By Nilooka Dissanayake
In the last article in this series, we looked at how you can find a business idea that suits your needs, aspirations and circumstances. This week, let us consider the other side of selecting a successful business idea. That is, how to find a business idea that satisfies a human need at a profit.
People have needs and wants. If you, as an entrepreneur can satisfy their wants and needs people will be willing to pay a price for that satisfaction. So, in order to become a successful entrepreneur you have to first decide which of the multitude of needs and wants you are going to satisfy and how; whether by making something, selling something or by providing a service.
Once you make that basic decision, the next issue is to decide who would be your customer. This is one of the most important and most difficult questions you will face in your entrepreneurial efforts. The future of your whole business will be based upon this decision; and all your efforts will need to be directed in one direction after you find the answer. If you decide to go ahead with it, that answer will be your business idea.
Photo by Elevate via Pexels
Let us assume you are a good cook. Then you can decide to go into the food business, naturally. But who will be your customer? You can’t simply produce everything for everyone. You need to be specific. Let us then also assume you like making sandwiches above all else.
By that one decision, you have narrowed down your customer base substantially.
How many people eat sandwiches? What are their eating habits? How important are sandwiches in their daily diet? Were you thinking of selling sandwiches for breakfast, as a snack or for lunch? What sandwiches do they like – brown bread or white bread? With what fillings? What size should they be? How should they be packed? Where do your prospective customers live?
Obviously, they will not come from Colombo to Rajagiriya (where you live) to buy sandwiches because they are relatively low-value items.
Before venturing into your sandwich business you need to find answers to all these questions and many more. You may have seen a lot of people go into business without asking or answering these questions. Then their market size, the potential for expansion and the success of their operation are depending more upon luck than on anything else. If you want to be different, to start your home-based business in a methodical manner, you need to learn in great detail the type of person who will be your prospective customer.
You need to understand the customers, identify their needs and wants and then set about satisfying them.
Photo by Pexabay via Pexels
You need to understand the customers, identify their needs and wants and then set about satisfying them.
Finding out about your customers is called market research. At the home-based level, you do not need the services of market research organisations. Let us consider how you can learn about your prospective customers and build-up an image of who will be your ‘typical customer.’
Where do you start? You can start at home and then extend your ‘research’ to your family and friends. Ask their ‘sandwich’ wants and needs, their preferences in taste, size and packaging, the times at which they like to eat sandwiches, what would they consider as a reasonable size etc.
It would also be very useful visiting food outlets in and around your home and those scattered around the city operating in shopping complexes or in their own outlets. These outlets may or may not sell sandwiches. If you wish, ask them whether there is a demand for sandwiches from customers. Where else is there a demand for sandwiches? School canteens, sports and health clubs, coffee shops, supermarkets and even small restaurants may sell or have the potential to sell sandwiches.
Photo by Steyn Vilojoen via Pexels
If they are already selling sandwiches, check out the prices, the variety they offer, the packaging, the frequency and volume and the nature of their demand. This you may casually find out by purchasing a few samples. This is necessary so that you know for yourself the quality and taste of the items you are trying to compete with. The more sandwiches you sample the more you will learn.
Once you have gone through this exercise, for sandwiches or for anything else, you will be in a better position to judge the type of market you are entering into and the size of the market. You will have gained a fairly thorough idea as to who your ‘typical’ customers are and their preferences as well as what they will be willing to pay for the type of product (or service).
You must also remember that there could be a latent or hidden demand for some products and services. For example, before the paper clip was invented, no one would have gone around complaining that they needed a way to stop all the papers from getting lost or gone to a shop and demanded for some such item to help ‘clip’ their documents together. The same type of hidden demand was satisfied by the makers of the motor vehicle, the airplane or even the vacuum cleaner and the washing machine.
To get closer to consumer requirements, the pioneers in instant food and take-away outlets anticipated a growing trend in groups of customers. In the same way, if we go back to the sandwich business it will be interesting to find out how many people settle for short-eats or go without breakfast because they do not have time to make their own sandwich or do not have a ‘safe’ and convenient place to buy a good sandwich. If you can satisfy the demand of a significant number of these customers, the sandwich operation will be a good business idea to develop further.
As you can see from the above examples you can find a business idea if you start looking deep into satisfying any type of need or want. When you study any group of customers, you will also get a lot of insight into their other needs. For example, you may discover that there is a demand for sandwich bars – where people like to come and select the filings for their own sandwiches. You may also get this same idea while watching television while glancing through a magazine while having a chat with a friend or visiting a foreign country. And all this may lead to your thinking of setting up a sandwich bar instead of a home-based operation.
According to the Sinhala publication titled Starting a Home-based Business or “Gruhastha Vyaparayak Arambamu,” you can also make use of the following sources to help you search for a suitable business idea and to develop an already identified business idea:
Your former or current job, your experiences, travel or hobbies
Friends and family and their requirements
Trends in society and the marketplace
Magazines and newspapers, radio, television or the movies
Specialised publications (say food industry magazines etc.)
The internet
Chambers of commerce, trade and industry associations
Technical service providers (both private and public sector)
Trade fairs and exhibitions
Telephone directories and catalogues
Whatever you decide to do, the fundamentals of success will be in satisfying a group of customers at a profit. Therefore, you need to pick and develop a business idea that will help you satisfy the needs of a specific group of customers.
In the next article we will take a further look at identifying and developing a business idea.
Once you have found and developed a business idea, you can start preparing a business plan. This will help you develop your business idea further and prompt you to think about the practical aspects of marketing, finances and operations.
Notes:
- Starting A Home Based Business: Adapted versions of a series of 25 Articles
By Nilooka Dissanayake, published in the Ceylon Daily News between 2000 and 2001. - ©Nilooka Dissanayake. The contents of these articles may not be reproduced in any form without the express written permission by the writer.
- The Sinhala publication mentioned above, “Gruhastha Vyaparayak Arambamu” is one of a set of six books published by Athwela (Private) Limited, the publishers of Athwela Vyaparika Sangarawa, the Sinhala business journal targeted at educating the small and medium sized business operators. The other books in the set, all published in Sinhala, are titled Starting a Small Business, Marketing for the Small Business, Financial Management for the Small Business, Managing the Small Business and Recordkeeping for the Small Business. At present, they are out of print.
DiyunuwaBlog.com | දියුණුව 