By Dan Boudreau
When planning to start or grow a small business, it’s helpful to select the most important products and services to be the focus of your research and forecasting efforts. Faced with deciding which of a broad variety of products to offer customers, new owners will wonder where to begin. The following points will help you identify the most important products and services to go forward with.
1.Fit to Mission. Does the product fit your business mission and goals? Your business mission is to serve your customers. If your products don’t fit your mission, you risk confusing your customers and being less effective in the marketplace.
2.Profitability. Will the product earn you enough profit? If the product isn’t profitable, there has to be some other compelling reason to use it. Some products may not bring a high return, but help to attract customers that spend money on other products. Not all of your products and services need to be high producers, but you definitely want high producers among your offering.
3.Accessibility. How accessible is the product to your business? Access challenges can be a strength or a weakness. A product that is difficult to get can command higher prices and help to keep the competitors at bay. On the other hand, a product that is difficult to get might end up being too expensive for your market.
4.Competitive Advantage. How many competing products are already available? If there are a number of competitors, your product should be different from the others and have some competitive advantage that compels customers to buy from your business instead of the others.
5.Supplier Control. How much control do the suppliers exert over the product? A supplier who has a monopoly is likely to exert more control over prices and terms, whereas one with less control might be easier to deal with. Suppliers with exclusive products might bring more security to a small business.
6.Price to Customers. How much control over the selling price do the customers exert over the product or price? Some suppliers will dictate consumer prices; others will give you more leeway. You will want to assess whether you need pricing flexibility in order to satisfy your customers.
7.Scalability. Can you build or obtain the amount of product your customers are likely to order? If you are hoping to attract a large buyer, can you ramp up effectively to supply larger amounts when the orders come in? Can you maintain profit levels while producing larger amounts?
8.Distribution. Can you get the products to the customer in a timely, profitable manner? You might like to sell products in far off locations, but is it realistic? If you’re hoping to sell to customers in different countries, your ability to distribute the products will be a major consideration.
There are many more points to consider when accepting new products into your business, but the ones above will give you a great start on selecting which are the most important for business planning purposes.
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