Mistake-Proofing Your Start-Up Business

By Jay Arthur

With so many people out of work during this recession, it should come as no surprise that many are thinking about starting their own businesses. And with so many jobs moving offshore, even people who are still employed might consider starting a business as a back-up plan. Even if you’re the owner of a successful start-up, the recession might have you worried. So how can long-standing business owners and first-time entrepreneurs survive these tough times? There’s an easy way to mistake-proof any business - all it takes is a little time using free online tools and search engine research with Google.

Mistake 1: Not Listening to the Voice of the Customer: Most entrepreneurs become enchanted with an idea and pursue it without thinking it through. They end up with a garage filled with unsalable merchandise and wonder what went wrong. Others open a store and name it something cute, like a hair salon named Curl Up And Dye. Or they start an Internet business but don’t bother to understand what customers really want. Why do they fail? The answer is simple; they didn’t understand the “voice of the customer.” Businesses large and small can collect and analyze the voice of the customer to understand what customers want and how to deliver it. Toyota uses this to design better cars, and you can use it to design a better product or service.

First, figure out where the crowds of customers are going and then get in front of the crowd. In the old days, this would involve lots of market research, focus groups and money. Today, these answers can be easily found on the Internet for free with Google’s key word tool.

Let’s say you want to start a pet food bakery that makes healthy treats for dogs and cats. Just search Google’s keyword tool for “pet bakery” and “pet food.” You’ll quickly discover that there are over 500,000 searches a month for “pet food” but only 8,000 a month for “pet bakery.”

There are also 33,000 searches a month for “wellness pet food.” From this one might conclude that “pet food” is too broad and would have to compete with the big chains; “pet bakery” is too narrow; but “wellness pet food” might be just the niche to explore because these customers are probably willing to pay a premium.

Mistake 2: Not Speaking Your Customer's Language: As learned from Mistake 1, customer language can differ from our own. Based on the search terms above, it might be smarter to name your store “Wellness Pet Food” (customer language) instead of “Bow Wow Biscuits” (your language) because that’s what the crowd wants. Don't paraphrase (using healthy instead of wellness); use the customer's exact words. Then check domain name availability for “wellness-pet-food.com” or “wellness_pet_food.com.” If it's available, register it (try a site such as www.GoDaddy.com); if not, try adding other key words likely to attract customers such as your location.

Be aware that Google cannot identify compound words, so registering a site like “WellnessPetFood.com” won’t be as effective as “Wellness_Pet_Food.com.” Separate the words with a dash or underscore to improve the site’s search engine ranking.

This "get in front of the crowd" strategy also works for service businesses. Let’s say you are a hypnotherapist in Denver with “HypnoDenver.com” as your site. Many other hypnotherapists in town also have hypnosomething.com as their site name. What are prospects searching for? They don't want “hypnosis;” they want to “stop smoking” or “lose weight.” Domain names like “Stop-Smoking-Denver.com” and “Lose-Weight-Denver.com” would be a great start.

With more than 100 million Internet users in the U.S. and billions of Internet-capable cell phones, no business can afford to ignore the power of the web. Even if you don’t plan on having a Web site, you will want to own the domain name to prevent others from using it. And if the business succeeds locally, having the domain name will make it easy to expand into a regional, national or global Internet business.

Mistake 3: Not Making Your Product or Service Better, Faster and Cheaper: Too many entrepreneurs try to enter an already crowded market. Search the Internet for your product or service to find out how many competitors are out there. When searching for the key words, "pet food Denver," Google finds 726,000 results. "Wellness pet food Denver" yields 149,000 results. If Google reveals too many competitors, consider another line of business. If Google reveals no competitors, that can be just as bad. Someone, somewhere should be offering a similar product or service. If not, there are no customers.

“Pet food” for example, is crowded with low cost super chains. From the voice of the customer perspective, customers want you to be better, faster and cheaper than the competition. Are you more innovative? Do you provide better customer service? Are you more effective and efficient? When customers can't distinguish one business from another, they default to the familiar or low cost one. If you’re not sure what customers want in a particular product or service, start by asking your friends, family, neighbors, and even people on the street. Capture their responses. In general, are they saying:

  • “I want better ________ (e.g., pet food).”

  • “I want cheaper ________ (e.g., cell phone service).”

  • “I want faster ___________ (e.g., healthcare, service, delivery, repair, etc.)

Then ask: “What is the competition offering (better, faster or cheaper)? What can we do differently?” If you can’t answer these questions, neither can your customers.

Mistake 4: Not Testing the Business Concept: Once Google has revealed what customers want (in their language, not yours) and you’ve identified a unique value proposition from the voice of the customer (better, faster or cheaper), it’s time to test the concept. For this, Google offers another powerful tool: Adwords. Google makes its money by putting ads around its search results. Many entrepreneurs use Adwords to test business and marketing concepts before they throw a lot of money at it.

Tim Ferriss, bestselling author of “The 4-Hour Workweek,” used Adwords to test various titles for his new book. He bought pay-per-click ads using various titles (Adwords will alternate them for you) and each ad took the Internet user to a different Web page about the book. Ferriss let the “wisdom of crowds” choose the best title for him. All of this research might take a few weeks and a few hundred dollars, but it’s a lot cheaper than wasting your hard-earned money on a doomed startup.

Mistake 5: Not Bootstrapping the Business: Most people start looking for a "business loan" (3,350,000 Google searches) before they think about a "business plan" (1,500,000 searches). Entrepreneurs don’t always need a lot of money to get started. If Mrs. Robin Andrew's third grade class at Pelham Elementary School in Pelham NH can start The Bow Wow Biscuit Company, you can too.

If the business is a product, don't make 10,000 of them. Put up a Web site; bake a few in your kitchen and sell them online or give away free samples to test the response. Or make a prototype and get people to try it and provide feedback. Post-it™ notes are a classic example of this and look at how successful they are. When customers start clamoring to buy your products, then get money to do a production run.

If the business idea is a service, print some business cards (carefully crafted with the crowd's keywords and phrases) and pass them out at local business meetings. This is how entrepreneurs bootstrap businesses that grow. It's also how they avoid sinking huge sums of money into bad ideas. This “crawl-walk-run” strategy works as well for new businesses as it does for new babies.

If the first business idea doesn't click, try another one. Walt Disney went bankrupt several times before succeeding … but then again, he didn't have Google. Good luck with your start-up!

Read other articles and learn more about Jay Arthur.

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