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Many small business owners confuse creating a product with building a business – and many fail because they don’t understand this difference.
These two things may sound like the same thing, but they are very different. Successful business owners understand the difference between the two, so I want to share how they compare to one another.
Many businesses start with a great idea. Maybe it’s an idea for a new product, a different way of delivering a service, or taking an existing idea and applying it to a new type of customer. Some ideas for products are services are brand new, such as a new invention or completely new service. For example, the iPhone was a new cell phone and music player created by Apple, which was a product that hadn’t been successfully created in the past.
Other ideas are not new, but still fill an unmet need in the market. For example, the Samsung Galaxy was not a new invention since it came after the Apple iPhone, but it still filled an unmet need in the market. Samsung attempted to create a product that was better and cheaper than Apple’s iPhone. Both the iPhone and Galaxy are successful products made by successful companies, but the originations of those two products are very different.
The key point here is that no matter whether your product or service is a brand new one or an extension of an existing idea, a business idea won’t succeed unless you build a “real” company to develop, market, and sell it to a mass audience. It doesn’t mean that your product or service has to be as popular as the iPhone to be successful – although I’m sure most of you wouldn’t complain if it were – but it means that you have to do more than just create a good product to make your business thrive.
There are a number of reasons why this is true. First of all, one product or service typically isn’t enough to make a successful business. It typically takes a number of complementary products and services to fulfill customer needs. For example, even the iPhone isn’t effective as a standalone product. It succeeds not only because it is a great product, but also because customers can also download music, subscribe to photo sharing services, and buy additional storage space from Apple. The combination of these products is what makes Apple and the iPhone successful. And the iPhone is just one of many products and services that Apple provides to its customers.
Secondly, the economy and customer tastes change very quickly, which means that no one single product or service is likely to stay popular for long. This means that if you want your small business to succeed in the long-term, you need to constantly update your products and services to constantly meet the needs of your customers. If you rely too much on one product, it won’t be long before it becomes obsolete and you find your business in trouble.
A good example of this is the company GoPro, which makes wearable recording devices for athletes and other active individuals. The product was initially very successful and enabled the company to grow to nearly $1 billion in revenue. However, it relied too much on this one product and has since struggled to maintain its growth in the face of competition from smart phones and other cheaper recording devices. As a result, the company is now facing a decrease in market share and revenue. At the time of this recording, the company was actively trying to expand its product offerings to diversify and meet the changing customer tastes, but it is to be seen whether this strategy will work.
The third main reason why building a company is so much more important than creating a product is because it is difficult to get each customer. For every dollar and minute of time you spend acquiring a new customer, you want to maximize the revenue you realize from that customer. Having only one product limits your ability to sell more to your existing customers that you worked so hard to get.
Finally, building a company enables you to have a sort of well-oiled machine that continuously creates more demand for your products or services, allows the business to create enough product to meet demand, and grow in the long-term. A product by itself won’t last for long if you can’t build a company that constantly creates more and more demand for it and finds ways to deliver those products or services profitably.
So, the summary is that building a company is more sustainable for long-term growth. It allows you to be more nimble and more quickly adapt to changing customer needs. It also allows you to build a business that can last beyond the original owner, in the case that you may want to sell the company or pass it on to your children. A company that provides a single product or service can’t provide this level of growth potential and sustainability.
This is one of many things you can learn from a free trial of our small business training courses. Click here to register for a free trial to learn how a proven small business program can help you start and grow a successful business.
Apart from the gruelling task of managing employees by viewing them as individuals, entrepreneurs must adopt the most effective small business management styles. Appropriate management styles contribute to an organization’s growth and development. The right style promises to solve the problems in the organization, enhance employee satisfaction, and increase productivity.
But which is that management style that will ensure that these returns are guaranteed?
There are three primary management styles you have to choose from. Let’s talk about the pros and cons of each. (more…)
Mаrk Cubаn is one of America’s most widely-known entrepreneurs. He hаѕ an аnѕwеr to thе world’s есоnоmiс ѕtimuluѕ рlаn. He also wants to hеlр by hеlрing реорlе tо think more entrepreneurial аnd оffеrѕ some small business ideas fоr ѕtаrtuр buѕinеѕѕеѕ.
