope.

If you don’t believe me, just check this out.

Show me the money, indeed.

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Five basic market research questions for new start-ups

March 27, 2012 by

Market research is a process of collecting information, analyzing that information properly and then making the correct business decisions based on your analyzed results. Whenever you talk to customers or competitors, you are absorbing market information even though you probably don’t treat it as ‘official’ market research – but you should. The same applies when you surf online, engage in social media, watch television, or read magazines and newspapers. To increase the effectiveness of this ‘observation’ requires becoming more conscious of what you’re trying to find out and why.

Example

Suppose you’re thinking of opening a bar in your local area and want to know the main types of people living in your area so you can position the bar to meet their needs. To establish a profile of your intended market, you could conduct research by visiting the government statistics website and studying the latest census to gain information on the sex, age, income, race and religion of those living in your area. Alternatively, you could knock on the door of every house in your area and find out yourself, or sit outside your ideal bar location and note the types of people who walk past.

The point is, fit the type of research to the question, as not all ways of collecting information are effective.

Yet to establish your business?

If you’re yet to establish your business, the most valuable information comes from understanding what is happening in your chosen industry and from gathering answers to particular questions. Five of the most important questions to ask are:

1. Is there a demand for this new business?

Try to find out what people think of your new business idea. Ask your professional and personal contacts what they think of the idea and if they think it will work. Another alternative is to start the business on a very small scale to test the market and establish whether there is demand for what you’re offering.

2. Have people seen it?

If you have samples of what you intend to offer, be it a good or service, don’t be afraid to show people. Although many people like to securely guard their idea, there is very little benefit to be gained from this strategy. You will gain much more from sharing the concept and getting responses than keeping it a secret.

3. What can you charge for what you’re going to do?

Get a good idea of what your competition is charging. You could also ask potential customers what they would be willing to pay for your product. Once you have established the scale of pricing, think about what other messages the price says about that product. For example, if the product/item is priced at the high end of the continuum, will people perceive it to be superior to other products? Now you can position your product where it best fits.

4. What is the potential profit in this business?

Don’t exaggerate your answer, as tempting as it might be. With an idea of the potential demand for your product, think about the percentage of that market that you wish to capture (it is better to underestimate than overestimate). Multiply the number of customers you expect in a certain period (a month, quarter or year) by the per unit charge, then subtract the expenses.

5. Where should I locate?

Location is of utmost importance to retailers. If you’re a retailer, consider who will form your target market and then take a look at the statistics for your town or area that will highlight where these people live. This will help you determine where you should locate. If you are a service business or manufacturer where location is not so important, then locate somewhere cheap near a main road with lots of parking.

In summary

When starting a business, don’t forget that every waking moment is market research. Everything you see, hear, do and experience builds up a picture of ‘should I do it or not?’. You can do too much research, spending years and years, and that means you’re procrastinating. At some point, your intuition kicks in and you take the plunge.

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