Question: How should new products/services be created?
A) Make a novel untested product/service then find customers for the product/service?
B) Find a group of customers, find one of that group’s unmet need, then create a product/service to address than unmet need?
Reason: The development process of the product/service will take time irregardless of choice A or B. However, with choice B, the likelihood or having to rework the product/service to make it more closely meet the needs of the target market is lower. Also, with choice B, you have a better idea of the size of the target market. Having a market large enough to grow your business is very important. More on that below.
A great example of choice B is Girls Auto Clinic. Girls Auto Clinic is a brilliant combination of female-focused auto repair shop and salon.
Founder Patrice Banks felt what many of us feel when car issues come up:
“I felt like an auto-airhead. I hated all my experiences going in for an oil change, being upsold all the time for an air filter,’ she said. “Any time a dashboard light came on, I panicked.” – Patrice Banks, Girls Auto Clinic Founder
Of course many people come up with business ideas like how Patrice did: through personal experience. However, where most people fail is that their own experience might be too niche. In other words, the market might be too small. How do you know if your market is too niche? Market research. Market research is a process of analyzing factors such as demographics, purchasing habits, direct and indirect competitors, macro and microeconomics, and other elements. As much art as science, thorough market research is a critical step before moving forward with any concept.
Not recommended for small new businesses because of course with every controversial ad, there will be criticism. However, such a campaign will instantly give your brand more personality and fans may become even more loyal.
One of the key tasks for any startup is pitching your business. Whether it be to potential investors, lenders, future partners, etc. Conveying information compellingly is difficult so creating a narrative is helpful. As with any narrative, stories are best told with pictures.
Presentations with bullet points and lots of text are ill-advised…and some very influential people agree. Google CEO Sundar Pichai used only about 40 words over the course of 12 slides in his presentation at the company’s developers conference this year. One researcher concludes that the average PowerPoint presentation contains 40 words per slide. The slides in Sundar’s presentation mainly contained pictures and animations. The slides with text were only used to succinctly described the image.
This is because it is difficult for the brain to do two things at once: namely, read and listen. However, looking and listening is much easier.
In practice, one doesn’t always have the opportunity to present in person (or even over the phone). That is why it is important to have two versions. The in-person (presentation) version, and the leave-behind version. The leave-behind version has more text and information that you would normally speak to. The in-person version is the modern low-text version that you would present live. You get both for the price of one from me at extremely low prices. Contact me and let’s craft a beautiful, highly, persuasive pitch deck for your business.
According to a new Credit Suisse report, up to 25% of U.S. shopping malls may close in the next five years.
What are the reasons? Of course Amazon and online shopping is a major reason. However, another factor is mall overexpansion. Currently there around 1,200 malls in the US. Between 1970 and 2015, the number malls grew more than twice as fast as the population. As such, it is predicted that within the next 10 years, that number will decline to 900.
Of course brick-and-mortar retail stores will never completely disappear because of the needs listed above and because of the fact that humans are social by nature. Just the type and make-up of retail stores will change. Possibly pop-up stores (a strategy utilized with great effect by Halloween stores) will become more common?
What to do with vacant buildings? That’s a lot of land that could be used for other use. Maybe mall owners will lower their rental rates. In some areas of Manhattan, retail rents have declined 10-15%.
More housing? Closures from major chains like Macy’s and J.C. Penney are pouring up to 37 million square feet of space back into the market. That could reduce some housing costs. Although, generally more expensive housing markets have greater discretionary spending which is often used for shopping. Also, the time and cost to demolish existing structures, rezone, and rebuild into residential properties along with its infrastructural linkages is not insignificant.
Some mall owners have indicated that vacant properties will be renovated and updated in efforts to attract new tenants and raise rental rates.
What to do?
Who knows that the future will bring but keep in mind that juggernauts like Walmart, Macy’s, and Sears are affected. So starting a service or online store that doesn’t compete with what Amazon sells is a safer option. Brand your own product (e.g. Bonobo, Dollar Shave Club) and controlling your own distribution is another option (of course be aware of knock-offs). B2B businesses (e.g. no one buys industrial components at malls) is insulated from mall closures.
Services such as dentistry, restaurants, car mechanics, large difficult-to-ship products such as mattresses, etc. will remain (so far) an insulated industry.
Analyses such as what I have done above is a small and cursory part of the industry/market analysis and strategy consulting services I provide to clients.
Amazing resilience and determination.
I was chatting with my buddy who is the VP of Product at MomentFeed, an online customer experience management platform for multi-location brands, and we talked about The Hard Thing About Hard Things a book by mega-investor and venture capitalist Ben Horowitz.
Entrepreneurship is not for everyone. There are many very tough decisions with no “right” answer. As such, I tell a lot of my clients that entrepreneurship isn’t for everyone. To the many up-sides, there are many down-sides that unless entrepreneurship is a calling, can be too much.
In The Hard Thing About Hard Things, Ben Horowitz, cofounder of Andreessen Horowitz and one of Silicon Valley’s most respected and experienced entrepreneurs, draws on his own story of founding, running, selling, buying, managing, and investing in technology companies to offer essential advice and practical wisdom for navigating the toughest problems business schools don’t cover.
His advice is grounded in anecdotes from his own hard-earned rise—from cofounding the early cloud service provider Loudcloud to building the phenomenally successful Andreessen Horowitz venture capital firm, both with fellow tech superstar Marc Andreessen (inventor of Mosaic, the Internet’s first popular Web browser). This is no polished victory lap; he analyzes issues with no easy answers through his trials, including demoting (or firing) a loyal friend;
whether you should incorporate titles and promotions, and how to handle them;
if it’s OK to hire people from your friend’s company;
how to manage your own psychology, while the whole company is relying on you;
what to do when smart people are bad employees;
why Andreessen Horowitz prefers founder CEOs, and how to become one;
whether you should sell your company, and how to do it.
Filled with Horowitz’s trademark humor and straight talk, and drawing from his personal and often humbling experiences, The Hard Thing About Hard Things is invaluable for veteran entrepreneurs as well as those aspiring to their own new ventures.
An eye-opening, sobering, and inspiring read. Recommended for anyone interested in business.
Sometimes my clients ask for a business plan but aren’t yet seeking funding or aren’t beyond the ideation/conceptualization stage. This is where a business model is helpful.
“I have an idea for a product/service. How do I monetize?”
At this stage, you don’t need to exactly know the details of marketing strategy, distribution channels, location, etc. unless it is crucial to your business model.
At the ideation/conceptualization stage, you need to know who your market (i.e. customers) is, growth rate of the industry, who your competitors are, the major costs to bring your product/service to market, and any other major hurdles (e.g. regulatory) that might be a barrier to entry. Business models are 30,000 foot views for seeing if the business is feasible and viable. Why decide on the color the napkin if you’re not sure if there’ll be a wedding, right?
Once we have a good understanding of IF the business is likely to succeed, then we can investigate further and do a feasibility study. Feasibility studies go even deeper to include details of the operation, marketing, product/service, and other pertinent information specific to the industry/sector that your company will occupy. Feasibility studies can be easily adjusted into a business plan by adding revenue projections and investment asks.
Business model should not be confused with revenue model. Revenue model is a piece of the business model. In other words, how the company generates revenue: production, subscription, advertising, commission, etc.