Moments Later: Eight Basic Questions to Ask Before You Start a Small Business

Whether you are starting a small business, a new brand from scratch or adding to a portfolio of new products, finding a compelling point of difference is job one. The world doesn’t need another cupcake.

Yet, I can think of several innovative ideas within that market segment that are unique. How will your brand stand for something different among the baker’s dozens of competitive products? What single and simple idea will you own in the mind of your potential customer?

What a waste of energy and effort to copy someone else. Find your ahaa idea that you have some passion for because there will be plenty of days when your vision will help you charge forward.

The following checklist and questions can help you think through this process to get your started on your approach so you don’t go off half-baked.

Let’s take the hypothetical case of someone looking to launch a brand in the bakery industry. The same idea could apply to new software, toys for children, wine or salad dressing. Take the situation of someone named Sara who decides she wants to start a cupcake business along the coast of North Carolina. Sara loves to bake and thinks doing something with her hobby could be the career direction she wants to take.

The following are the questions she needs to answer before she blends that first pound of butter and flour together.

What does the competition look like? How many companies sell something called a cupcake in your market. Keep track of brands, products, names and pricing. Do a thorough search both of retailers, brands on store shelves, and wholesale products to caterers and direct to consumers competition. Obvious as it seems, Google the word and some variations to see who is advertising what to the market. Study the market and how other products are positioned.

How are you defining your market? Is it within 3 miles of a location or will you be selling nationally? What does the entire category nationally look like for this segment? Is it a growing market or on the decline? Ask lots of questions of people in the business who are often willing to talk to you. (Hint: Don’t ask potential competitors for help but you can talk to people from anywhere in the country and get their insights and ideas). Maybe you can even go to work for one of these firms to get an inside view of how they run their business. There is nothing wrong with a little cupcake CSI. Do your research.

PRODUCT OFFERING

How will your product offering be different? Are you selling finished cupcakes that look and taste like everyone else or are you planning to do something innovative with the shape and form. Will it be smaller, on a stick, frozen, packaged, over- sized, just the top, a mix versus the finished product? Will your product be a smash up - a cross between a cupcake and Margarita? Or a cupcake and a quiche? Ideally, can you find a new space in cupcakes that no one else occupies? Can you innovate a new concoction that no one else has ever thought of beyond a different flavor or topic.

AUDIENCE/TARGET CUSTOMER

Who is your audience? Are these cupcakes for adults, for children for senior citizens? Are they cupcakes for gluten free individuals or those who want a super-premium experience where calories don’t matter, are they adult only because they are laced with Skyy Vodka or Baileys? Are they organic cupcakes or cupcakes for vegans?

How will you price your offering? Is it more or less expensive than similar products? What will people stop buying to buy your product? Will they compare your offering to a non-baked treat so do you have room for a premium price or will people be unwilling to spend what it takes for you to make money? Are you going after high volume and low margin or low volume and high margin?

OCCASION/CHANNEL OF DISTRIBUTION

What occasion is the product designed for? Is it an everyday product or a gift for special occasions? Is it designed to tie in to each holiday like Halloween, for example, that pops up on a calendar or is it really tailored for a specific event like weddings? Are you thinking about selling exclusively to caterers since they need large volumes of desserts and want them to be unique and homemade?

How will you sell the product? Will you have a shop or online store that sells it directly to consumers? Will you wholesale the product so it goes through a retail shop that buys from you and resells it under your brand name? Will you use a distributor to get it placed on store shelves or are you planning to have a Cupcake Food Truck and sell it through a mobile store? Is this just an online purchase?

How will the world (or your neighborhood) learn about your product? How will you promote what you sell and get the word out to your target audience? Will you have a story to tell that is unique and special to you and connects with your product in a different way? Where will you put your marketing dollars (and time) to raise awareness of your brand and to get your cash register to ring?

One hint tied to communication is the critical importance of your story. You will repeat how and why you got into this business many times to customers and the media. This is not a minor topic but something you really have to perfect. Your story and reason for being will be the anchor to all communications efforts.

When you start a business and develop your brand, you need to think about many of the questions posed in my list. You won’t be able to answer all of them but the more you can answer, the easier it is to create a clear vision for what you will do differently. This is the secret ingredient to improve your chance of success.