How to Start a Kingdom Business (Pt. 4)
When we first started our business incubation work in Central Asia in the 1990’s, we had to quickly introduce local entrepreneurs to the idea of a market study. How would they know if their idea was a good one? How would they know who their competition was, how much to charge, etc.? When we first began to talk about the “voice of the market”, they quickly translated that into the “voice of the bazaar.” Not a bad translation all things considered. We created a list of 41 questions, called ‘The 41 Questions’, that our students could go and answer in the bazaar. I suggest that every entrepreneur needs to create their own set of questions to answer before they launch their business. Here are a few to consider:
1. Who do you think will buy your product or service?
One young brother came to us with the idea for custom leather Bible covers. In Kyrgyzstan. In 1998. I asked him gently how many believers he thought were in his country. He said maybe 1000. I asked how many owned Bibles. Maybe 100. How many of those could afford to buy a leather cover? Maybe 10. I think you see the point.
2. Who else is offering a similar product or service?
Sometimes the answer is no one. Great…but why? It’s more likely that you are one of several or even many in your space. Who are the others? What do you know about them? In WWII, posters encouraged the Allies to “Know Your Enemy!” We need to know our competition.
3. How much are people paying for this product or service if it’s available? How much will they pay if it is not?
How do you know how much to charge? Do you start with your costs and add your profit margin? Or do you start with what the customers are willing to pay and work backward, i.e. control your cost to create profit? Price points can make or break any company, but especially a startup.
4. In what way is your product or service different than what competitors are offering?
I remember one candidate in Asia was going to start an egg business. He would collect eggs from farmers and sell them for them in the bazaar. One of our faculty pressed him repeatedly on how he would differentiate and get attention from potential buyers. He seemed quite frustrated by the line of questioning and finally blurted out, “I will hang a sign out that says ‘I have EGGS!” That was enough. He was the only one selling eggs in the bazaar.
5. Where and how are your competitors operating?
Location is essential to certain types of businesses. To others it’s irrelevant. Is the product or service delivered in person or virtually, in a store or online?
Starting a business without studying the market is a formula for disaster. Unless you are Steve Jobs and can create entire industries from nothing the time you spend to understand the environment into which you are entering is to roll the dice–and they often come up snake eyes!