Investigate The Market

You have an idea, great! But now what do you do?

Begin by investigating the market for similar products and trends that will affect your small business. You need to know if your great idea is a want shared by millions, thousands, or just a handful of people.

You need to look into other small businesses that produce similar products or services, and ask yourself, “Can I compete here?”

To begin, look at these 4 important factors to understand the market and where you can fit in it.

1) Demand:

How many people want your product and how bad do they want it?

It's important that your product/service fits a common need or desire. Ask yourself “What problem does my business solve for people?” Then find out how many people have that problem.

2) Economic Pressures:

Can your customer base afford to buy your product, is the market trending upward, are people looking to spend money?

By understanding the pressures put on your future customers you can understand what they are willing to buy.

3) Location:

Who is buying your product? Is your customer base a global fan club, or is it a tight knit community that lives within 15 minutes of your store?

Just like understanding the economic pressures put on your customers, if you understand their location you can tailor your marketing, shipping, and overall business format to fit that need.

If your customers live nearby you could advertise on billboards or by sponsoring your local high school. But if your customers live thousands of miles away your high school won't help much.

4) Competition:

Are other companies producing a similar product? Can you sell your product at a lower price, if not, is your product unique enough to steal other companies' consumers.

If your market is oversaturated you will have to work really hard to let your consumers know why your product is better.

On the flip side if your product opens a whole new market you will need to convince your customers why this new market is a game changer.

These four ideas are just a few questions you can use to better understand your consumer, but don't stop here. The more you can learn about your consumers' likes, dislikes, and pressures the better you can tailor your product and marketing to attract them.

Study Consumer Trends:

To get a nation/world-wide understanding of your consumers’ trends, you can use existing online platforms.

For example online platforms like SEMrush, google keywords, and google analytics provide a quick and easy way to find generic information for large sample sizes.

For more info on market trends look at USA.gov Statistics Consumer Credit Data, Bureau of Labor Statistics, or Google Trends.

Involve Your Community:

Another great way to gain customer feedback on a local level is by interviewing or questioning the people in your local community.

To get more personal and specific details, you will have to hit the streets and maybe local community centers. By using focus groups, surveys, questionnaires, or interviews you can discover what your consumers like and hate about your business.

These small groups also allow you to get others' views on your logo, name, and even your slogan.

Don't be afraid to test your ideas on these small groups.

Formalize Your Business Plan:

Every great adventure starts with a map. A business plan is your map to success in your business. It’s essential to stay organized and focused.

Business plans outline, 1) what format of business you’ll run (online, brick and mortar, both, garage, etc.) 2) what products or services you will sell, and 3) how you plan to do that.

To begin, choose between a quick but less detailed lean startup plan, or a detailed traditional business plan. Both can be good for internal use. However, if you want to appeal to banks and other investors, having a traditional business plan is often required.

Traditional business plans:

Traditional business plans may be long but the details they provide are invaluable. If you use the 9 steps below, you’ll maximize your chance to attract investors and stay organized.

1) Executive Summary:

State your product, your mission statement and basic information about your leadership. For example:

Why did you start your business and what are your qualifications?

Why do you think your business could be successful?

How do you envision the company’s future trajectory?

Do you want to create a franchise?

Do you want to sell your products to retailers all around the nation, or are you just hoping to be a small town jewel?

Elaborate on your employees, location, and include your financial information.

2) Company description:

This is the part where you get to brag about your strengths.

Write in detail about the problem you plan to solve and companies and people you will help.

Tell your investors why your company will be an outstanding success. Do you have an entire team of specialists, a groundbreaking idea, or is your restaurant in the perfect location?

Describe your company in the shining light it deserves to be in.

3)Market Analysis:

Use this section to elaborate on your target consumers and your industry outlook.

Are you selling to kids, teenagers, adults or retirees?

This is the part where you get to brag about your strengths.

What are the difficulties that your customer is trying to overcome?

Go into detail about your market trends.

Is your market growing?

Is the market full of industry giants, startup disruptors, or solopreneurs?

Compare your business to other successful businesses. Then elaborate on why you can do it better.

4) Organization and Management:

This is the section where you get to the nitty gritty legal stuff.

State your business structure. Are you going to be an LLC, or a C corporation? Are you starting the business with a partner, if so who's in charge?

Take time to go into detail about how your company will work and the chain of command that will run it.

5) Service Product Line:

Finally, you get to talk about your product or service.

Describe what you're selling and what problem it fixes.

Prove that it's a big problem and that your idea is an original and effective solution.

6) Marketing and sales:

Marketing is a key component of a business, so you need to get this section right.

Draw out your marketing plan. Include things like online ads, brick and mortar billboards, and community events. Consider funding or working with charities to get good publicity.

