New product development is a complex and variable process. This flowchart provides a general macro view of the new product development process. Each decision and process step is an entire field of study onto itself with significant details and nuances beyond the scope of this flowchart. Please note, every decision and process step may require significant costs and expenses.
This process is applicable to many products. For example, in 1920, candy store owner Christian Kent Nelson, invented an ice cream brick with chocolate coating. Because he did not have the know-how or means to mass produce his invention, he secured an agreement with local chocolate producer Russell C. Stover, of Russell Stover Candies, to mass-produce them under the new trademarked name “Eskimo Pie”. The dessert was rebranded to Edy’s Pie in 2021, because the original name contained a derogatory term.
Welp, there’s no need to put lipstick on a pig. Today’s GDP data released by the US Bureau of Economic Analysis showed that real gross domestic product (GDP) decreased at an annual rate of 32.9 percent in the second quarter of 2020, according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 5.0 percent.
One thing I learned while working with my client KiloNiner several years ago is that pet products were largely recession-proof during the 2007-2009 recession. This is because people view their pets as family members so cutting back was avoided. There are many other businesses are that recession-proof as long as adjustments are made to accommodate social-distancing requirements:
Repair / maintenance services: People will still need their plumbing to work, their lights to turn on, and their car engines to run
Dry cleaning / laundry: Laundered clothing and materials will always be needed as long as people wear clothes and don’t have in-house machines. Dry cleaning for clothing might decline as formal wear is reduced but will not go away as people still wear jackets, etc. on occasion.
Professional services: Accountants, lawyers, and other administrative professionals still needed for the economy to run.
Funeral / Memorial services: A natural consequence of life is death. Particularly with the unsettlingly high mortality numbers associated with COVID-19, demand will likely be high for a very long time.
There are many more industries and even sectors/value-chain-links within floundering industries that are somewhat insulated from recessions. Your Startup Guru provides industry/market research as well as a wide range of other services for businesses to help navigate this turbulent economic climate. Contact us and let’s figure out a plan for you.
The Emergency Economic Injury Disaster Loan (EIDL) application from the Small Business Administration is fairly straightforward.
If you need assistance in filling it out, please contact me today as funds are limited and applications are coming in quickly.
4/16/2020 UPDATE: A loan officer from the SBA called me today to let me know that they will send an email with a .gov link (https://covid19relief.sba.gov/#/ do NOT click on any other URL extensions as there are many scams out there). Once I clicked on that, I resubmitted the same application which then takes me to the approval process.
You have probably noticed the deluge of advertising that is targeted to the new reality of being at home. This is obviously a response to the global pandemic we are all being affected by. The following is a breakdown of what is happening and how your business can harness the post powerful trait: adaptability.
Adapt Through Marketing Strategy Marketing
Aired prior to the COVID-19 crisis but replayed recently Campbell’s realized that people are stockpiling canned food. Set to a wholesome and nostalgic soundtrack without pandering to panic buying, they capitalized on an opportunity to remind customers of a classic pairing. On a side note, the music choice was oddly relevant — Thank You For Being a Friend was the theme song to the ’80s sitcom The Golden Girls and the elderly are among the most vulnerable to COVID-19.
Also, more people are telecommuting and are realizing their home computers might not be suitable for work so Dell aired a commercial for one of their newest laptops. Peloton, home office chairs, etc. are all advertising the benefits of being healthy and productive at home. Also, mental health app Talkspace, Delta Airlines offering free flights for medical volunteers, online education, bidets, and more are using this opportunity to advertise their products and services.
Adapt by Seizing the Opportunity
When disruptions happen, it is important to consider alternatives in order to adapt to the new environment. I have advised a new restaurant client to pivot their business model from a brick and mortar location to a commercial kitchen or food truck and adjusted their ad hoc financial projection model to reflect the pivot. Of course, depending on the stage of a business pivoting to a commercial kitchen or truck is not an option; which is why I always provide tailored consultations to each client.
Many people have a lot of downtime now with not having to go into work. It is a good time to take a break from watching the news and start mapping out the idea that you’ve been mulling. Who is your target market? Where will you be located? What are your startup costs? These are all questions you should know the answers to or be actively seeking if you are serious about taking the next step. If you do not know the answers or want a second opinion on, I always provide free consultation so send me an email. Afterwards, those pushup challenges on social media are also a good healthy distraction too from all the dire news.
These are better practices than gouging prices like that hand sanitizer guy.
Often entrepreneurs come up with their business idea because of their own personal experiences or that of someone in their circle of friends & family. This is a great strategy but sometimes doesn’t tap into a market large enough.
In episode #850 of Planet Money, The Fake Review Hunter the hosts interview Tommy Noonan, creator of SupplementReviews.com. SupplementReviews.com is a highly popular website that provides unbiased user reviews of health supplements. However, Tommy soon found that there were reviews that were suspiciously positive. Because Tommy’s entire website was based on authentic user reviews, fake reviews became an existential threat. After a lot of research, he found that some of these reviews were being written by the supplement companies themselves. He uncovered so many fake reviews that he started noticing a pattern; almost like a modus operandi. They were often single product/brand reviews, used fake pictures, lots of reviews in a short period of time, and/or only had one review. Sometimes the “reviewer” would give positive reviews for one brand and negative ones to competing brands.
