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How to Research Your Business Idea

Your brilliant idea may indeed be brilliant--or it may need some work. Here's how to find out whether you're ready for startup.

Article from http://www.entrepreneur.com/article/

Somewhere between scribbling your idea on a cocktail napkin and actually starting a business, there's a process you need to carry out that essentially determines either your success or failure in business. Oftentimes, would-be entrepreneurs get so excited about their "epiphanies"-the moments when they imagine the possibilities of a given idea-that they forget to find out whether that idea is viable.

Of course, sometimes the idea works anyway, in spite of a lack of market research. Unfortunately, other times, the idea crashes and burns, halting a business in its tracks. We'd like to help you avoid the latter. This how to on researching your business idea is just what you need to keep your business goals on track.

The Idea Stage

For some entrepreneurs, getting the idea-and imagining the possibilities-is the easy part. It's the market research that doesn't come so naturally. "It's a big red flag when someone outlines the size of the market-multibillion dollars-but doesn't clearly articulate a plan for how the idea will meet an unmet need in the marketplace," says Aaron Keller, an adjunct professor of marketing at the University of St. Thomas in neighboring St. Paul and a managing principal of Capsule , a Minneapolis-based brand development firm.

That kind of full-throttle approach can cost you. "Entrepreneurs are often so passionate about their ideas, they can lose objectivity," adds Nancy A. Shenker, president of the ONswitch LLC , a full-service marketing firm in Westchester, New York. "Rather than taking the time to thoroughly plan and research, they sometimes plow ahead with execution, only to spend valuable dollars on unfocused or untargeted activities."

Market research, then, can prove invaluable in determining your idea's potential. You can gather information from industry associations, Web searches, periodicals, federal and state agencies, and so forth. A trip to the library or a few hours online can set you on your way to really understanding your market. Your aim is to gain a general sense of the type of customer your product or service will serve-or at least to being willing to find out through the research process. "For example," says Shenker, "if you don't know if your product will appeal to the youth market, make sure you include a sample of that population in your research efforts."

Your research plan should spell out the objectives of the research and give you the information you need to either go ahead with your idea, fine-tune it or take it back to the drawing board. Create a list of questions you need to answer in your research, and create a plan for answering them. "Utilize experts in planning and conducting research sessions," Shenker advises. "They can recommend what type of research is most appropriate, help you develop statistically valid samples and write questionnaires, and provide you with an objective and neutral source of information."

The type of information you'll be gathering depends on the type of product or service you want to sell as well as your overall research goals. You can use your research to determine a potential market, to size up the competition, or to test the usefulness and positioning of your product or service. "If, for example, the product is a tangible item, letting the target audience see and touch a prototype could be extremely valuable," notes Shenker. "For intangible products, exposing prospective customers to descriptive copy or a draft Web site could aid in developing clear communications."


When working with firms on brand development, Keller first looks at a business idea from four perspectives: company, customer, competitor and collaborator. This approach allows Keller to scrutinize a business idea before even approaching the topic of brand development. Here's what he looks at for each of the four issues:

1. Company. Think of your idea in terms of its product/service features, the benefits to customers, the personality of your company, what key messages you'll be relaying and the core promises you'll be making to customers.

2. Customer. There are three different customers you'll need to think about in relation to your idea: purchasers (those who make the decision or write the check), influencers (the individual, organization or group of people who influence the purchasing decision), and the end users (the person or group of people who will directly interact with your product or service).

3. Competitor. Again, there are three different groups you'll need to keep in mind: primary, secondary and tertiary. Their placement within each level is based on how often your business would compete with them and how you would tailor your messages when competing with each of these groups.

4. Collaborators. Think of organizations and people who may have an interest in your success but aren't directly paid or rewarded for any success your business might realize, such as associations, the media and other organizations that sell to your customers.

Another approach is to research is SWOT analysis, meaning analysis of the strengths of your industry, your product or service; the weaknesses of your product (such as design flaws) or service (such as high prices); and potential threats (such as the economy). "[SWOT] enables you to understand the strengths and flaws, [everything] from internal information such as bureaucracy, product development and cost to external factors such as foreign exchange rates, politics, culture, etc.," says Drew Stevens, a St. Louis professional speaker and consultant who works with entrepreneurs in researching and marketing their ideas. "SWOT enables an entrepreneur to quickly understand whether their product or service will make it in the current environment."

