Imagine starting a £1 million pound business this weekend – Is that possible? Could you do it? Whilst many people spend their weekends in shopping centres or lounging around watching telly, tomorrow’s entrepreneurs are busy creating the products that will make them a fortune.
Whether they are cooking up something big in the kitchen, tinkering away on an invention in the garden shed, finishing off their prototype in the garage or managing their website from the spare bedroom; these are the people who can look forward to giving up their day job to run their own business or may simply be happy to generate a bit of extra cash on the side.
Turning an Idea Into A Profitable Business
So many of todays successful businesses, started from humble beginnings. Take the popular Ella’s Kitchen brand of organic baby and toddler food. To try and improve the fussy eating habits of his young daughter, Paul Lindley produced a more interesting and healthy range of children’s food products from his kitchen.
Since it’s launch a couple of years ago Ella’s Kitchen has expanded to its own offices and is turning over more than £16 million pounds a year.
Or how-about Tony Caldeira who in 1991 at the age of 15 started selling cushions made by his mum on a market stall in Liverpool and has never looked back.
Today the business has 160 staff (I guess his Mum got to retire from the cushion making!), generates sales of over £20 million pounds per year and has a chain of outlets in the South of England, plus distribution offices in New York and China.
There is no doubt that both of these entrepreneurs will have worked hard and taken risks to get where they are, but a key factor in their success was the ability to produce great products to sell.
How To Create Great Products
All new products, whether they are a door-wedge or an iPhone, will pass through a design process before they are released onto the market. The process will vary depending on the organisation and complexity of the product, but essentially it can be boiled down to three steps:
- Discover – The ‘lightbulb’ stage where the product idea is generated
- Define – The refining of the idea to gauge whether it has the potential to be sold for a profit
- Develop & Deliver – Producing the product and working with customer feedback to continuously improve it
Discover – Generating Product Ideas
This is the fun part, but is often more tricky than expected – coming up with that unique product idea that will make you millions.
How you decide what sort of product to make will often depend on:
- Interests, hobbies and past-times
- Personal experiences, perhaps seeing or reading about a useful product in other countries or markets
- Education and work-experience
- Technical expertise
- Things that you use every day that you think you could improve on
Ultimately the product has to be something that people will want to buy… and people will buy stuff for a variety of reasons:
- Out of necessity
- For entertainment
- To save time or money
- For happiness and to make them feel good about themselves
Tapping into the minds of consumers and identifying the next must-have product is the thing of dreams for marketing departments the world over, but it doesn’t have to be that complicated.
Looking around, ask yourself the question – what sort of things are people buying at the moment, that I could realistically produce myself?
Some useful sources of inspiration include:
- Browsing social media and seeing what comments people are leaving on blogs, forums and Twitter (start with the SpringWise Ideas Database)
- What is hot on Amazon or Ebay?
- Browsing supermarket shelves, craft markets, shopping centres and other outlets
- Going into a newsagents and browsing through the magazines on offer – these tend to be targeted towards niche markets like fishing, home improvement, snow-boarding or classic cars and could reveal untapped opportunities
- Conversations with colleagues at work or friends in the pub, observations made by children
- Setting yourself a goal of reading something completely different and visiting somewhere completely different every week, so that you can acquire new perspectives
- Thinking about personal interests to figure out how you can enjoy them more
Brainstorming Tools & Techniques
Mind mapping is a great creative technique for pro-actively brainstorming product ideas. Here are some useful mind-mapping resources:
- 15 Useful Online Mind Mapping and Brainstorming Tools
- How to Make a Mind Map
- Using Mind Maps
Define – Refining The Idea To Gauge Potential
This is the first test of whether a product idea has the potential to make it onto the market and where the thinking begins to take shape around the practicalities and costs of product development, production, marketing and distribution.
For example, an idea formulated during the Discovery stage to produce mouse-shaped door-wedges may seem like a good opportunity based on an initial hunch (maybe you had seen something in the paper about rabbit-shaped door-wedges selling particularly well recently), but before you dive into the garage to dig out your woodworking tools, it is time to ask a few Dragons Den style questions:
- How much can a single unit be sold for?
- How much will it cost to produce one unit?
- How much will it cost to market and distribute one unit?
- What direct competitors exist in the market (those with the same or similar product)?
- What in-direct competitors exist in the market (those with products that could substitute your product)?
- What makes your product better than or different to others available on the market?
- How easy is it for other people to create similar products and join the market? What barriers can you put up to prevent them doing so?
- How many units do you think you will be able to sell every year?
- Is there the potential for repeat business? If so, how much?
Development, Production & Distribution
- How easy (technically) will it be to develop and produce the product?
- Who will do the development and production (yourself or another company)?
- How will you sell the product (mail order, through a website, at a craft market, through specialist shops)?
- Are there any health & safety or potential liabilities that could arise from your product (Children’s toys with small, breakable parts been a good example)?
Try not to spend too much time researching and planning or else you will lose the impetus to actually develop the product!
