By Tobias Anne Skelly
Here are three basic rules aspiring entrepreneurs need to know:
1st: Specific products and services are what matter most to potential customers.
When consumer choice is involved, the true motivation for purchasing anything is based on individual self-interest. Individuals buy products and services that they believe will benefit them. The greater the benefit, the more likely the purchase, even when the price is high. This is also true for gift purchases and charitable donations, because contributing to the wellbeing of others makes individuals feel good. Many start-ups fail within the first three years because they offer mediocre products and services or ones that don’t live up to customer expectations.
2nd: Today’s successful products and services are not necessarily tomorrow’s.
Change is a constant. Companies must continue to perfect their core products and services, weed out those that are no longer valuable, and create or locate those that are valuable to their current customer base. In the corporate world, this process is known as research and development. In the small business world, this process is known as the reason most companies fail before they reach their tenth year! Be aware of changes with competitors, technology, government regulations, and especially with consumers. Consumer tastes, habits, and perceptions naturally change over time. The reasons may seem varied, but it always comes down to individual self-interest. They want what is most beneficial for them at that time.
3rd: Profit is essential for a for-profit company.
Failure to produce or sustain a profit will bankrupt any company. Profit margins are based on charging the right price for products and services. The right price is determined by current and future costs. It’s an objective and mathematical process, not subjective or based on wishful thinking. The right price (or fair value) is a win/win. Customers win because they get products and services they value at prices they feel are fair. Companies win because they make the profits needed to sustain their business.
Tobias Anne Skelly is a Business and Marketing Consultant for small business owners and start-ups. She is the Owner of gITnoticed® Marketing and an Educator in Marketing and Communications. To learn more, visit www.gitnoticed.com or send email to firstname.lastname@example.org.