Business.com

Business.com

Why You Need to Develop Your Own, Unique Product

Posted: 15 Dec 2019 10:00 AM PST

Buying and selling products has always been simple and straightforward. You figure out what kind of product you want to sell and source this product from a number of suppliers on Alibaba, Global Sources and other marketplaces. You add your margins and sell this product on your ecommerce store. 

This process works for getting experience with trading products but you'll never be able to be a leader in the market. The main reason why you can't be a leader in the market with this strategy is because your products are open for anyone to sell. To overcome this and improve your margins while also stealing a larger piece of the market, you will need a product that only you can sell. 

The good news is that you don't need to start from scratch. If you're engaged with your clients, you will understand what they are looking for. By understanding your customers, you can minimize the risk of developing a product that the market is looking for. 

Why entrepreneurs should develop their own products?

Developing a product is not a new concept. Many people have thought of developing their own product but ultimately they ran into many roadblocks and lacked the confidence to proceed. The main reason driving companies from trading to developing and selling your own product has to do with the limitations that product trading has. When you're trading products, you have limitations and constraints that are out of your control. 

Most entrepreneurs that have thought of developing their own products have been led in this direction by a few triggers from the trading business. These main triggers are

Entrepreneurs are tired of being like the others

Anyone can sell a product they are selling. What makes them so special?

It enables entrepreneurs to gain higher margins

For most offline and online retailers, it's a race to the bottom with prices.

Entrepreneurs are unable to evolve their brand

Being able to provide customized products will improve your brand awareness. People would much rather have something unique rather than a product that is flooded in the market but many different sellers.

Entrepreneur's business has poor customer loyalty

When everyone has the same product, customers tend to look only at prices. Customers become much more loyal to companies if the product is fully catered to their needs. 

What are the limitations entrepreneurs face when creating their own products?

The sky is not the limit

You can only sell a certain amount of products due to the competition. Factories are able to sell the same product to as many customers as they can find. This means that you have very little priority in the eyes of suppliers and buyers.

Non-product manufacturers face low margins

When anyone can sell the same product, the buyers will make it a race to the bottom with prices.

Entrepreneurs lack control over the supply chain

When you don't own the product you are buying, you have very little control of what can be added to the product. You receive what the supplier has made rather than something that's made for you and your customers.

Entrepreneurs have almost no brand awareness

What makes you unique when you're selling something that anyone else can? Your brand will be forgotten about because you're not able to provide a unique product. The reason why developing a product is great is because is gives you an opportunity to take those limitations and turn them into huge opportunities. 

Everyone knows the headaches and pain that come with developing a product. However, if you understand your customers and your competitors, taking the time to develop and launch your own product holds huge potential. You want to take those limitations and turn them into opportunities.

What are the opportunities you open when developing your own products?

Sky's the limit

When you successfully develop and launch your own product, there is no end in sight. By being the sole manufacturer of that product gives you the flexibility to go sell your products to anyone without the threat of too much competition.

Entrepreneurs enjoy higher margins

Since you created a product based off the feedback from your customers, they will be willing to pay a higher premium for that product. No one is able to sell this product so you can have higher profits.

Product manufacturers enjoy more control

With having the control over your product gives you the flexibility to make any changes needed in order to improve customer satisfaction.

Brand awareness

Listening to your customers and launching products that are catered towards them will automatically create loyal customers.

How should entrepreneurs start manufacturing their own products?

Before we proceed, it's important to understand that successful product development needs the fusion of two types of information, the need and solution. 

You need information

This is a company or individual that knows exactly what the market is missing. They might not understand how to develop or build it, but they know what the market needs. The best way to gather this information will be to engage with your customers and listen to their feedback. 

Gather solution information

This company or individual knows how to digest the need information and bring it to life. These are usually engineers, designers, developers or a factory that has the capability to understand what the need is and turn it into something physical. 

To develop the perfect product, the need solution needs to provide a perfect description of their envision to the solution party. Remember that the solution doesn't have a perfect understanding of your product so you need to be very thorough with your description and reasoning. 

There is a myth that the development steps are long and demanding which often leaves you broke. However, if you follow the correct steps and have total transparency between the need and solution parties, the process will be smoother. When you get to the solution steps, you might not be the leader but you should understand the process. 

Step 1: Product engineering and design

The first step the solution information needs to carry out will be engineering a product that is envisioned by the need information. This first step provided by the solution information is also the most critical step. If the engineering is done incorrectly, the product will never be functional and will have poor reviews.

In order to eliminate failures, design the most critical part first and test it. Make samples of it to ensure that the product works as it's supposed to. If not, it's back to the drawing board. 

Step 2: Prototypes 

The purpose of a prototype is to verify that the engineering works as it's intended. It's great that you have the idea engineered and drawn out on CAD but you also need to make sure that it works as intended. 

When you have a prototype, it really opens up many doors because you can start to market the product, you can take pre-orders, seek investment, start a Kickstarter campaign, etc.

Step 3: Tooling 

For this article, we are assuming that you have built a relationship with your factory that will be building this product. If you got lucky, your factory also provided you with the resources to develop this product. 

One great part of product trading is that you never need to worry about opening up new tools. However, if you are the sole seller of this project then opening up a tool is well worth the investment and well worth the short amount of time needed to make that tool. 

Remember when negotiating with your supplier that the tool is yours and that the supplier is not able to use that tool for any other customer. 

Step 4: Production

This is the moment that you have been waiting for. This is the last step for you to receive your product. The good news is that if the above steps were followed correctly, there will be no major issues. Keep in mind that with production there are some minor issues that occur but stay calm and handle those as they come up.  

If you are able to follow these steps you'll see a healthy launch that will sustain for the life of the product. 

