Did You Know That Each Business Start-Up Idea Falls Into a Specific Category?

Did you know that, 60% of small businesses fail in the first twelve months? This statistic is very discouraging for budding entrepreneurs that want to get started with a new start-up. Does that mean you need to squash your beautiful business startup idea that is starting to germinate? Far from it! You know there is a quote of Seth Godin that I love because it says it all.

Stop trying to find the formula that will instantly make your idea into a winner. Instead of being scientists, the best marketers are artists. They realize that whatever is being sold is being purchased because it creates and emotional want, not because it fills a simple need ~ Seth Godin

As with anything in life, there are simple steps and processes that you can take to increase the chances of success. The most important part of any startup idea is definitely the amount of research.

The Business Start-Up Idea 

As you very well know, any business starts with an idea. If you have not had a start-up idea yet it is a good time to give your imagination free reigns. Maybe you have a hobby and always struggle with a specific item – if you can come up with a solution for that specific problem, it would be a great idea. People are passionate about many things, therefore the best start up ideas are usually problem solvers.

Important here is to understand that all business opportunities fall into one of the following four categories.

1. Offering an existing product/service in an existing market.  
2. Introducing an existing product/service to a new market. 
3. Offering a new product/service in an existing market. 
4.  Introducing a new product/service to a new market.

So the first step is to look at the above categories and if you already have an idea categorize it accordingly. Once you have clarity about your idea, it is time for the next step… market research.

Offering an Existing Product/Service in an Existing Market.

If your business start-up idea falls in this category, you need to know that you will need a unique market penetration strategy. You will need to develop a strategy where you can gain a competitive edge in one or more of the four P’s. The four P’s are the following…Product, Price, Place, and Promotion. You will re-think your strategies very carefully because many times start-up entrepreneurs set their target on the lowest price point but find quickly that the price war is a difficult one to win. The better way is to concentrate on the uniqueness of your product may it be a better service, better performance, better looking, better functioning etc…

Introducing an Existing Product/Service to a New Market.

If your business start-up idea falls into this category, your product/service will definitely face stiff competition. If there are existing, services and you want to introduce the same type of service but to a different market you may find that you do not know enough about the new target market. In this setup, you will need to have a close look at the demographic/psychographic makeup of the new market you want to enter. Many times, there may be a new untapped market within the current market. Your best strategy here is to identify existing markets and pinpoint any gaps in the marketplace that you can exploit.

“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do.” -Steve Jobs, Apple Inc. co-founder, chairman and CEO

Offering a New Product/Service in an Existing Market

In this start-up model, you will create a new product/service and introduce it to an existing market. You need to know who the existing customers are and you have probable an idea that they will be very much interest in the new product/service. Your best course of action will be to do market research under the existing customer base to find out whether a new product/service will receive a positive welcome. It is also important to have a set budget and a timeline to introduce the product/service to the target market.

Introducing a new product/service to a new market. 

This category is known as high-risk, so starting a business on this strategy may prove to be very challenging. In the same breath, I must admit it can also be very exhilarating. It is also the least common business model to use as a new start-up. In this instance, you need to find a new market and educate your prospective customer about your product/service. If you are an inventor, this model will suit you perfectly. This model requires a lot of time but it is also the model with the biggest payoff potential. Your best course of action is to keep your expectations realistic and know that it will take time to make your mark and generate sales.

This is only a small part of the start-up process, but if you know in which category your business start-up idea falls, you can plan accordingly. I wish you all the best with your new small business venture.

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