Whatever your approach to evaluating your idea, just be sure you're meeting the research objectives you've outlined for your product or service. With those goals always top-of-mind, your analysis will help you discover whether your idea has any holes that need patching.

Checking Out the Competition

Assuming your research process has helped you uncover your competition, you now need to find out what they're up to. Shenker advises becoming a customer of the competition, whether by shopping them yourself or by enlisting the help of a friend. "Visit their Web site and put yourself on their list," she says. "Talk to your competitor's customers, too-ask them what they like or don't like about your competitor's product or service. If you conduct formal research, include a question like 'Where do you currently go for that product or service? Why?'"

Your aim is to understand what your competition is doing so you can do it better. Maybe their service is poor. Maybe their product has some flaws-something you'll only know if you try it out yourself. Or maybe you've figured out a way to do things better, smarter, more cost-effectively. Find your selling point. It's going to be the core of your marketing program, if and when you're ready for that step. It's also going to be what sets you apart and lures customers your way.

After all this-the idea stage, analysis of the idea, competitive analysis-you might find that your idea (and not your competitor's, as you'd hoped) is the one with the holes. Does that mean you need to scrap the whole thing and resign yourself to life as an employee? "Not always," says Keller. "Sometimes it just needs to be reworked or retooled."

That can be disheartening if you've already spent X amount of hours in the idea stage, plus X amount of hours on market research-only to find that you're not quite ready to get started after all. But taking the time to refocus your energies and determine why your idea needs some tightening is the best predictor of future success. "No entrepreneur wants to hear that his 'baby' is flawed, but only by listening and reacting to feedback can he give his idea a chance for success," notes Shenker. "Ask yourself, 'Is this a weakness that can be overcome?' If you can't create true value for your customer and your business, then it's time to pick another idea to pursue."

Remember, though, that many ideas simply need some fine-tuning. Before you panic and start flipping through your idea books again, closely consider whether you can make this idea work. After all, there was a reason you thought of that idea in the first place. Some ideas that seem like they'll be total duds after doing a little research end up being great successes. "Ideas that seem like a flop are always interesting to me," says Keller. "Sometimes you look into an idea and find it was just luck-but many times, you find the original founder had some clear insight into the potential. That insight was his or her focus, and it seemed to lead them to success.

"I've seen many people launch ideas that I thought were beyond foolish," Keller adds, "but then I learned more about the idea, the customer and the vision-and realized the true risk being taken."

When Your Idea Is Ready to Go 

The market research you've conducted thus far ought to be a good indicator of where you need to go next with your idea. One key factor to consider is pricing. You want to do it competitively while also considering what the market will bear. For products or services that have a close competitor, Keller advises pricing with respect to the competitive position. "Higher-priced positioning requires an idea with enough relevance and importance to customers to overcome the gap between your idea and the nearest competitor," Keller says.

The beauty of being in business for yourself is that you have the option to make changes at will-so if a pricing structure isn't working, you can alter it. "Price high to start-you can always drop the price down," says Keller. "You can never go up."

Shenker adds that you need to be sure your product or service is delivering enough value to command the price you set. If possible, test different pricing offers as you go, and determine what works best.

When you're ready to get started, be sure you're selling where your target market is likely to buy. "Your marketing plan and budget should include a well-crafted distribution strategy," notes Shenker. If you'll sell over the Internet, budget for media to drive new customers to your site. If you'll sell via retail distribution, you might need workers with industry experience to help you reach your target market.

Remember, too, that you can always seek help in this long, arduous process of bringing an idea to fruition. The Internet, your local library, the U.S. Census Bureau, business schools, industry associations, trade and consumer publications, industry trade shows and conferences, and new-product development firms can be invaluable sources of information and contacts. "It's just a matter of seeking knowledge from as many sources as possible," notes Keller. It's also a matter of putting your ego aside and being willing to create a business that will not only survive, but thrive. "If you have an idea, don't be afraid to refine it, retool it, rethink it," adds Keller. "The more you do before you launch, the less you'll have to do [afterwards], and the less painful the lessons tend to be."

Article from http://www.entrepreneur.com/article/

Turn the hopelessness within you into a fruitful opportunity.

