The last post in this series focused on refining your business ideas and choosing one to make a business. I gave you three questions to ask yourself to help you narrow down your ideas into one business plan. Hopefully, you’ve figured it out. If you are struggling to come up with an idea to go with, I also offer free email consulting. Just send an email to me at firstname.lastname@example.org with your brainstorming list and I will get back to you within 48 hours.
Before you get started on your business, there are a few key pieces of information you need to know to ensure your business success. Getting these 2 things figured out is crucial in getting a good start in your business AND staying focused.
You need to know exactly who your customers are.
You are probably thinking “How can I possibly know who my customers are when I haven’t even started?” Well, you don’t want to know their names, silly. But you do want to have a specific image of your ideal customer in your mind. Age. Male or female. Education level. Income level. Things like that. This is called your customer avatar. The more specific you can be, the better you can focus your business on your ideal customer.
You also need to know what problem you are solving for them. If you can provide a solution to their problem, it makes you a very valuable resource for them and they will continue to buy your product or use your service. Let me give you some examples to help illustrate the idea of a customer avatar and solving their problem.
Business: Providing Lawn Maintenance.
Customer: Elderly people with health issues.
Problem: Health issues prevent elderly people from keeping up with the lawn maintenance.
Solution: They hire someone else (YOU!!) to do it for them.
Business: Selling Hair Accessories.
Customer: Teen girls with pixie haircuts.
Problem: Few accessories for girls with short hair.
Solution: Provide unique, one-of-a-kind barrettes and headbands for them.
Knowing these two critical things, ideal customer and problem you are solving, will help you to focus your products or services and help you find customers. It will also help you when it comes time to write copy for your marketing materials and even your website.
Your pricing strategy is another essential element you need to determine before you start your business to ensure success. Your pricing should be competitive, meaning it’s comparable to other similar businesses. It should also make a profit, otherwise, why are you in business?
Checking out your competition to see what they charge is a good way to gauge the market. It gives you a range of prices to work from that you know customers are willing to pay. Don’t make the mistake, though, of setting your prices lower than everyone else. You may think that doing so will get your more customers. But, generally, when people see really low prices they tend to think of cheap or poor quality products and services. Instead, find another way to stand out to your customers, such as excellent customer service or great follow up.
For service businesses, you must also account for the costs of providing your service. For a lawn care business, for example, there are other costs you must think about. Equipment cost, maintenance, and supplies such as fertilizer, must be included in your pricing structure.
If you sell a product, you have to consider the production costs. How much does each part of your product cost and what is the total for one finished product? Don’t forget to tack on your markup costs (or the amount of profit you want to make on each.) If your headband with a daisy on it costs $1.75 to make, you can sell them for $2.75 and make a profit of $1 on each headband you sell.
Okay, now it’s time for some homework. First, your customer avatar. I want you to take some time and think about your ideal customer and use the worksheet below to create your customer avatar. This will be for your personal use. As you work through this series and create your business plan, keep your customer avatar handy. Tack it up at your desk in your bedroom or put it in a spiral notebook that you use just for your business.
Next, do some research. Get online to your competitors’ website to see what they are charging for their products/service. If it’s a business without a website or they don’t list prices, give them a call. You can either pretend you are a potential customer or you can just explain that you are a teen wanting to start a similar business and ask. More than likely they will want to help you. If you create a product, figure out how each of your products cost to product and add in your profit. VOILA! Your price is set. You will see a page in the download below that will help you with this.
In the full course that will be released later this year, we will go into greater detail on creating your customer avatar, setting your prices and more including how to use Google to help you develop business ideas, research competition, and your potential customers.
In the next post in the Teen Business Launch Series, we will be getting into what I think is the fun part. Marketing! You’ll be naming your business, coming up with a tagline that targets your ideal customer, develop an elevator pitch, your logo and brand messaging. We’ll also be working on marketing materials in the coming week (with a few surprise FREEBIES!)