General Business News for April 2004

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What Comes First - The Customer or the Product?
Ask any farmer, kid or short-order cook what one of the more pressing questions in life is and you might get, "What came first - the chicken or the egg." Of course, you may also get a different answer, but if you ask an entrepreneur the same question, you will probably get a long-winded answer that boils down to, "What will come first, the product or the customer?"

Now why would an entrepreneur ask a silly question like that? Isn’t the answer obvious? Of course, you need to have the customers. Well...that’s true, but what happens if you have a customer ordering your superwidget, but you’re not ready to produce the superwidget?

There you go; we have the answer now. The first thing we must do is put our product into production? Are you sure about that? What happens if you build a hundred widgets and nobody wants them?

Perhaps you need a two-pronged attack - 1) sales/marketing and 2) production. Maybe you should put some of your business efforts into attracting customers and some of those efforts in getting the product to market. Aside from possibly having a split personality, how are your going to do that? Let’s see.


If you build a better mousetrap, the world will beat a path to your door...if you convince the world yours is the company from which to buy said mousetrap. If nobody knows your new mousetrap is available, why would they come to you to buy it? Similarly, if they know there is a better mousetrap, how is your target market going to buy that mousetrap if they don’t know how to find you?

Both of these questions are answered with one simple word - marketing. Most people equate marketing with selling the product. Actually, the prime reason to engage in marketing is to raise and awareness of who you are, where you are, what you are selling and why people need what you are selling. Marketing gets the customer on the phone or through the door. Selling gets the customer to place an order or buy the product.

Job number one is to get the word out on your new business or product. This can take one of many forms. You can advertise through the various media outlets - television, newspapers, and radio. You can put flyers on windshields in the parking lot if your new business lends itself to this type of advertising. You can make personal appearances and talks at stores where your product will be sold. You can hit the "rubber chicken circuit" and tell the local service clubs about the benefits of your new superwidget.

There are a number of approaches you might take to raise your target market’s awareness of your product; however, we caution you to be careful. Marketing is an expensive endeavor and the timing of your message is important. Don’t begin too soon, or your market may be ready much sooner than you want; begin too late and you may have a much heavier investment in inventory than you planned. Don’t spend too much on one outlet either. Some people listen to radio and some people watch television. Some of us read newspaper advertisements and some of us have no time for anything, but we do notice billboards and other outdoor advertising, including the sign on your front door.

If your budget permits, you may want to engage a marketing professional. Some are extremely expensive and some are more reasonable. They can, however, be worth their weight in gold if their knowledge of the market is very good and they can help you maximize your advertising dollar through the right media mix. If you can’t afford the marketing consultant, your decision may be made for you; steer away from higher cost broadcast media and more towards the static outdoor advertising and word of mouth methods.

Bear in mind that you will still need a sales force to solicit orders from customers. That can be anything from the clerk at the counter of a coffee shop to salespersons making calls on industrial customers. It all depends on your product and industry. Assuming you have done your business plan well, you will already have some idea of who you will need and how you will support your sales force.


Most likely, you already have a good idea of how you will produce your products and at least some idea of where that will happen, but let’s talk about some basics.

Where will your store or plant be? What will the cost be and will you rent or purchase? Aside from the obvious consideration of how much capital you have to invest in a location, you have many critical questions to ask. What kind of access to transportation and shipping routes do you need? Do you need a plant with reinforced flooring and special wiring to support heavy equipment? Is your product one that will require special ventilation systems or waste systems and what kind of offices will you need for personnel? How long will it take to get the location ready for the equipment or furnishings you will need? If you are a retailer, where is the location where you will get the most traffic of potential customers?

What equipment are you going to need? Is yours a capital-intensive business or more dependent on people with light duty equipment? Is your equipment the off-the-shelf kind that can be ordered and received quickly or will it require a long lead-time? Some equipment takes more than a year to produce. Keep these issues in mind when timing your target date to create the first production run of the superwidget.

Who will you need to produce your products? Will your product be mass-produced by a low-skilled laborer or will you need highly trained technicians. Perhaps you will need a combination of both. Where will you get these employees and when will you need them? Depending on you’re industry, this could take a few days or weeks in searching for employees.

What materials will you need to produce your product? Your product may require specialized materials such as drugs and chemicals or you may just need a good coffee and donut vendor. If you need specialized materials, where can you get your materials? Is there a single source of supply or multiple sources? If you are entering into a franchise, is it one that will sell basically proprietary products, or will you have access to numerous vendors as long as the sources are up to the franchisor’s standards?

All of the preceding questions will require your attention, and a good many more. Just be aware that the marketing and sales effort will depend on the ability to get the superwidget to market and the timing of getting the superwidget to market will depend on whether you are able to generate the interest needed to justify beginning full-scale production.


So what’s the answer to our question? What do you need first, the product or the customer. We submit the answer is both. If you are having trouble developing your business plan or developing your startup plan, give us a call. We have the experience to help you properly plan the steps you will need to get your business started or product launched.

Happy April and please keep our troops in your thoughts and thoughts.


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