There is a lot of talk about whether or not to patent your product. If this is your first product you might be overly excited to patent the product. However, the best way to keep the market share is by not patenting your product because those are simple to get around but by consistently developing and launching products. This is something that your competitors and factories looking to knock off products can't keep up with because they are still selling products that are in the market already. 

Product trading can be a great way to build experience to see whether or not it is a profession that you wish to pursue. However, developing your own product is the only way to the top of the line. While many people have failed to develop products efficiently, learn from their mistakes while going forward. 


 

How to Build a Business in the Legal Gray Zone

Posted: 15 Dec 2019 06:00 AM PST

The cannabis market is rapidly budding all around the world, leading many entrepreneurs and investors to consider building a business in the legal gray zone of recreational and medicinal cannabis while they still have an opportunity to reap a massive return on their early investments. Despite the allure of making huge sums of cash by tapping into the ongoing cannabis craze, it's imperative to remember that legally dubious business propositions end in catastrophe just as often as they do in great success – if not more often.

It's possible to thrive in the current cannabis market, but it's certainly not easy, especially if you're uncertain of the legal landscape you're treading upon. Here's how to build a business in the legal gray zone without losing it all.

1. Understand that this is an inherently risky proposition.

The first and most essential thing to understand is that what you're doing may be morally acceptable and even admirable, but it's still legally dubious and liable to result in tragedy. This isn't to say that starting a business in the legal gray zone isn't worthwhile, but rather to acknowledge the reality that most such businesses don't endure for long, let alone make a hefty profit. If you're fooling yourself that you can earn a quick buck by pivoting to cannabis without doing your legal homework, you're setting yourself up for dismal failure.

Now that you know the challenges and daunting possibilities that await failed businesses, you can focus on the joyful success you may achieve if you play your cards right. The international cannabis market is booming, after all, with total worldwide sales projected to reach a whopping $40.6 billion by 2024, according to some estimates. If you tread cautiously and avoid scandals, lawsuits, and other hurdles to success, your cannabis-based business could very well reap tremendous profit in the long term, especially when markets finally become free of stigmatization and prohibition.

So, how should you go about preparing to launch a business in the legal gray zone? First and foremost, retain an excellent legal expert who can give you advice in trying times, as you may frequently find yourself in need of a good lawyer in the days to come. Don't think of this as an intimidating or negative thing; virtually every successful business needs a good lawyer, whether they're in a legally dubious industry or not, and your business will benefit tremendously from in-house expert counsel.

Hiring a lawyer for a cannabis company may seem almost hilarious, given that just a few years ago, you were more likely to hire a lawyer to get you off from a cannabis charge. Skip this step at your own peril, though – relying on your own advice when it comes to complex legal developments can land you in some serious hot water.

2. Have a plan for marketing.

The next step is to consider how you'll get the word out about your business. Marketing isn't easy when the products or services you want to advertise could well be illegal in various areas. Similarly, you may not violate the law at all but still anger consumers who don't approve of recreational or medicinal cannabis. Tapping into your target market without igniting a PR firestorm is an essential element of success in this industry. When it comes to bolstering your brand's image and getting the word out, you can't go wrong by following the examples set by companies that have already forayed into this legally gray zone.

Take some time to review the methods cannabis companies use to market themselves if you're concerned about advertising. Of course, some strategies may work for other companies yet backfire for yours, so always consider the legal and cultural context of your target market before copying someone else's marketing strategy. By injecting some personal flair into the advertisements and avoiding legally questionable methods, you'll soon attract customers to your new business without also attracting unwanted attention from legal authorities or prohibitionists.

3. Figure out how you'll store your money.

This may seem like a trivial question to many entrepreneurs or investors who are only somewhat familiar with the cannabis industry. However, banking and transferring the proceeds of your cannabis-based business is no easy feat. Public attitudes toward recreational marijuana, medicinal marijuana, CBD oil and other alluring products may be warming up, but banking regulations are infamously slow to develop and change. If you've relied on a bank for previous business endeavors, you may be shocked to discover the bank is no longer interested in doing business with you after you become involved in the cannabis industry.

This will change as time goes on, stigmatization fades, and the legal environment evolves, but for now, it's something that every prospective cannabis entrepreneur has to grapple with. The New York Times has conducted a thorough investigation into where pot entrepreneurs go when they can't find banks willing to take their money, and it's worth a review if you've yet to consider your financial prospects. If your business takes off and you end up generating hundreds of thousands of dollars in cash payments each month, you won't have time to figure this out as you go along, so some foresight could save you from a tremendous headache down the line.

You should also have a system in place for managing and paying your employees well before you open your doors, as an all-cash business in any industry can find itself in muddy legal waters when it comes to reporting incomes and fairly reimbursing workers. Always champion transparency and legitimacy in your internal financial arrangements and payment system, and you'll avoid the bulk of legal trouble that could fall upon you for dealing with such huge sums of physical cash.

4. Expect to pivot eventually. 

Finally, it's important to realize that sooner or later, you'll need to pivot from operating in a legally gray zone to running a legitimate, full-fledged business when cannabis inevitably becomes widely legal. Support for recreational and medicinal cannabis continues to skyrocket with each passing year, so don't expect your company to be operating in a legally dubious area for long. You can't rely on banks now, but eventually you may need to, and lack of access to a certain market in the present doesn't mean you'll always be prohibited from reaching out to those consumers.

In a few years, when cannabis is just about universally accepted, many budding pot entrepreneurs will be going bankrupt because they can't handle the pivot to legitimacy. Always keep the future in mind when you launch your cannabis business. Soon you'll discover that operating a business in a legally gray zone is challenging but has a unique set of rewards ripe for the taking.
Posted by: at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)