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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.
Some of our recent blogs have addressed common challenges that entrepreneurs often face. Another common problem that we haven’t discussed yet is the fact that many small business owners confuse creating a product with building a business – and many fail because they don’t understand this difference. This is an important small business idea worth noting.
These two things may sound like the same thing, but they are very different. Successful business owners understand the difference between the two, so we want to share how they compare to one another. (more…)
Mаrk Zuсkеrbеrg ѕhоwѕ trаnѕfоrmаtiоnаl leadership in асtiоn. Althоugh hе was fеаturеd аѕ a traitor in thе movie the Social Network, he fоundеd Facebook аnd turned it into a billiоn-dоllаr соmраnу, whiсh iѕ a ubiquitous company used by people all over the wоrld.
Many people are full of small business ideas, yet they do not have the cash-flow to really begin it. Fresh out of the box, new organizations are regularly turned down for bank credit, and regardless of the possibility that your business is set up, assets can in any case be hard to secure. Advances supported by the Small Business Administration are generally more available; however they are turning out to be progressively aggressive.
With that in mind, there are several alternative sources of small business financing to choose from: (more…)
It is a well-known fact that hard work, dedication, and perseverance are all important to small business success. At the same time, however, few people ever explain the tangible and specific reasons why perseverance is so important to attaining your small business goals.
For example, in the classic book Think and Grow Rich, author Napoleon Hill examines how focus and desire can lead to business and professional riches. While the author does a good job of explaining the connection, here again, there is very little offered in the way of tangible ways that this focus and desire will help your small business succeed.
On the other hand, much has been written about other variables that commonly contribute to success. Popular business gurus and academics have analyzed all financing, education, leadership traits, and a spectrum of other small business success factors at length. However, none of these variables are nearly as critical as the more simple and universally accessible trait of perseverance.
Other than stating how important perseverance is, most business authors, gurus, and advice from the Small Business Administration gloss over this important topic. However, it is extremely important to understand exactly how perseverance will translate to small business success and help overcome the various obstacles that you face as an entrepreneur.
Below are the three ways that perseverance will help you on your way to small business growth and success: (more…)
Many successful small businesses begin with slow growth – sometimes painfully slow growth – before reaching a tipping point that propels them to steeper growth curves and success. But not every entrepreneur and small business owner understands the strategies and tactics required to reach the tipping point of small business growth.
There are a few strategies that successful small businesses use to reach the point of mass product acceptance and sustained growth. None of these approaches involve rocket science, but many entrepreneurs instead think they can simply rely on luck or time to make this happen.
Here are three ways that many small businesses are able to reach the tipping point of growth, scalability, and success: (more…)
Most startups and small businesses begin with a grand vision or idea capable of propelling it to prosperity. As such, most entrepreneurs and small business owners are focused on the vision and strategy of the company rather than more mundane things such as small business software.
However, small business software can help your flourishing enterprise reach the level more effectively and more efficiently than if you were to gloss over this important aspect of small business ownership. Below are three areas in particular where small business software can help your business growth more quickly and profitably: (more…)
As the optimistic, positive-thinking entrepreneur types, we typically like to think about the upside of being small business owners. However, there are often struggles and landmines along the way – and plenty of small business failures – that often get overlooked in our culture of glorifying the seemingly “nothing but success” stories of the Mark Zuckerbergs and Bill Gates of the world.
What many don’t realize, though, is that most entrepreneurs struggle immensely at some point along the way. Even for those that are fortunate enough to become successful, the entire journey can be a long grind. Despite this fact, most popular business publications, training courses, and Small Business Administration recommendations don’t prepare entrepreneurs and small business owners for the difficult scenarios to expect.
Based on my own challenges and failures – combined with what I’ve seen countless other entrepreneurs struggle with – small business owners make a number of common mistakes along the way. I certainly have, having unintentionally run one of my companies into the ground, only to recover and grow the company to heights that I had never seen before.
Below are several things that I learned in my rise, fall, and rise again cycle as an entrepreneur: (more…)