My daughter has realised what took me decades: you don't get wealthy working for a salary. She put herself into debt establishing a business selling body lotion products and a few other things like hand bags, men's shaving creams and gift baskets.
Every second Sunday we'd load my SUV with her three tables, plastic containers full of lotions and potions, cash float, and off we'd head to the Todd Mall Market (in Alice Springs, Central Australia). I'd look after grandson Tory while she raked in the money.
There's a solid, but intermittent demand for her products. She'd make a reasonable turnover every Sunday, but between markets, sales were limited to the odd returning customer. Not the stuff that dreams . . . or millionaires are made from.
Without a shop or a daily presence, it is difficult to sell anything. Additionally, who comprises the market? Is it the hundreds of thousands of tourists who stream through Central Australia every year, or locals who want to get rid of dry skin, buy presents, or just pamper themselves with a new product?
When my daughter asked me whether she should set up a shop, I was mindful of the 80% of businesses that fail during the first year; that it often takes businesses two to five years of losses before they see a profit; that a rental contract for three years would still need to be paid despite insufficient income. Naturally, I was seen as an obstacle to progress.
My advice to my daughter was to do some research . . . find out whether the products she sells are in sufficient demand to earn an income that will cover fixed and variable costs and result in a reasonable profit (at least equivalent to what she would earn on a salary).
Common sense and many marketing people tell us we need to do a feasibility study or at least do something to gauge product demand before sticking out our financial necks.
Among the many ways of identifying customer demand is to measure the degree of interest in one's articles. This has worked for me and could work for my daughter, Meredith.
Apart from being involved with fora and listening to the questions people ask and the needs they have, “I have very dry skin, do you know of a lotion that would help?", articles and the number of times they are read can give a good indication of interest. That might not be demand, but interest can lead to demand. Here's an example. Recenty I posted three tutorials about letter writing on Ezinearticles.com which were about:
- Parts of a letter (140)
- Writing business letters (109)
- Format of business letters (66
Within a day or two, the numbers of people who had read my articles were those in brackets above. What does this say?
There is more interest in people who want to know the parts of a letter than there is in people who want to know about writing letters or formatting letters. Big deal. How does this help me gauge demand?
It clearly doesn't tell me that there are a maximum of 140 people who will buy my soon-to-be-released ebook about business communication. But, it does tell me that there are 140 people who might be interested. Add that to other research, like the dozens of people who email and ask if I have an ebook about business communication and the figures start to look good. Do a bit more research with search engines etc and it looks even better.
When people read articles in which they are interested, they are part of a potential niche market. You can take advantage of this to determine what the potential is for a product or service you are introducing. On its own, it's not totally reliable, but with other data, it can be a valuable asset.
When you are planning your next market feasibility study, use the traditional methods AND submit one or more articles that will give you an indication of interest. If you do that, you'll have another indicator of whether you'll make a profit or keep feeding money into a lost cause.
Psst . . . Anyone need some butterscotch hand cream . . . or perhaps some lip balm?
Copyright 2005 Robin Henry
Robin Henry is an educator, human resources specialist and Internet marketer whose products help small businesses and individuals improve performance by accessing smart technology, smart processes and individual development. He runs his business Desert Wave Enterprises from Alice Springs, Central Australia and can be found at http://www.dwave.com.au/affiliate or http://www.winagovtjob.com