Ms./Mr. Entrepreneur, have you made any decision on the kind of product you will produce and/or sell?
In the last column, we discussed one possible product — food. Everybody needs it. Everybody wants it. Everybody must have it. However, too much of anything could have not so desirable side or after effects. Not many food businesses are successful. By the way, Triple V is up for sale.
Jeff Taylor, founder and chairman of Monster.com, opines in the January 2003 issue of Fast Company: “We all need to go into the corn-storage business. By that I mean deve-loping ‘silo expertise’ in emerging business areas — such as health care, government, biotechnology and pharmaceuticals — that haven’t gotten much attention in the past five years. Those are the places where money is still being spent.
“Call them ‘silos’ or ‘niches,’ ‘business units,’ ‘communities’ or ‘channels.’ I like ‘silo’ because it represents a harvest. The marketplace in 2003 is more specialized, competitive and focused. If you want to harvest revenue, then you’ll have to get into the silo business. You’ll have to build 20 of them, each with a different expertise. Then, depending on the size of your business, you could make millions in one of those silos and substantially increase your revenue productivity.
“What does this mean for each of us? We can’t be generalists anymore. If you want to have a chance, you need to be a specialist. Be bold about your industry or niche expertise. If you’ve been in pharmaceutical sales, trumpet your expertise in the industry, not just your sales skills. You need to become a silo yourself.”
The question now is how to determine your very own “silo,” that product that will catapult you to success beyond your imagination. Don’t laugh now. Aim high. You don’t go into business just to earn money for your next meal, do you? So you need a product that will help you not only to sustain a comfortable lifestyle, but also to help you achieve psychic and material abundance.
You are looking for a rare product that will satisfy the needs of your customers. That is, a product that your customers are willing to buy and able to pay for. Have you ever experienced walking around a mall or along a street, then your eyes are suddenly fixed on a particular item in a store. No question asked, you buy it even if it wrecks your budget or you find no immediate use for it. Basta. Or you look at it and exclaim: “I’ve been looking for this product for a long time now. Eureka, I found it!” You want a product or service that will elicit such reactions from your customers.
It should not be just another bag or umbrella or car or dress or pots-and-pans or electronic gizmo. It should answer a real need of your customers at the same time it should be unique and different from all the bags or umbrellas or cars or dresses or pots-and-pans or electronic gizmos in the world or, at least, in the cluster of stores you are located.
This is where you need to do a little market research before you take that plunge into the wonderful world of entrepreneurship. You need not hire a professional market research company. They’ll cost you an arm and a leg and their process takes time. There are other references available for you, such as the National Economic Development Authority (NEDA) or the Department of Trade and Industry (DTI) or your local government business office. They would have statistics upon statistics on the business situation here in our country or your locality. Seek their expertise and advice on what industry and product you could explore.
The business section of our favorite The Manila Times will also tell you about the business environment, the players, the goings-on, the active products and services and many others.
You also need to study the law of supply and demand. Whew! Economist Jimeno Damaso, in his book How to Start Your Own Business, explains its dynamics as: “if the quantity supplied is greater than the quantity demanded, the tendency is for the price of the commodity to go down, and vice versa. Prices are signals that direct the behavior of both buyers and sellers. A rising price could look good to a seller, but not to a buyer. On the other hand, decreasing prices benefit buyers who can buy more commodities given a certain level of income, but may discourage sellers who will view such prices as signals of less profits for them.”
Simply put, you need to have a product that is not so common and oversupplied such that the only way to sell it is to bring down your price to a level that might not be profitable anymore. Or you might end up with a “Warehouse Sale. Everything must go before we go.”
Jimeno adds that ability and willingness of both buyer and supplier are other important considerations in supply and demand. What would your customers be willing and able to pay for your product? How often would they buy it? Are they happy with their current product? Would they be willing to make a shift to your product? What differentiates your product from a present product?
You can do your own market research by asking similar questions and more. You need to identify your target market in order to do this. Or your intended business location. Then you can do your own research. Walk around, talk to people, ask their opinions, seek their advice. This is better done as foresight before you start or if you are contemplating your current “silo.” This is harder to do in hindsight when you have already lost your shirt.
When you have acceptable answers to all your questions, then we can proceed to other key decisions for you, Ms./Mr. Entrepreneur. Join us regularly every Monday as we continue our Journey on Entrepreneurship.
Let’s hear from Alrey Galang of Parañaque (alrey888@yahoo. com):
“Glad to see another fiery writer on entrepreneurship online. Writers like you on this subject inspires the young and not-so young to go into the jungle of owning-your-own-business.
“Spending money in the Night Market University can be really more fulfilling and experiential compared to the comfort of AIM’s SGV room or any of their newer rooms … and having somebody else pay for your tuition. You’re right! It can indeed be fun and gratifying specially after figuring out how to rectify each and every mistake you make … for the observable ones.
"Paying P2,500 a night for a stall can still be viable (even with a minimum of 10-percent net profit) if the buyers come in hordes. At that rental rate, I guess you should be selling some P8,000-10,000 a night. And this means you must have a very, very attractive product or set of products that those young people (most of them work at night in the vicinity) would want to part their money for. So that means you should get at least 80 customers each buying an item worth an average of P100.
"With those hordes of people at the night market (specially on Saturdays) and many of them coming from the A, B and upper C market levels, you should be able to make it. However, I have no idea what kind of gift items you are selling.
"I do agree with you that certain buyers’ motivation can be emotional particularly those whom the sellers are intimately acquainted with. Emotional selling can be effective in the personal selling profession where a salesman calls on prospective customers. In the retail business … hmm … I guess it can work too if you put up a sign in front of your stall that says “Buy a P100 gift and give a Payatas child a happy Christmas. Each purchase entitles you to one ribbon with your name on it and shall be handed over to a child. Be blessed this Christmas!
"And that may mean you’ll donate a portion of your 10-percent profit to charity; but you must ensure that you keep your investment intact, earning a bit and enjoying the whole experience of being a charitable entrepreneur!"
Moje Ramos-Aquino is president of Paradigms $ Paradoxes Consultants and can be reached at email@example.com.