He iѕ оn the right trасk. Thе ѕрirit оf thе еntrерrеnеur аnd thе рiоnееr is thе driving fоrсе behind whаt it is tо bе аn Amеriсаn. It iѕ part оf оur hеritаgе. Hiѕ plan iѕ worth lооking аt fоr those who hаvе аn idеа for a buѕinеѕѕ or аlrеаdу have a business and whо need invеѕtmеnt сарitаl tо fund it. (more…)
Steve Jobs, the founder of Apple, is one of the most successful entrepreneurs the world has ever seen. He is also a good role model and source of small business ideas for young entrepreneurs who are thinking of building a startup.
Regardless of whether you are running a small business or a large one, the rules to small business success remain the same. Entrepreneurs can always follow Steve Job’s methodologies and ways to get success in their startups. Let’s have a look at those fundamental principles that made Steve Jobs successful: (more…)
Chances are, you have a pretty good handle on the things that are most important to your small business and the industry you’re in. You’ve most likely identified a trend, problem, or opportunity and built a small business idea to address those needs in the market.
However, it is also important to keep an eye on bigger-picture small business trends that affect you as an entrepreneur and small business owner. In addition to the things affecting your small business and the industry you play in, there are a number of macro trends that every entrepreneur should be aware of.
Here are three current small business trends that are of particular important to small business owners in the process of taking their enterprises to the next level: (more…)
Incubators are an important trend in the startup world. Especially in technology hot spots such as San Francisco and New York, select small businesses take parts in these startup communities as a way to gain contacts, mentoring, infrastructure, and education to guide them on their journeys to small business growth.
While incubators can offer advantages to participating startups, they are not for everyone. In addition, although much media attention is given to startups permeating the startup community, they are not critical to the success of startups and small businesses. Just as is the case with any hot trend or topic with media buzz, it is important to understand the reality of incubators.
Here are a few important things to keep in mind when considering whether or not your startup or small business should pursue involvement with an incubator: (more…)
Earlier this week, we posted a blog outlining three reasons why small business growth is good for entrepreneurs and business owners. To summarize, the reasons are because you’re dying if you’re not growing, growth is the only way to create real wealth for yourself, and it’s the right thing to do (read the entire blog here).
While these are certainly valid points, small business growth is also a double-edged sword, with several risks and downsides. Starry-eyed entrepreneurs with grand visions of becoming the next big thing may not think about these challenges, but they are important to consider as you chart the course for your small business: (more…)
It’s not often that a reality show can provide meaningful small business lessons for entrepreneurs and business owners. There is one exception to this rule.
In addition to the antics of Donald Trump and celebrities as diverse as Flavor Flav, Gilbert Gottfried, and Donald Trump, several years of the TV show Celebrity Apprentice have brought many lessons for small business owners and entrepreneurs. Even though the show is well-scripted and staged for a reality show, it still provides several takeaways that we can apply to our small businesses: (more…)
One of the primary challenges of entrepreneurship is the fact that small business owners need to possess so many skills and wear so many hats in order to realize sustained small business growth. On the one hand, they are required to be the visionaries for their new business or startup, while at the same time they are required to be a detail-oriented executor who can rally his or her organization to get things done effectively.
This is one of the key reasons why so few entrepreneurs are successful at the various stages of small business growth, beginning with the startup phase all the way through sustained growth and, if things go well, becoming a large organization. While entrepreneurs such as Bill Gates and Mark Zuckerberg provide case studies of those that can adjust and make the transitions through the various phases of growth, the reality is that most small business owners don’t have the personality types, skills sets, or interest in doing so.
Regardless of which phase your startup or small business may be in, there are a number of key roles that you need to fill as a small business owner. The skills and focus required for each of these roles are varied, which is just one reason why managing a small business can be so difficult.
According to the book The E-Myth Revisited by Michael Gerber, there are three key roles that small business owners must fill on a day-to-day basis: (more…)
Innovation. Creativity. Delegation. Empowerment. Flat organizational structures. These are just some of the management styles that most academics, journalists, and the Small Business Administration will tell you are “right” for small businesses, startups, and even large organizations.
These management styles all sound great. After all, who wouldn’t want to work at a place where there is unlimited creativity, bosses don’t get in the way, and you’re allowed to make every decision for yourself?
However, small business management isn’t quite that simple – especially if you plan to grow or scale your business with any success. In fact, these flavor-of-the-month management styles are often times the worst possible formula for certain situations.
Before we get into that discussion, though, it is helpful to first understand the two primary general management styles available to small business owners: (more…)