The first thing anyone should do when they want to start a business is test their idea.
In the tech world there is something known as a minimum viable product, or MVP. The idea is to create the simplest version of your product that still contains the kernel of its functionality. Release your MVP, get feedback, and then pivot, or refine your product or offering based on feedback. Release again, get feedback, and pivot again. Eric Ries, in Lean Startup, calls this continuous innovation. It applies in the non-tech world as well. You can use interview forms and checklists, as detailed by Ash Maurya, in Running Lean.
It is a way to find out if anyone actually wants what you’re offering, before you’ve made a huge up-front investment in resources, such as equipment, leases and personnel. Any online business can use this process. The $100 Startup, by Chris Gillebeau, describes the process for the small, one-person example, with a wealth of examples.
Use the MVP method to test your physical product and get feedback—what you will learn is called market intelligence, and it’s invaluable. Run a tiny ad in your local paper, offer your product/service to friends for free (or a deep discount), get a booth at a craft fair–do something to get in front of your customer and offer your product or service.
A testing phase will give you invaluable information moving forward. If you need to borrow money, this proof of concept will be much more convincing than an untried, “I think this is a great idea” pitch.
I list a couple of great videos in my blog post, “Burn Your Business Plan.”
My friend Shelly (not over 50, but the example is timeless) decided to start a candle business. She wanted a clean-burning candle scented with essential oils and couldn’t find one in the marketplace, so she decided to produce and sell one. She initially outsourced the production to sell on Amazon1. However, the minimums were high and the cost to have them produced meant her prices were too high to be competitive. She didn’t sell very many.
So Shelly had a lot of candles to move. She decided to sell the remaining inventory at a local farmer’s market, with her fiancé’s help. What they noticed was that shoppers 1) picked up the candles to smell them (scent is important: check!) and 2) asked Shelly if she poured them herself. In other words, in that setting, shoppers wanted to be buying from the producer.
Shelly pivoted. She started pouring the candles herself and began selling them at local craft fairs and farmer’s markets. It allowed her to drastically lower her costs, and thus her prices. She also started calling on local gift shops to develop her wholesale accounts. With her lower costs, she could offer her candles to retailers at a competitive price. Shelly’s business is now growing steadily. She is pouring candles in a studio in her back yard, and has hired two part-time assistants to help.
If you think candles are small potatoes, the National Candle Association estimates retail candle sales in 2015 at $3.2 billion annually.2
And in case you think I invented this fable to flesh out my argument, you can find her candles at Slow North.
1 If you’re not familiar with being a third-party seller on Amazon, just know that average citizens can sell merchandise there. And yes, there are manufacturers that can make just about anything and put your name on it. It’s called private label manufacturing, and it’s big business, in the U.S. and abroad.