Every eCommerce entrepreneur has to answer the Five Fundamental Questions of a Business. There is no way around them. In this post, we are covering the first question. Here is where we are heading:
- What product should I sell?
- How will I produce my product?
- How will I deliver my product to my customers?
- Who is my ideal customer, anyways?
- How do I convince them to become a repeat buyer and brand evangelist?
If you study the methodologies outlined in this blog and master the resources available to you across the web, you will become an expert at answering these questions. And if you become an expert at answering these questions, you will succeed in building a great company. Before you officially launch your business, you should have a plan mapped out for each of the Five Fundamental Questions. Yes, you will need to remain lean and nimble and be willing to pivot, to pivot hard and pivot often. But the planning phase of any business is still essential!
And so begins our Entrepreneurship 101 module. Let’s dive in with the first question:
What product should I sell?
Many people have a burning desire to start a business, create a side hustle, to make money, or to be their own boss – but don’t have the faintest idea of what product to sell. The large majority of these people get hung up on this question and quit before they start.
And I can certainly understand why. Deciding what core product you will sell, or identifying a niche (a category of products), is perhaps the most important decision you will make in any new venture.
The foundation of every business is a product. Things like your marketing strategies, company culture, and advertising budget are important. But identifying, iterating upon, and differentiating the product that your business will be known for is paramount.
Two things should determine what product a business will sell: 1) Founder Background and 2) Data.
Founder Background
Yes. You, budding genius, are the founder.
It’s time to reflect on your professional experience, hobbies, and interests. Be encouraged by the fact that a business, probably many businesses, could be designed (and probably have already been designed) around anything that fits into one of these three categories.
Your new business is going to occupy a huge chunk of your time and your thoughts (even after you break for the night). You’re far less likely to get burned out and far more likely to succeed if your business pertains to something that you are proficient in, care about, or enjoy.
So, the first step in deciding what to sell is to identify a market, using these three categories.
Do this: Brainstorm your hobbies, interests, and proficiencies (things you are good at). Leave nothing out. Go for volume. We’ll pare it down later.
Armed with your market ideas (a list of hobbies, interests, and proficiencies), you can begin to brainstorm products that fit into these markets.
To do this, think about the problems that need solving in your areas of interest, hobbies, and proficiencies. What solutions to these problems would people pay for?
Great businesses solve their customer’s problems through irresistible products that make them happier, wealthier, or healthier.
Keep in mind that you don’t have to sell “widgets” (physical products) to start a business. What are you an “expert” in? For my humble readers: what are you almost an expert in? Can you create a coaching or consulting business around it? Spoiler alert: you can. We’ll cover how to create an “Information Product” in the next section.
You should now have a nice long list of potential product ideas (solutions to problems) that fall within a market that you understand (a hobby, interest, or proficiency).
If this section seems a bit abstract to you, don’t lose heart. It is time to move on to the second determining factor…
The Data
Before starting a business, you need to do thorough market research. The data will validate the potential markets you have identified and refine your list of viable products.
The goal of market research is to understand 3 things: demand, competition, and opportunities.
Demand
Let’s start with Demand. Demand is simply a representation of the desire for customers to buy a product. And unfortunately, you can’t build a business around something that people have no interest in buying.
Luckily, there are plenty of free ways to research market data online. You can find out if people are buying your product already, how many are searching for your interests or hobbies on Google, demographic information, and much much more. I always do keyword research before starting any business venture. More on keyword research in “Q5” article.
If you do your research and discover there isn’t much demand out there for your product, it may be time to move on to a different idea – unless you are confident that you can generate demand where none exists today. But that is a tall order. You’re usually better off choosing a niche with proven demand. For example, enthusiastic hobbyists make great customers. Think Video Gamers, Sports Fans, Cyclists, etc.
Competition
Competitive research can often be done in tandem with Market Demand research. After all, if you are able to prove that people are already buying a particular product, the next logical question is: who is selling it to them? These are (some of) your competitors.
To broaden that definition a bit:
A competitor is anyone who solves the same problem as your business (even if they sell a completely different product).
Before entering a market, you want to get a good sense for:
- How many competitors there are
- The product offerings available to customers
- Which of your competitors are “winning” in the marketplace
Opportunities
Competitive research is only as useful as the opportunities (or lack thereof) that you find. Read through the product reviews on your competitors’ pages (Amazon is a good place to do this). Are customers satisfied? Or are there consistent complaints about a faulty product feature, unmet expectations, or poor customer service? These all represent golden opportunities for you to differentiate yourself from the competition and create unique products that are tailored directly to what customers are asking for.
In addition to competitive opportunities, you might find opportunities in Market Demand, where trends are emerging. At the time of writing this, www.trendhunter.com is offering a free 2020 emerging trends report. But there is no shortage of tech and consumer blogs that exist solely to identify new trends.
A word of caution: be mindful that some “trends” will actually turn out to be fads. Fads die out quickly, and are not the stuff of long term business success.
Finally, you might identify a good market opportunity due to impressive financial data. Market research could lay bare that the profit margin of a particular niche is just too good to pass up.
Do this: Conduct market research to validate your product ideas. Score each on a scale of 1-10 in Demand, Competition, and Opportunities. Take notes on the top opportunities for each.
Ideally, you’d find a product that is a perfect 10/10 in all 3 categories, but this is rare. You will likely have to settle. Don’t feel you have to make your choice just yet. Until you finish answering all 5 Fundamental Questions, you shouldn’t move forward with any product idea.
Product Research Resources
If you already know what fulfillment model* you want to use for your business, that can assist you in market research. Whether selling on Amazon or Starting a Dropshipping Store, you can find detailed data on existing sellers, how many products are being sold, product reviews, trends, and more.
These tools are truly amazing and you should take a look at a few of these before deciding on a product.
Resource List:
- List of Free Market Research Tools
- For Amazon FBA businesses
- For Dropshipping
*Confused about “fulfillment models?” Don’t worry. We will cover them in Question 3.
First, let’s talk about how you will actually produce your product.Next up, let’s talk about how you will produce your product.
