How to Choose the Right Business Model for Your Product Business

Once you choose your initial product, it’s time to decide how you want to sell to your customers. Take some time to consider the demands of your potential business before you make your final choice. For example, if you want to be able to work while the kids are at school but still be able to volunteer in the classroom, then owning a retail store where you can sell your designer chocolates probably is not a good fit for you because you would need to be present at the storefront during open hours. However, you could take your designer chocolates and sell wholesale to local restaurants, bakeries and candy shops allowing you more flexibility in your time.

Characteristics of a Product Business

A product business gives you many avenues to sell your new product. As an entrepreneur, you can sell your product directly to consumers or to retailers, who then resell your product in their stores. Some business owners choose one path while others choose both.

  • Can be run from home or brick and mortar store
  • Good options available for third party manufacturing, storage and order fulfillment
  • Possible high startup cost to develop and produce products or to purchase beginning inventory
  • Has potential for high compensation as unlimited amount of product can be sold
  • Able to hire third party sales representatives or affiliate marketers to boost sales with limited upfront costs

Wholesale Side (Business to Business)

  • Upfront costs can be high to get initial supply of products manufactured
  • Spend time developing new products each year to keep business viable
  • Has options to sell wholesale to retail stores and retail to private customers
  • Significant storage areas may be necessary to find and maintain
  • Credit card processing and inventory management necessary

Retail Side (Business to Consumer)

  • Medium to high upfront costs include store and/or website
  • Credit card processing and inventory management necessary
  • Has control of ultimate price of items
  • Has multiple selling options with store, online, and private parties
  • Significant storage not necessary as many suppliers will allow relatively small order

Retail Websites vs. Brick and Mortar Stores vs. Private Sales

In today’s technology world one of the biggest questions you will face is: “Do I open a brick and mortar store, sell online, or offer my products in small group settings?” If you are developing products and selling direct to the customer, then a website presence is a must in my opinion. Brick and mortar stores, I think, are optional in the beginning. Some business owners prefer to meet face-to-face with customers in small group parties so that that they can demonstrate and show their products personally. The choice of sales method has more to do with your personality than anything else. Do you like to be closed away in an office or out talking with people all day? Are you ready to hire and manage employees?  Here are some traits of each type of business model to help you decide.

Website (Wholesale and/or Retail)

  • Can be from home or small office
  • Basic websites are relatively inexpensive
  • No daily face-to-face with customers
  • Primarily phone and email correspondence
  • Lower rent likely than retail space
  • Costly decor not necessary
  • Can be isolating
  • Can reach national audience
  • May not require employees at first as many aspects can be outsourced

Brick & Mortar (Retail)

  • Daily face-to-face with customers
  • Set hours of operation
  • Must be at store during open hours or hire employees
  • Can have office at store
  • Must decorate store
  • Reach local audience – can target effectively
  • Monthly rent, possible contract

Private Sales Methods / Home Parties (Retail)

  • Set hours of operation
  • Organize home parties
  • Low cost to provide hostess with free samples
  • Face to face sales with customers

As I said, Mini Me Geology is both a wholesale and retail business that I run from home through the internet. As a geologist I understand the products and as a Mom, I like the flexibility of working from home. Through my website, I can serve our wholesale customers and also have retail sales which allow us to interact directly with our end users. Some days I feel like the house is overrun with rock and mineral samples but when I decide that I cannot stand them anymore, we will move the assembly, packing and shipping to a third party service provider in our area. (Confession – I actually love having rocks all around the house…) Even when we move these aspects of the business, I can still sit at home and run the daily operations.

So what type of business is right for you? Home-based? Brick and mortar? Retail? Wholesale?

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How to Choose the Right Product to Sell

sept-21-2016_my-first-product-blog-imageChoosing the type of product to sell is the hardest decision you will make on your road to product entrepreneurship. The two most important things that I can tell you about choosing a product is to pick a product type that you know and love. If you pick a product that you know and like, it will be easier to provide great customer service with you are faced with questions about your product.

“Consider your job and hobbies when searching for a product or product idea.”

Pick a Product that You Know

When you start to develop your first product it is advisable to choose something with which you have familiarity or something that solves a problem that you have in your own life. If you are a florist but decide to open a fine-dining hamburger restaurant, you may have trouble because you do not know enough about hamburgers or fine-dining restaurants. You may love to eat hamburgers but that does not mean that you know enough to be successful. Conversely, if you develop a new, partitioned flower vase that helps homeowners create beautiful arrangements with their garden flowers you may enjoy enormous success.

