Creating a New Market

If you are just getting started in creating a new business, you may be considering a product or service that has never been offered before. Perhaps it is a new solution to a problem. It may be a problem that customers are not even fully aware of yet.

This is a very challenging approach to creating a business, since the work is more than creating a business, product, or service. It is creating a new position in the customer's mind. It is essentially creating a new market.

The advantages of creating a new market are easy to see. If you are the first to establish your brand in he customer's mind, you may find that you have the branding power of Coca Cola, Kleenex, or Xerox. Until competitors rise up to capture some of your market share, you experience a type of monopoly. If the barriers to entry are high, you may sustain the number one position perpetually.

For the small startup business or solo entrepreneur, these opportunities are very difficult to find and execute. It may take many years of effort and awareness-building to make customers realize the value of a new product or service. Many startup business do not have the resources or financial backing to create a new market.

Competition allows several companies to build the market together. Customers see options, and this adds credibility to the product concept. It also pushes competitors to improve their products and pricing. If it takes too long for competitors to bring their products to the market, you may have trouble keeping your business profitable.

If you have a great idea for a new product or service that no one is offering today, here are a few options to consider:

1. Sell the Idea - Sell the idea to a company that has the financial resources to build the new market.
2. Get Venture Capital - Create a solid business plan and prototype and use them to get funding from venture capitalists. It will take serious financial backing and a top notch management team to see the new idea through to profitability.
3. Reposition the Product in Established Markets - Find a way that your product can be adapted to fit a specialized segment of an existing market. If customers already recognize the product category and their own need for it, it will improve your initial product sales.
4. Choose a Different Product - Many existing products and services offer great revenue potential. Pick a product or service that others have already proven successful, and work at doing it better than your competitors.

If you have a great idea for a new product or service, consider your options, your strengths, and your weaknesses. Consult with family and friends, and pick the option that is most likely to work for you.

Why Do You Want to Start a Business?

Many people dream of starting their own business. Some venture out on their own and find success. Others last only a short time. If you dream of creating your own business, start by clearly defining why.

1. To Supplement Your Primary Income
The lowest risk way to start a business is while you are working in a full-time job. You can earn extra money in your side business while working your regular job. If your business is successful, you may be able to quit your regular job and go full-time.

If your primary income disappears because you become unemployed, your own business may help carry you through. Some people will use temporary lay-offs as opportunities to focus on growing the businesses they started while they were working.

The drawback of this option is that it limits the types of business you can create. Make sure your side business doesn't conflict with your regular job. If your business requires customer contact during your normal working hours, you may not be able to swing it.

2. To Replace Your Full-Time Job
One of the riskiest ways to start a business is to replace your full-time job immediately. People who make the change quickly are typically able to fund their businesses for one to three years, allowing them time to become profitable. Funds may be a combination of savings, secured loans, unsecured credit, and venture capital.

Because the expectation for the quick start business is to become profitable as soon as possible and eliminate subsidies, it's important to create a solid business plan, hire the right people, and work on profitable growth. One of the most successful approaches is to buy franchise rights for an existing business. When you buy into a franchise, your initial investment is in buying everything needed to implement an already proven business model.

Although this is the riskiest option for starting your business, it is also one of the most rewarding, if your business is successful. If you are willing to work hard, to take sound financial, legal, and marketing advice, and to take a chance on your business idea you may be successful and make a better income than can ever be made as an employee.

3. To Create a Company and Sell It
Some people are less interested in running a business and more interested creating a business that they can sell. Companies may be sold to investors, such as private equity and leveraged buyout companies. They may also be sold to individuals who are interested in buying a business. In rare cases, these companies may be pursued by larger companies that are looking to expand their portfolios of products or services.

If this is the type of business you would like to start, be prepared to create a fully functioning, profitable business before handing it over to an investor. Your equity is built by your initial idea, your organization of the company, and the effort you spent gaining initial success.

Conclusion
Start with your reason in mind. If you plan according to the goal you have set for your business, you'll be off to a good start. Good luck.

Welcome to Startup Magazine

Thanks for visiting Startup Magazine. Stop by daily for tips, techniques, and inspiration for starting your own business and breaking through to successful operation. You'll find ideas for new business opportunities, tips for planning your startup, ideas for organizing and recruiting, and inspiration to keep you going when things get tough.

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