Three tips for investors looking for income

Adrian Lowcock | 16 May 2013
Article from http://www.hl.co.uk/news/articles/

Dividends paid by UK companies grew a healthy 6.1% in the first three months of the year, excluding special dividends, according to Capita Registrars' Dividend Monitor report.

In recent years investors have benefited from strong growth in UK dividends despite the weak economic climate. In 2012 UK companies paid out a record £80.4 billion in dividends with a number of one-off special dividends boosting the total. This year fewer special dividends are expected, but with these excluded, underlying dividends are forecast to grow 8.6% – an indication that many UK companies are in excellent financial shape.

The concept of equity income investing is simple - invest in the shares of well-managed companies whose dividends have the potential to grow over time. This provides a rising income, which if reinvested can create a snowball effect of compound growth. Furthermore, the shares of such companies often find favour with investors, meaning their prices rise. In our view equity income should form the core for most investors' portfolios, whether they are looking for income or growth.

Constructing a portfolio to generate an income can be relatively straightforward as long as you follow some simple rules:
  • Identify how much income you need. If your income requirements are too high then you might end up with a portfolio which pays a high income, but at the expense of capital growth. An income in excess of 5% is probably unsustainable in the long run.
  • Look after your capital. Many income-seeking investors look to maximise income without protecting their capital. A high yield can be a result of recent falls in the share price. This can signal there is something wrong with the business and the dividend might be cut in future. Good equity income investors look for companies that can pay a sustainable and growing dividend. This approach is likely to be supportive of the share price.
  • Diversify your income stream. If you are dependent on income from your investments, it is essential to have a mixture of investments from which the income is derived. Diversification will minimise the impact of events affecting individual companies. Investing in a number of asset classes can help to provide a more stable income - income generated from corporate bonds is generally less volatile than that from equities. Likewise investing overseas provides a further opportunity for diversification.

Adrian Lowcock | 16 May 2013
Article from http://www.hl.co.uk/news/articles/

Turn the hopelessness within you into a fruitful opportunity.

6 Steps to the Perfect Pitch

Learn to succeed with investors--from a guy who failed.

BY Scott Gerber | May 22, 2009
Article from http://www.entrepreneur.com/

Shortly after my college graduation, a few friends and I started a new media company. Within a few weeks we fleshed out the concept, wrote a business plan and set out to seek financing. With a little hustle, I managed to get us a meeting with a well-known investment firm to discuss the opportunity. Even though our business had yet to bring in a single dollar, and none of us had ever been the CEO of coffee shop let alone a multi-million dollar enterprise, we were all confident that we had a sure thing on our hands. After all, our financial projections forecasted gross revenues of $200 million. What investor could say no to that?

We'd be rich. All we needed to do was raise a small amount of capital--$15 million.

I remember thinking, "How hard could it be?" We were obviously, naïve, foolish and delusional.

There was one small problem with our plan. None of us had any idea how to pitch an investor. So I did what any clueless entrepreneurial upstart would do: Google searched "how to pitch an investor".

Nothing that I read online could have prepared me for what was to come. We would quickly find out that our presentation was doomed before we ever set foot into the meeting. In reality, it was doomed before we started writing the business plan.

At the beginning of the meeting one of the investors asked me to hand him a one-page executive summary review. I hadn't prepared a summary, so I handed him the first 11 pages out of the binder encasing my 95-page business plan. Strike one.

Less than four slides into my 32-slide presentation, the second investor interrupted me and said, "OK. Stop. I get it. You definitely don't need $15 million."

Defending our business plan, I overconfidently replied: "It can't be done for less."

"Really? It can't be done, huh?" he responded with a smirk masking a hint of laughter. Strike two.

Both of the investors then proceeded to hit us with a barrage of questions:

"How much money have you personally put into your business? Anywhere near $15 million?"

"Why should I pay a bunch of twenty-somethings with no track record $100,000 executive salaries?"

"How much revenue has the business produced to date?"

"Why should I give you $15 million when the company hasn't even made $15?"

"How can you possibly substantiate gross revenues of $200 million in year three?"

"Why are you trying to produce, market and distribute 10 products at the same time before you see if a single one sells at all?"

The questions went on and on. None of our answers were favorable. Strike three.