When you are trying to decide on a product business, make a list of all of the possibilities based on the things that you know how to do. Many of you reading this may be thinking, “I hate my job and I want as far away from it as possible!” I will tell you a secret. I thought that too. I worked for an environmental consulting firm and my boss was very difficult. I decided to open an online flower business because I liked flowers and it had nothing to do with geology. The problem was that while I love flowers, I know nothing about them! How I thought I could run a business selling flower arrangements and educate people on the different types of flowers when all I really knew was what roses and tulips looked like, I will never know! My biggest problem with the flower business was not that I did not like the flowers; it was that the learning curve for me to grasp everything that I would need to know about flowers to successfully run the business was too steep. I like flowers but not THAT much. What a nightmare!

But, I was so annoyed with my then current supervisor that I let that frustration push me in a bad direction. Then one day, my husband asked me “What is it you like about geology? There must be something or you would not have earned a Master’s degree.” He was right.  I had both a bachelor’s degree and a master’s degree in geology so obviously it appealed to me. I found myself telling him that I like the rocks and minerals themselves. That was the rocks and minerals and how they formed that I liked and that is where my final business idea came from.

To find your best product idea, take a notebook and make a table like the one below. It can be as long as you like. Make a list of all of the possible products that you could develop for your business. Start your list with things you know and add products that could solve a particular problem that you have in your life. If you already have a clear direction for your product then you are in a great position. If you do not, the sky is the limit so starting making that list.

Brainstorm Product Ideas

Use this chart to list your areas of expertise and the different products that you could develop. If you already have one product in mind, think of complementary products that you can use to produce a full line of goods for sale.

sept-21-2016-chart_2

My chosen product is:

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To Be or Not to Be an Entrepreneur

Be an EntrepreneurIt seems that today everyone wants to start a business either to earn more money, have more freedom or a combination of both. I started my businesses so that I could work from home and spend more time with my children.  It works for me because I am self-motivated enough that I can sit in my house and work, run over to the school, pick kids up, drop kids off and then return back home and continue to work while ignoring the mountain of laundry and dishes that need attention. Of course, that could mean that I really dislike housework, too!

During the past few years, I have met many other business owners who all have interesting stories about how and why they started their businesses and the unique companies that they run. Everyone has different experiences but the one thing that I noticed is that they all have is the ability to self-motivate. To build your own business you have to be willing to sacrifice a little sleep, a little money and some fun time.

If you are still undecided about taking the plunge, ask yourself these questions:

  1. Can I stay up late and give up some sleep?
  2. Can I make myself work when I do not feel well?
  3. Can I make myself work when I do not want to and would rather be watching television?
  4. Am I willing to take risks, both personally and financially?

If you answered “No” to any of these questions, then you are not ready to make the decision to forge ahead with your business venture. However, if you answered yes…let’s go!

Yes, I’m Ready to Get Started

Yay! Now that you decided to start your business you may be unsure where to begin.  I think the question people ask me most is “How did you start?” Honestly, I tried a few different products before I found the one that fit my experience and personality the best.

You should fully expect that you will make some mistakes along the way. Mistakes are okay because you can always try again, change your course and learn a better way of running your business or develop a better product to offer. But the absolute BEST THING you can do now is get started.

But I Can’t Quit My Day Job

If you cannot quit your current job and start something new without the guarantee of a paycheck you are not alone. Many of us, like me, start our businesses while still working either part time or full time at a traditional job. Depending on the type of business you start, this can be a great option for you. However, if your business is going to be in direct competition with your current employer, then you should not start your business while you are still working.  If your new business is in a different field than your current employer then you may be able to get your business off the ground while you keep your traditional job.  Check with your human resources department to see if starting your business while working part-time or full-time is within your company’s rules.

Remember that having what it takes to run a business does not mean that you have to know how to do everything before you begin. All you need is the desire to either learn how to get it done by yourself or by hiring other professionals to help you.

What is My First Step?

The very first action that you should take is to brainstorm what type of business you will start. I sell products so first, I had to decide what type of product I wanted to sell. I ended up choosing a product that I could design and create on my own that used my background in geology. I make rock and mineral kits and write educational books for students and teachers. What is your background? What product could you sell? Make a list of at least 20 product ideas. That is step one.

Need help?

If you are struggling with figuring out what to sell, tell us about your background in the comments and maybe we can brainstorm some ideas together.

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