Before You Start a Business, Be Sure You Have a Good Idea
A number of years ago, Saturday Night Live did a sketch about two guys who started a cellophane tape store in a shopping mall. That's all they sold -- cellophane tape.
Opening Day came and the business partners were excited. They thought about all the money they were going to make. The only person who came into the store wanted to change a dollar bill.
There were several reasons for their failure. First, mall rents are expensive and tape sells for a pittance. They would have had to sell tens of thousands of tape dispensers every month just to break even, let alone make a profit.
An obvious reason for the inevitable business disaster is that a roll of tape lasts a long time in most businesses and homes. If you sell houses or cars, that's not a problem. But retail stores usually must rely on having repeat customers who buy from them frequently.
Third, this tape store was doomed because tape is available practically everywhere -- in drug stores, grocery stores and big box stores, to name a few. People had no reason to make a trip to the tape store when they ran out. They could even go to the local convenience store or pick it up when they go out to buy other items.
Keep this lesson in mine when you decide to start a small business. You don't want to waste your time, money, sweat and emotions on a bad idea.
Consider these questions before you invest any of your time and hard-earned money:
Who are your potential customers? You need to be clear about this.
Is somebody else already filling this need?
What will your profit margin be? Will there be enough profit to make it worth your time?
What is your competitive advantage or unique selling proposition?
And finally, do you have enough capital to start and sustain the business in the early stages?
Once you have taken time to consider and ask these questions, you will have a better understanding of how viable your small business or home business might be.