As you might have guessed, I didn't walk out of that meeting with a $15 million check. I later realized, however, that this was one of the greatest educational experiences of my young career. I learned more about real-world fundraising in 30 minutes than many entrepreneurs learn in a lifetime. To this day, whenever I pitch investors for capital, I always remember these six hard-learned lessons:
  1.     Less is always more. An elevator pitch is vital. Verbose presentations and lengthy explanations will not impress investors, and most likely will turn them off. Present your business in a manner that's short, sweet and to the point. Investors need to be confident that your business will attract and retain customers. If they don't grasp your concept in a short time span, they may presume that customers won't understand it either.
  2.     Never hypothesize. Execute, execute, execute. Inspire confidence with facts, not fiction. Most investors seek out low-risk businesses with proven managers that are as close to guarantees as possible. A company with cash flow, a track record and real-world experience has a better chance of getting investors than a business plan forecasting large returns. Find ways to test your business's viability on a shoestring budget, and turn your idea into a functional business before you seek investment.
  3.     Leave the hockey sticks on the ice. Excite investors about your big picture, but be reasonable and responsible. Avoid hockey stick projections. Respectable investors will not take you seriously if you present them with nonsensical financial graphs that claim your company's revenues will grow from $100,000 to $50 million in three years. Show investors that you have a grasp on reality with three versions of financial projections: best case, moderate case and worst case. Base each of these models on facts, past and present performance data, industry and competitor analyses and a series of well-thought-out, defendable assumptions.
  4.     Learn to love discount stores. Being cheap is chic. In an age where spending is out of control, you'll need to prove that you are a fiscally responsible manager who knows how to get the most out of a buck. Give yourself wiggle room in your operations and marketing budgets, but avoid being excessive. Never ask for a large salary or big-budget perks. Investors want you to be in a position where everything is on the line.
  5.     Rome wasn't built in a day. Your business won't be either. Investors are wary of funding over-eager businesses that seem destined to bite off more than they can chew. Before asking for millions of dollars to fund 50 divisions and hundreds of product lines, prove how well you can create, manage and fulfill demand for a single product. Demonstrate that your business can crawl before you say it can walk. Perfect your marketing tactics, sales strategies and operational procedures. Investors appreciate companies with sustainable step-and-repeat business models that are poised for exponential growth. Remember, even Google's success is based on a single product.
  6.     Choose not to be the smartest person in the room. Know what you know, know what you don't know and find the people who know what you don't know. Build a team of credible experts. The smartest leaders in the world are those who surround themselves with smarter people. Investors are funding a management team as much as they are investing in a great business concept.

Scott Gerber | May 22, 2009
Article from http://www.entrepreneur.com/

Turn the hopelessness within you into a fruitful opportunity.

Whatever happened to these Fortune 500 companies?

Here are seven companies from the first Fortune 500 that have since been merged, split up, or put out to pasture.

Article from http://money.cnn.com/gallery/leadership/2013/05/06/500-where-are-they-now.fortune/index.html?iid=SF_F_River


Though Henry Ford was attributed with the invention of the assembly line, Philip Danforth Armour employed a Model-T-like efficiency to the butchering of animals in his meatpacking enterprise. It was companies like Armour, in fact, that inspired Upton Sinclair's The Jungle. Every part of the animals was sold, either as meat, glue, fertilizer, or, later, soap.

Armour & Company had been making soap for years when, in the 1940s, it added a germicidal agent to its product, creating "Dial" -- the first deodorant. Dial sold so well that the company changed its name to Armour-Dial and expanded its offerings on the soap side. By the mid 1980s, the company had sold off its meatpacking operations, but kept its canned meat products. By 1991, it had changed its name to the Dial Corporation.

The canned meat side of the company lives on. Pinnacle Foods now owns Armour, which makes stews and soups, potted meat, hash and Vienna sausage.

Bethlehem Steel

The fall of Bethlehem Steel, which was formed in 1904 and dissolved in 2003, represented the crash of an American manufacturing icon. The company, headquartered in Bethlehem, Penn., supplied steel for railroad ties that helped build the country's transportation networks. During both World Wars, Bethlehem Steel supplied armor plate for U.S. soldiers and battleships.