This is when Tommy had his a-ha moment. If his website had fake reviews, others would also probably have them too. So he created another business that aligned with one of the juggernauts of the internet, Amazon. Tommy’s site which uncovers fake reviews is called ReviewMeta.com.
How to find a need
As mentioned at the top of the post, most rely only on their personal experiences or that within their network. Sometimes the need is obvious. For example, at a 7-Eleven in Shirley, New York one 7-Eleven sells more coffees than any other franchise in the US; all because of one store manager than knows virtually every customer’s name and greats them. No special location mojo or customer flow algorithm, just old fashioned customer service. You can read more about it in my post Competitive Advantage and Coffee.
Other times it is not that obvious. In that case, you have to hustle in a different manner. How do you do more “work” when you’re already working to the bone? Find efficiencies: know your customers, know your competitors, lower your expenses, by working to learn more doing more research in episode #700 of Planet Money, Peanuts and Cracker Jack. In Boston’s Fenway Park, Jose Magrass is the top seller. One year, on opening day he sold 500 hot dogs, $2750 worth of hot dogs in a single game. In fact, Jose has been the top seller for over 5 years. Part of his secret? He has a spreadsheet where he analyzes many factors beyond just the weather such as what his competing vendors are selling and what fans are likely to purchase depending on the price of their seats. For example, behind home plate diet coke sold better because possibly that is where the “vain people” sit. That kind of analysis is impressive.
Excess inventory, cost management, and other issues are a reality for most businesses. When uncontrolled, a business can face inadequate cash reserves and even bankruptcy.
To mitigate these issues, proper industry and market research coupled with financial planning for contingencies is crucial for any business. Whether you’re in the ideation phase or are already up and running, knowing how much to allocate to the various activities a business engages in is difficult so contact me and let’s create a strategy that works for your business.
Last week a client asked me about the Lean Startup. As a small independent baker, the did not Learn Startup methodology didn’t really meet his needs. Actually for many small businesses, they’re already utilizing some of the Lean Startup’s principles: split testing (e.g. which new cupcake idea is selling better), pivoting (e.g. advertise better selling new cupcake), build-measure-learn (e.g. ask customers what they like about each cupcake, why, etc. then adjust the recipe if needed).
The Learn Startup is more applicable to large/new & complex products and/or services. When you have hundreds of ideas, tweaks, iterations, it can very easy to get caught-up in the labyrinth of product/service development. Essentially, it comes down to starting with a minimum viable product (MVP), have users play around with it, gather data on (i.e. with actionable metrics, interviews, use studies, etc.), decide on which steps to go next. This measured, calculated, and insightful process prevents over-developed products/services that do not necessarily have a market/meed a need.
As mentioned, the Learn Startup method might not be useful for all entrepreneurs but if you are in the processes of developing a large/complex product or even a brand new/novel product, it might be worth your time to check out this book and install some informational gathering and pivoting processes to make sure that it closely meets a market need.
One of the services we offer is strategy consulting. However, the name is quite vague so what is strategy consulting? It is a lot of things. It varies by the needs of the client. Some clients need help developing an overall strategy for the business.
Say they have a product but not much else. So they need everything from naming of their product, research on where to sell their product, team building, etc. Naming might require a psychographic analysis of branding.
If they are a little farther along, it can be an audit of what they’re already doing, or analysis of where to go next. A business might be looking at weighing the pros and cons of expanding to a new market, introducing a new product, do a product overhaul, etc. Product overhaul might require a net present value calculation of multiple alternatives.
Every situation is unique so contact us and let’s figure out what you need.
A situation in which an entrepreneur starts a company with little capital. An individual is said to be boot strapping when he or she attempts to found and build a company from personal finances and/or from the operating revenues of the new company.
Most startups do not have a bunch of cash laying around. So businesses have to make due with what little they have. I often tell my clients that as the CEO/Founder, they are also the janitor. One potential client wanted to hire a marketing manager for her startup. Hiring a marketing manager was vastly beyond her revenue allowance. She should have allowed me to consult on how to manage her own marketing campaign; then she could’ve saved a fortune by being her own marketing manager.
The temptation to abandon bootstrapping is strong especially when investors come knocking. One of my clients attracted large investors with a business plan I had prepared for him. Initially, I budgeted a modest salary for him in the financial projection. He saw that there was a good amount of retained earnings (something investors want to see), and had since budgeted a larger salary for himself. I had to tell him to reduce his salary. I am not alone in emphasizing this sentiment:
A red flag goes up for Mark [Cuban] when a Shark Tank contestant says that he’d be comfortable with a six-figure salary. Ultimately, Mark and all the other sharks walk away from the deal.
Serial entrepreneur Neil Patel, founder of Crazy Egg and KISSmetrics, reflects on how glad he was keeping a $5,000/mo. salary even after raising $4,000,000 in seed and series A rounds for KISSmetrics.
I advised my client to pay himself less and take in dividend income instead because it is taxed at a lower rate. In business, cash is king and the CEO doesn’t want to be the kingdom’s worst drain.