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SEVEN STEPS TO STARTING A REAL BUSINESS ONLINE - STEPS 3 and 4
by: Cary Christian


(Note: New subscribers who missed Steps 1 and 2 can read them in last weeks issue at:
http://www.peakconsultinginc.com/newsletters/hbnl_nov1602.htm )

Last week we talked about assessing your skills, interests, experience and personality and determining what kind of business you want to run. This week we're going to get into your markets, products and competition.

STEP 3

1. Identify a market that needs what you can provide.

The easiest way to guarantee your success and profitability in your online activities is to work backwards. You've assessed your skills and what you can offer, so now begin identifying markets that need those skills.

It sounds simple, but in practice it can be very difficult. It will require some creative thinking and you must be able to put yourself in the shoes of your potential customer.

2. Segment that market into smaller niches.

To make it a little more difficult, you need to narrow this market down to as small a niche as possible. The smaller the niche you are marketing to, the more profitable you should be.

Let's assume you've decided you're going to sell software. You've got some terrific ideas about creating specialized software that is difficult to find anywhere else. To start with, you've decided to hire a local college student who will design whatever you want relatively inexpensively, perhaps for no money down and a piece of the action. Based on your background, you decide to concentrate on specialized financial planning software.

At this point you could decide to develop very generalized financial planning software that would be useful to a very broad market. What you'll find is that it becomes very cumbersome to anticipate everyone's needs and your software becomes so general that it loses most of its appeal to anyone in particular. Your sales will suffer tremendously.

Let's say instead, you decide to concentrate on financial planning software for corporate executives only. This will allow you to tailor your software to the specific needs of this group and make your software outstanding in handling stock options, benefit plans, deferred compensation, and all the other financial opportunities important to the executive market. You've just narrowed your market considerably, and you could even narrow it further by concentrating on a specific industry or group of industries that share similar characteristics.

This same reasoning process will work with any type of product you might want to sell, whether you have it developed for you or purchase it from someone else for resale.

3. Identify needs you can fill.

Examine your target group carefully. Think about the problems they face in their business or personal lives. Think back on your skills and experience and gain an understanding of how you might be able to help with those needs.

Don't fall in love with a product idea! Just because you love it doesn't mean anyone else will. It's the customer's needs that must be met if you are going to make sales.

For example, if you have a great idea to build a specialized IRA analysis add on to your financial planning software, but your target market needs 401(k) analyses instead and can't even invest in IRAs because of tax limitations that apply, you're trying to force a square peg into a round hole. No one in your target market is going to buy your add on.

You also do not want to attempt to satisfy needs you are not capable of satisfying. If you don't have the experience or the skills to provide a particular solution, don't try. Stick with what you know.

STEP 4

1. Decide on the products you will offer.

You've identified your target market and niche, and in doing so you've probably identified at least one product you can offer them. Now you want to think about how you can break that product down into multiple products and add some complementary products to your line.

The accounting software industry comes to mind, so I'll use them as an example. When you buy accounting software, you choose various modules that you need for your business, like a general ledger module, an accounts payable module and the accounts receivable module. If someone else needs those same modules but they also maintain inventories, they'll want the inventory module as well. Most accounting software companies offer 20 or more different modules that allow their customers to build the system they need without buying anything extra they don't need.

See if you can segment your product in this manner. If you can, you will make the product more affordable, more flexible and will realize more sales as a result.

Complementary products are just as important. Every sale you make will give you an opportunity to make a backend sale of a related product or possibly sell an upgrade. You're also going to want to get your customers on your mailing list so that you can market to them in the future. Without complementary products, you're going to miss a lot of opportunities to profit.

These complementary products do not have to be your own. You can become an affiliate for complementary products instead.

2. Assess your competition and refine your plans.

If you identify the perfect niche market and then find out thousands of people are targeting that same niche, you really haven't found a niche.

Your ideal niche will be one that almost NO ONE is serving. That might seem impossible, but if you do your homework, you will be able to find them.

I've presented steps 3 and 4 in linear fashion, but in reality, the steps and sub-steps are all part and parcel of the same process. They really cannot be performed in linear fashion.

For example, you wouldn't want to spend countless hours identifying a niche and a product only to have to start over when you find there are many companies providing similar products to the same niche.

So you really need to perform your niche analysis, product analysis and competition all as part of the same process. These tasks must proceed in a parallel fashion. You won't have to think about it, it should happen naturally.

There is one key point I need to make here that you must understand: if you want to enjoy success on a large scale, you must commit to creating your own product. You need to own it and control it completely. Affiliate programs are great for complementary products, but a whole new world of opportunity opens for you when you have complete control of your main products.

The main reason most people fail to make a living selling as an affiliate is because thousands of others are selling the same thing. However, with your own product, you're taking an unfair advantage over the competition because you're able to backend an affiliate product after already gaining the customer's confidence and selling them your own product. You'll not only make more money from selling your own products, you'll make more on affiliate sales as well.

Next week, steps 5 and 6.

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