Starting a product-based business

- Analyze the market. A good idea may not always materialize well once it hits the market. A company needs to look at direct and indirect competitors. It is not enough to have a great product, the product needs to be able to impact the market and influence consumers to buy.

- Study your target market. Each product should have a target market. A company needs to study the buying behaviors of their targets. The behaviors of consumers can impact decisions regarding packaging, price, availability, marketing, etc.

- An intended business needs to survey its circumstances before deciding how to establish itself. A one person business can begin as a sole proprietorship. A business with a few people can become a partnership, LLC, or corporation. The structure of the business can determine other decisions.

- Many businesses underestimate the amount of capital needed to begin. There are sources to acquire additional funding, but a business needs to decide what source is best. Recruiting investors may mean executive decisions be shared with them. Funding from other sources may mean high interest rates regardless of the initial success of the business.

- Consider outsourcing for many duties in the beginning. Outsourcing to professionals enables a business to run smoothly (especially in the beginning stages), while initial executive decisions are being made and modified.

- Marketing is very important in the beginning of a product's life cycle. A new product has a great chance of making an impact, but can be overlooked by consumers unless an efficient marketing campaign is established. Consider using a marketing company that has experience in the product's particular industry.

- Writing a business plan serves several functions. It helps the executives see the objectives and goals of the business in black and white. In addition, potential investors may want to see an established plan before considering spending their money.

- A business needs to become acquainted with rules and regulations regarding their practice. Depending on the business and its location, laws pertaining to zoning, licenses, practices, etc. may apply.

- A business needs to be insured. Consult a lawyer in regards to the level of insurance needed for the practice. Also, be aware of the tendency of some businesses paying too much for insurance. Know how much insurance is needed and what is covered under your specific account.

- Begin to establish literature about your company and product. Contact papers and magazines in your industry in order to make an impact on the press. Get business cards, brochures, and other marketing materials produced and dispersed.

Sources

IRS
US Small Business Administration