And as time goes on, your marketing strategies should evolve. Make sure it lines up with your marketing goals outlined here in your business plan.

You also need to cement how exactly you're selling stuff. Are you going to be an online company where you just ship your goods, or are you going to have a main street store?

7) Funding request:

Now you get to clearly outline what you want from your investors.

Clearly explain if you're looking to sell part of your company for a large loan to get it started or whatever else you need. Prove to your investors that you do need the money and that it will be well worth it.

In this section, include your financial projections. Include previous balance sheets, cash flow and income statements, or capital expenditure budgets.

Use charts and graphs to project future balance sheets, and cash flow and income statements quarterly for the next 3 to 5 years.

Don't forget to list any loans you have or any debts you need to pay.

8)Appendix:

Use this area to display any licenses, patents, permits, letters of references or any other legal document you or your investor might want.

Lean Startup Plan:

Use this area to display any licenses, patents, permits, letters of references or any other legal document you or your investor might want.

Key partnerships:

Think about what companies or services you rely on.

Do you depend on shipments of raw metal?

Do you hire IT help?

Do you sell stuff through a site like amazon or shopify?

Key Activities/Resources

Determine what process and resources make your business successful.

Do you use technology to quicken your processes?

Do you have a gifted staff?

What makes your business better than your competitors?

Value Proposition:

Think about how your company is valuable to the market.

Is your product/service original?

Is it something people are looking for?

Why is your business valuable?

Customer Relations:

Determine how EXACTLY you are going to be able to reach your customers and interact with them after your initial touchpoint.

How are you planning to sell to the customer?

Are you going to be completely online?

Are you going to have a brick and mortar store on main street?

Are you planning on selling primary at farmers markets?

Customer Communication:

Ponder how you are going to talk to the customer. Email?

Text services?

Blog?

Podcast?

Target market:

Specify your target market.

Are you selling to kids, teenagers, adults or retirees?

What psychographic groups will benefit the most from what you offer?

Cost Strategy:

Explain how your company will manage costs to compete with competitors but still gain a lot of customers.

Do you want to reduce the cost of your product so more people will buy it?

Or do you want to increase cost but also increase the products' worth?

Revenu Strategy:

Plan how you will gain revenu.

Will you directly sell your product?

Charge for services?

Charge for advertising space?

Keep in mind that this list contains just a few of the many ideas that go into starting a business. There is no perfect way to start a business. Feel free to mix and match these ideas as you go.

Nail Down Your Purpose & Brand:

One of the best parts of creating a business is picking out a name.

And as the first step to branding, choosing a name requires a ton of thought and legal knowledge. You will want to pick a name that is memorable, unique, portrays what you will be offering, and lines up with your brand’s mission.

For example a cycling startup might create a company called Green Tree Cyclery. Then the aspiring cyclist will search up cycling and find this great company.

Bounce your name ideas off your friends, interest groups, and check to see if your keywords are popular.

Once you pick a name you need to register it. Consider registering for the following 4.

1)Domain Name:

A domain name is the URL or website address for your online company.

When you register your domain name no one else can use it so it's a good way to protect your brand.

In some instances, someone may have already taken your company name but don’t worry your legal business name does not have to be the same as your domain name.

For example our bike company might discover that the domain name greentreecyclery.com is already taken. You’ll have 3 choices: 1) choose a domain name similar to it (but risk customers going to your competitor thinking it’s you), 2) buy the domain from the owner, or 3) choose a domain that’s similar (e.i. Greetreecyclery.org or Greetreecycleryutah.com).

2)Trademark:

Trademarks give you legal ownership over your company's name and products so other companies can’t steal or copy your goods.

For example, if our biking company trademarked their name and primary product, The Mark 3x then if the startup down the street also made a bike called The Mark 3x, then they could be sued.

If you need any help with trademarks or patents contact our lawyers at Miller IP Law.

3)Entity Name:

An entity name is the legal name of your business as it is registered with your local state.

Most states prohibit companies from sharing the same entity name, so by creating one you protect and in a sense copyright your business’s name on a state level.

4)DBA:

DBA (Doing Business as) names allow you to register your business under a trade name, fictitious name, or a fake name with your state or city.

It does not provide legal security by itself but it is required if you want to open a business bank account.

Plus, you can have multiple companies under your DBA. For example our cycling business might use Green Tree Cyclery as their entity name and Green Tree Transportation as their DBA. This allows them to include other companies under their DBA.

But don't forget to make sure your DBA is original. Copyright laws are still in effect here.

Identify Your Funding Strategy:

Obviously, you need money to start your company. Consider which of the following 6 strategies would work best for your needs.

1)Bootstrapping:

If you like to do things on your own this is the funding strategy for you.

Bootstrapping is the process of using your own money to fund a business, and then once it is up and running you reinvest most of the profit back in to scale it up.

