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Is the Idea Feasible – Will
it Fly?
Before you get too involved in business
development, you need to determine whether or not
your business idea is feasible. Do a basic assessment
of the idea to determine whether it is worth your
time and investment. This involves market research,
cost calculations to see if you can make money,
determining prices and calculating a break even
point. You will also want to consider your
distribution channels and develop a marketing plan.
Step 1: Market Research
Marketing is directing your goods and services to
consumers in response to their wants and needs.
Marketing begins with the consumer. It involves
acquiring a thorough understanding of what
consumers need and want and making products that
meet those needs.
When you start a business you must develop a keen
understanding of your market: your consumers. You
need to know everything about the buyers: their age,
sex, income, buying habits as they relate to a
particular product or segment of the market, where
they live, how much they spend on related products
and even what they read. This and other information
about them is called demographic information.
Gathering demographic information is part science
and part intuition, part detective work and part
research. A healthy combination of all these
techniques will be needed.
Many food products come about because friends,
family and others who have tasted a homemade
recipe have pronounced it suitable for sale. They
have assured you that they would buy your mustard,
jam or barbecue sauce, and that their friends would
too. They encourage you to consider selling the
product by suggesting to you that there is a market:
an audience for the product.
Think back to the time when friends began to
suggest that you had a saleable product and you
began to wonder if they were right. You may have
thought, okay, everybody who tries it likes it, but
would they pay for it? Just gather them together and
ask them. Assemble your own focus group. Ask who
might buy the product and why, what they would
pay for it, what would they do with it. How often
would they buy it? Then, consider what you know
about them: are they gourmet cooks, or harried
moms looking for something to make life easier? Do
different kinds of people like it, or does it require a
more sophisticated palate? Where do these people
shop? Is it something they would give as a gift? Is it
an alternative to a mass market product they already
use? Keep going until you have looked at the
product from every possible point of view.
Next, do your homework. Visit the library. Find
recent newspaper and magazine articles about food
trends and your kind of product in particular. If your
library has a reference librarian, ask for their help.
College and university libraries are good places to
do research. While they may not let you check out
books, most will allow you to read and copy
materials in the building. Study everything you can
find about the target consumers. Read trade journals
and food processing magazines.
Talk to gourmet food store buyers, gift basket
buyers, grocers and others who might be potential
buyers. Do not forget the ethnic food stores. While
you are in retail stores, talk to customers. Find out
what they buy, what they are looking for and why
they shop where they do. Your research will help
you discover if there is an existing market or an
emerging market for your product. And it will tell
you a lot about your potential customer.
These are the basic steps of discovering your
potential customers. With this knowledge you will
be better able to judge if you actually have a shot at
success.
Step 2: Can You Make
Money?
You must calculate the costs associated with making
your product before you can set the price, and you
must set the price before you can answer the ultimate
question: will consumers pay the price?