Charlie Tyler had a surefire solution to many companies' problems -- or so he thought.
Determined to strike out on his own, this Baton Rouge, Louisiana, CPA saw businesses struggling with tracking and collecting their employees' attendance records. So he and a partner dove right in to become value-added resellers of software designed to streamline those functions. But Tyler's “can't-miss" solution missed -- big time.
“We went about six months and didn't sell much of anything,” he says. Fortunately, he and his partner still had other sources of income, so they went back to the drawing board.
As Tyler's story shows, even the best business ideas can fall short because of poor planning and a lack of testing the commercial waters. Follow these tips before jumping to invest in your idea:
Find the Best Product
The next time Tyler attempted to start his own business, he focused on finding the right products. “The first time we were dealing with products that really were not far enough along in development, and we hadn't gone out there to find out the level of need among potential customers,” Tyler says. “You must spend time investigating what other products are out there and what it takes to become a value-added reseller of existing products.”
The second time around, Tyler and his business partner determined their product “by knocking on a lot of doors and asking,” he says. They found that “the cornerstone of a lot of security and automation products is a single card that could control several applications -- building access, attendance and even a photo ID.”
Test Your Product
Once you've chosen your product, research its feasibility in a commercial context and then lay out a strategy that includes determining your competition, says Tony Martinez, director of the Louisiana State University Small Business Development Center. “Who is the consumer who would use your product? What is the potential market for it? What are the trends in the related industry?” are questions Martinez says you should look to answer.
"Talk to users of similar products,” suggests Tyler. “Ask why they are happy with the product they are using and how they would improve it.”
According to Martinez, your research must also identify your competitive advantage. “Ask yourself: What expertise do you have that qualifies you to enter this business?” he says.
Market Your Product
“Write a business plan that starts with marketing,” Martinez says.
Tyler agrees. “You can have the greatest product in the world, but if you don't figure out how to get it to the marketplace first, it goes nowhere,” he says.
Get Outside Help
To further develop his business plan, research the market and systematically get the business up and running, Tyler turned to a business incubator, the Louisiana Business and Technology Center.
Incubators make it possible for budding businesses to obtain essential startup services they otherwise would not be able to afford. Within the incubator, Tyler's company, Time Solutions Inc., had a phone answering service, a conference room, office space, mail service, a computer network, fax and telephone service -- all at reduced rates.
Consider Gaining Experience First
Paul Dunn, PhD, director of entrepreneurship studies at the University of Louisiana at Monroe, counsels his potential business owners to go to work for someone else in their chosen business before starting their own. Learning the field from the inside out often helps prospective business owners determine the viability of their intended product or service.
Take Your Time
Rushing is the deal killer. “Entrepreneurs are often in a hurry, afraid someone's going to do it before they do, so they jump in and shoot without researching the implications of their idea,” Dunn says.
Love Your Product
Finally, it is important that you follow your gut when deciding whether to invest in your business idea. “You better be sure you like what you're doing,” says Tyler. “There's no use in testing the waters if you don't love what you're doing.”
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