Small Business Primer - Part 1: What Business Are You In?

What Is Your "Product"?

After you’ve determined which industry you are passionate and have knowledge about, and the business model you want to pursue, you’ll need to develop at least one product idea.

Let’s take our previous example, Penguin Consulting. Though you may be forgiven for thinking that a Consulting company has no products, this couldn’t be further from the truth. In reality a Consulting company lives and dies by their products: knowledge and experience.

So, in the case of Penguin Consulting we have both knowledge of and experience in development: Web development, product and lifecycle development, database design and operation, etc. This will be our “product”, or offering to the market.

Who is your Target Market?

Having determined what our company is, and what it’ll sell, we need to move onto the really exciting stuff: delineating our client base.

The process you can use to figure out exactly who you want your target market to be is fairly simple. Ask yourself:

• Who do you want to serve?
• Who can you serve?

As before, when you start your business, it’s best to first think about what you want. Put aside all the financials, the dreams of big houses, big meetings and big cars, and just sit and think: if you could have any type of client, what type of client would you want?

Dream a Little...

Do you want to deal with Corporations or mom-and-pop shops? Do you want clients who desire quick turnarounds or do you prefer to take your time? Do you want clients who like face-to-face meetings, or would you prefer a long distance relationship? Do you want local clients or would you rather fly out to see them?

These are the types of considerations and questions you need to ask yourself in order to determine what you want. At the end of the day, you need to be able to define a fairly precise client type that you’ll pursue, because these are the people you’ll work with day in and day out. If you don’t enjoy being around them, you’ll simply burn out.

...then Take a Dose of Reality

The next step is to look at which types of clients are available to you. It’s all well and good to say you want to deal with large corporations, but what if you live in Sticksville (population: 3), and there aren’t any? The previous exercise allowed us to dream. This one allows us to get practical.

What types of clients exist in your region, or area of interest? Are these types of clients in the market for your type of product? If they are, are their needs already being thoroughly fulfilled by another company?

These are the considerations you should address at this point. After all, you want to be happy, but also have a reasonable chance of success. It’s pointless to launch a business where you will need to fight tooth and nail for every single client. It’s also rather unwise to think that companies who don’t need your product will buy it. In essence, you need to strike a balance between being happy with what you’re doing and who you’re dealing with, and your ability do actually do what you want to do with whom you want to do it with. Don’t settle for second best, but be willing to compromise in order to do what you love.

At the end of the day, you’ll want to set a good foundation, and launch into your business with a certain degree of peace of mind. You will never know everything going into establishing your own business, but the more you know and plan, the better prepared you will be.

Next, we'll look at the legalities of setting up your business, and help you decide which form you want your business to take. Don't miss it!