I would like to tell you a true story.
I had been working with a woman’s business center. One day the director asked me if I would talk to a customer of hers in another state. I told her I would be happy to offer her any help I could.
The next day, the woman called me and we had a long conversation. Basically, she was considering opening a store selling her baked goods, because all her friends were encouraging her to start a retail business. She was convinced that since everyone LOVED her baking, she could open a shop and the customers would simply flock through the doors.
Boy, I have to tell you, she reminded me of me. I had heard the same thing from friends I had. When I started asking my friends opinion about opening the coffee shop, encouragement was coming in from every direction.
I asked her who her target market was, and her answer was “Everyone”. She had never heard of anyone who did not like what she baked. I cringed at her answer, but I totally could identify with it as well. I felt like I was hearing a recording of conversations I may have had years earlier.
I thought” I“ had done my market research. In my mind, coffee shops had a great profit margin, and it was a no brain er that “Everyone” loved what I baked. I went to the library, took a look at the business section. There were tons of articles about how coffee shops raked in huge profits.
In addition to that, many friends and acquaintances assured me that “If you build it, they will come.” How could I possibly go wrong? I took the numbers about coffee shops to my class advisers, they took a brief look at it, nodded, and said it looked promising. That was it, market research – done.
The reality of the matter is, most often, people don’t go out of their way to do business with you. They may truly love what you do, however, the majority of us are busy, and even though people may love what you bake, if it takes much time to do business with you, they quite likely won’t.
The problem, is that to be convenient, you have to be in the right spot. We have all heard it, in real estate all that matters is location, location, location. The problem with that reality, is that location usually means big bucks.
If you are just starting out, unless you are independently wealthy, investing big bucks is a huge risk. My point here is that it is prudent to really have more than a hope and a prayer that your business will flourish. Please keep in mind that all those friends who are offering encouragement will not be putting their names on the dotted line, you will.
I guess you think that I am raining on your parade. Believe me, I am all about encouragement, as I have said earlier, if I can do it, just about anyone can. My point here is to follow the steps that help you avoid the pitfalls, and yes, signing a contact that will cost a small fortune is a big pitfall!
From my experience, I would want to advise you to truly take the time to identify your niche market. Being the best at something, is way better than trying to be all things to all people. That just makes you mediocre, and that is not the path to a successful business.
So……the “To Do” this time around is to realistically start your market research. The good news is that you probably don’t have to go to the library and start by looking us SIC codes, you can simply start by searching Google for keywords and the numbers associated with them. For example, if you are wanting to sell pound cake, using your Grandma’s favorite recipe, take a look at the interest in homemade pound cake.
There are a number of research tools you can use for that, Google “keyword research tools”. There are some free ones there and they will give you at least a good place to start.
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There are ways to get around the problem of location, and in the future, I will talk more about that. After making an almost fatal mistake, I was able to regroup, work like crazy to clean up the financial mess I had made, and live to sell another day, another way.