Instead use the Definition stage to weed out the really bad ideas, so that you don’t end up wasting time, money and effort trying to seem them all through. Think of the process as being similar to a 19th century Californian gold panner who uses a sieve to wash away all the mud, so all that remains are the small nuggets of gold.
The Definition process is the sieve and the nuggets of gold are your product ideas that have the most potential.
Develop & Deliver – Continuous Development & Selling To Test Demand
Satisfied that the mouse-shaped door-wedge product ticks most of the boxes, the next stage is to develop an initial version of the product (a prototype) and see if it can be sold.
The first lesson to learn when creating a prototype is to avoid perfectionism. People spend so much time trying to make their first product absolutely bang on perfect, that they end up becoming afraid to fail (which can even prevent them from starting at all).
Accept that the first prototype won’t be completely right, nor will the second or potentially the third – that is the whole point, this is a learning process.
Instead have some fun and take the opportunity to experiment with different materials, ingredients, packaging, tools, designs and innovations until you come up with the product that you think is right.
During the process of prototyping, you will also gain more accurate information for answering the questions in the Define stage.
Sell To Test
Don’t waste your time with surveys and market research panels – people are too polite to say they won’t buy your product and will unwittingly let you think there is a demand for it. Instead get them to put their money where their mouth is by asking them to buy the prototype there and then.
If customers are falling over themselves to get their hands on your product, then you must be doing something right.
If they decline to buy your product, then ask them why. Engage them in a conversation and find out whether they think it is too expensive, too poor in quality or just completely useless.
Try to sell to as many people as possible and use the opportunity to get valuable feedback which you can take back to the drawing board to improve your proposition.
How you get your product into the hands of customers is known as distribution. The mouse-shaped door-wedge has the potential to be distributed through a number of different channels:
- Selling in bulk to small retail businesses – Small, homeware shops would make good outlets. The shop owner might buy an initial sample and see how well they sell, before ordering more.
- Larger retail outlets – getting into the larger outlets like department stores and supermarkets will be more challenging, but increases the sales potential of the door-wedge.
- Craft fairs & car boot sales – taking a stall at a weekly craft fair or a car boot pitch will enable you to sell directly to customers and get their feedback for product improvement.
- Selling on the web, either through your own website, through an Ebay or Amazon shop or to be stocked on a the website of a large homeware online retailer.
- Inclusion in a mail-order catalogue.
- Walking door-to-door to sell directly to people in their homes – However, rather than cold-calling, it may be better to do a leaflet drop in an area one week. The leaflet will contain details of the door-wedge and will explain that you will be calling around the following week with supplies of the product for people who are interested.
Growing Your Business
The steps above outline at a high-level how to create a great product, but there is plenty more to learn about growing a business – certainly more than can be summarised in a single article.
So instead I’ve listed some key issues to consider when growing a product-based business and provided links to relevant resources.
The product may be a mouse-shaped door-wedge, but to prevent competitors from muscling in it needs a more user-friendly, recognisable brand name, such as SqueakyStops or DoorMouse!
However branding is not just about naming products, it also involves a whole range of factors such as marketing, user experience, customer service, quality and pricing.
In many cases the brand often becomes the most valuable asset in a business (e.g. Coca-Cola), so it is worth further investigation.
Whether you plan to sell your product online or not, having some sort of web-presence is an absolute must these days, as most customers and retailers will want to read about you and your company before ordering your product.
The type of web-presence you require will probably change as your business grows and there is a huge wealth of information online to help you determine what you need to do.
To begin with however, you may simply want to use a ‘click & build’ service like doyourownsite.co.uk or even just create a Facebook page.
You may enjoy making your SqueakyStops, but you may not be able to keep up with demand or you might find you need to spend more time selling and managing the business. This is the point where you need to decide whether to begin outsourcing the production or employing other people to help with the work.
- How To Outsource Manufacturing And Increase Sales
- How To Outsource Manufacturing To China
- Employing People Guide
Do you continue as a sole trader or form a limited company? How will you manage the accounts and pay taxes? Do you need to patent your product and could you license it out to a bigger company?
It seems like there are millions of questions to be answered, but fortunately there are plenty of useful business advice portals available to help, including:
There are further links to useful resources in this post: Who Else Wants A Profitable Sideline Business.
Creating A Business To Fit Your Lifestyle Needs
I started this post with some examples of entrepreneurs enjoying multi-million pound success with their businesses, but this may not appeal to everyone and it is important to have a business goal that fits in with your lifestyle ambitions.
Many people will already have successful jobs, but dream about a more rustic lifestyle; perhaps making pottery in a kiln in their back garden, rather than spending their days commuting or in meetings, suffering death by Powerpoint – so the thought of taking on employees would probably be the last thing they would want.
Other people will be nervous about the notion of outsourcing production to another country or filling in complicated patent forms. All they really want to do is spend their time making products they are proud of and earning a solid living.
This is absolutely fine and there are many people already running successful lifestyle businesses, who have purposefully kept them small to avoid a number of the issues of that significant growth can bring. The important thing is to make a start; because whatever your goals and ambitions are, starting a weekend business by creating a product to sell is the equivalent to planting the seed. Once you have a product to your name, it is yours to decide how big or small the business will be.