National Dairy Products

The National Dairy Products Corporation was incorporated in 1923, formed out of two of the largest dairy and ice cream manufacturers in the U.S.: Pittsburgh's Reick-McJunkin Dairy Company and Chicago's Hydrox Corporation. In 1926, the company operated in 13 states across America.

Demand for its products soared during wartime years. In 1944, the company delivered 48 million quarts of milk, 8.5 million gallons of ice cream, and 101 million pounds of cheese to the United States government.

In 1930, National Dairy Products Corporation bought Kraft-Phenix Cheese. The combined companies went through several name changes together. By 1969, Kraft's brand strength ate National Dairy, and the company became known as Kraftco.

Last year, Kraft split again, separating its international snack business from its U.S.-based grocery products division, including loud orange cheese-type foods such as Velveeta that harken back to the company's dairy product origins.

International Harvester played a major role in changing the shape of American agriculture. The company was born out of a 1902 merger between Deering Harvester Company and McCormick Harvesting Machine Company. McCormick was founded by Cyrus McCormick, who invented the mechanical reaper, a horse-drawn device used to harvest crops, sparing workers the labor of reaping by hand.

After the merger, International Harvester manufactured big trucks and tractors. But as the business developed, it focused on building machines in general and became less involved with the agricultural side of the business. In 1986, the company changed its name to Navistar International Corporation, still a Fortune 500 company today that produces trucks, defense vehicles and RVs.

Radio Corporation of America

General Electric created the Radio Corporation of America, and to General Electric it has returned. In the meantime, the company pretty much shaped the world's consumption of media.

It started in 1919, when GE bought the American assets of the British radio company Marconi and formed it into RCA. At the beginning, RCA was financed by GE (GE, Fortune 500), AT&T (T, Fortune 500), and Westinghouse. When RCA bought Marconi, they also got David Sarnoff, who would later run the company. Sarnoff came up with the idea that stringing together organized broadcasts could help radio receiver sales. In other words, he created the first network. RCA built the National Broadcasting Company, or NBC, originally for radio broadcasts.

Sarnoff worked his magic on television, promoting the development of TV technology during the 30s and 40s. By that time, the Justice Department had separated AT&T, GE and Westinghouse from RCA via an antitrust lawsuit in 1932.

RCA ballooned. During World War II, it conducted research that ultimately contributed to the development of satellite technology and the space program. In 1965, it bought Random House, a publishing giant, and in 1967, it got into the rental car business with its purchase of Hertz.

Through the 70s and 80s, RCA shed many of its diverse assets, until 1986, when its creator GE bought the company, spinning off NBC as its own entity.

American Can

Not the most creatively named company in the Fortune 500, American Can was formed in 1901 by the merger of several canning plants around the country. The big canner was headquartered in New York, and was a major producer of tin cans as well as cartons, wraps and plastics for food, beverage and meatpacking companies. In 1957, two years after the first Fortune 500 list was published, American Can merged with paper cutlery-maker Dixie.

In 1987, American Can merged with the National Can Company to become, again with the creative names, American National Can Company, which French company Pechiney then purchased a year later. At the time, American National Can Corp. was the world's largest packaging company. That same year, other parts of the company were spun off to form financial services company Primerica (PRI).

Bendix Aviation

Inventor Vincent Bendix got his start in the business world with his invention of the Bendix hand crank starter device for cars, then moved on to improve automobile breaking devices. By 1929, Bendix saw potential in the growing aviation industry and changed the name of his company to Bendix Aviation Corporation.

One of the most important contributions to flight was Bendix's pressure carburetor for aircraft engines -- a device that ensures fuel delivery to a plane. Nearly all Allied aircraft during World War II were equipped with one. The company also sponsored the Bendix Transcontinental Air Race, a flight speed competition that Amelia Earhart entered in 1935.

In 1982, Bendix merged with chemical, oil and gas company Allied Corporation. In 1999, Allied merged with Honeywell, and the two companies took on the Honeywell name. Under Honeywell (HON, Fortune 500), the Bendix/King brand still makes devices for aircraft, including displays, flight controls and navigation equipment.

Article from http://money.cnn.com/gallery/leadership/2013/05/06/500-where-are-they-now.fortune/index.html?iid=SF_F_River

Turn the hopelessness within you into a fruitful opportunity.