2)Friends and Family:

If you trust your family and friends you can always try asking them to fund your company.

Of course family and business is a difficult thing to mix so be sure to write out all transactions and payment plans on paper so both sides know what they are getting into.

3)Small Business Loans:

These are loans you can get for your small business normally through a bank or credit union.

Of course you will have to pay these back but you will get a good amount of capital to invest in your business so in due time it will generate enough profit to pay itself off.

4)SBA Loans:

If your startup is a little risky consider SBA guaranteed loans.

These are businesses that the U.S. Small Business Administration recommends as being reliable or promising. As a result banks see less risk in your business and are more willing to lend money to you.

5)Investors:

This form of funding requires you to sell some ownership of your business in exchange for money.

Investors normally invest money in fast growing companies where they get equity or a share of the company.

However, know that investors like to be involved with the company and at the very least will want to be on the board of directors.

6)Crowdfunding:

This is a new and upcoming trend in business funding that is low risk and if you play your cards right can have high returns.

Crowdfunding works by a lot of people donating to your company, they do not become investors so you get to retain full control of your company, but crowdfunders often expect a gift or at least a public thank you.

Keep in mind people often donate to businesses because they think their product or mission is cool. So if you're going the crowdfunding route brand your business as a must need, super legit, world changing company.

*note: You should consider getting a business bank account that would allow you to run finances for your business separate from your personal account.

Decide On Your Business Structure:

Your business structure affects everything from funding, to personal liability, to taxes. Although it’s possible to change your business structure in the future, it can be costly and require a lot of your time and attention. Starting on the right foot will save you headaches in the future.

This needs to be done before you register your business.

Here are some of the most common business structures:

Sole Proprietorship:

This is the most basic form of business structure and is the default if you do not choose another.

These are easy to form and give you complete control over your business. The drawback is that your personal liabilities and assets are not independent of your business liabilities and assets. This means YOU personally can be held responsible for anything that goes wrong with your business.

As a result banks are skeptical to lend money to sole proprietors.

However, if you're planning to start a small, low risk business on a local level (without outside funding), then this business plan could work for you.

LP and LLP

Limited partnerships are the simple business structures of two or more people owning a business and sharing liability.

In a LP, there is a general partner who has unlimited liability. They can be held fully responsible for any problems with the company, but they do usually get paid more. And then the rest of the partners are paid less but have limited liability.

LLP or limited liability partnership is similar to a LP but there is no general partner. Everyone has the same pay and the same amount of liability. These are good for companies that have numerous owners or just want to test their ideas.

LLC

Limited liability companies are the best of both worlds, they combine the perks of a corporation and partnership business structures by separating your personal assets from your business assets.

With an LLC your house, personal bank account, and vehicle are safe if your company faced lawsuits or bankruptcy. You wouldn’t be liable for your company and you wouldn't have to pay corporate taxes. Of course you still have to pay self-employment taxes.

The downside is that some states require LLCs to be dissolved and then reformed if a member transitions in or out. But for a medium to high risk business this could be the business plan for you.

Corporation:

Corporations come in many shapes and sizes but the main idea is that corporations are individuals themselves.

The owners have a ton of protection against liability and members of the board can go and come and not affect the legal workings of the corporation at all. Plus you can share stocks and grow your company exponentially.

The down side is corporations cost more money, require detailed records, and you have to pay taxes twice. First, when the company makes a profit and then the owners have to pay taxes on the money they get.

Cooperatives:

Cooperatives are businesses owned by the users. Any profits would be split among the user-owners. To become a user-owner you need to buy shares of the company, at which point you also get to vote on the direction of the cooperative.

Plan Your Marketing Strategy & Tactics:

Marketing is a big part of your business, you need to make sure you are constantly acquiring new customers. This can be done in a million different ways but here are a few basics.

SEO

Search engine optimization is the art of making google love you, this is done by picking keywords that are tailored to attract your target audience to your website. If done correctly you can increase the flow to your site and subsequently increase sales.

Social Media

You can use social media like facebook, linkedin, or twitter to get your company’s name out and to create connections with people and the community. Use it to promote your business.

Network

It's important to create connections everywhere you go, the more friends you can make the more audiences you can connect too. So it's not a surprise that networking is a basic part of marketing. This could include sharing content with similar companies and appealing to each other's customers.

Advice for specific locations

That’s it for general advice. If you live in one of the following areas, we also have a brief article and reference guide for you:

Miller IP Law is a firm that focuses on small businesses, startups, and entrepreneurs/solopreneurs. We’re easy to use. We offer affordable pricing that’s transparent and flat-rate. We focus on the little guys who actually need our help. If you’d like an attorney on your team, simply schedule a Zoom call, and we’ll take care of the rest.

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