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Some key points to consider are:
Where are your potential customers likely to
look for products like yours – in grocery stores,
delicatessens, gift shops, specialty food stores,
supermarkets, farm stands, food service or other
establishments?
Can you sell directly to the retailer or food
service buyer and are they receptive to your
proposed product?
Are the locations and types of outlets you have
identified selling similar products at competitive
prices?
If your research indicates you can place your product
into outlets where it will sell successfully at your
proposed price, you are ready to continue to unravel
the interlocking puzzle of markets, consumers,
products and outlets.
Step 6: The Marketing Plan
The next step is to develop a marketing plan that
targets your potential buyer: wholesale, retail, food
service or direct to consumers.
Marketing is an ongoing function of business. You
should never stop gathering information about your
consumers and buyers. Staying abreast of new
market trends enables you to react quickly to
changes in consumer demands.
These days, consumers are health conscious and
looking for convenience. They read labels with great
interest and pay attention to nutritional information.
Producers who understand and adapt to market
demands for healthy products stay profitable, while
others lose their share of the market. Take a trip
down the food aisles and you will see labels that
announce products that are organic, salt free and low
fat. The makers of these products are all responding
to market demand, which is consumer driven.
Consumers demand, and producers and retailers
respond. From your initial notion that you might
have a saleable product until the time you retire from
business, you must constantly be attuned to the
market.
Step 7: Forecast Business
Start-up Costs
Before you sell one unit of product, you will incur
cost. You need to be sure that you have enough start-
up capital available to get you started. It is
recommended that these costs not be calculated into
your production costs because they are one time
costs and may result in pricing your product too high
for the market. Typically these start-up costs are
financed with owner’s equity or from profit you
make when you sell your product. Some of the costs
are:
product development and testing
market research
your own time
office expenses before product is developed
(phone, fax, stationery, etc.,)
An Opportunity ...
By following these seven steps and doing some
rough calculations, you will have an idea of whether
or not your business idea is feasible. Depending on
your product and your expertise, you may need to
concentrate on some areas more than others. Will
you be able to get the money to finance your
product? Will your cash flow be adequate to cover
your expenses? Planning issues are covered in more
detail in the section on business plans. You may
want to review your seven step assessment with a
third party such as Alberta Agriculture and Rural
Development New Venture Coaches, community
futures staff or someone in a similar business.
A list of resources that can assist in this initial
assessment can be found in the resources section on
page 59.