We started class today by looking at some of the end of chapter 3. This included topics that were much more number oriented. Being an accounting major, I did not have too much trouble with any of these concepts. I have covered Cost of Goods Sold for two years now and am familiar with the equation “assets = liabilities + owner’s equity”.
We then moved on to chapter 4 which focused on the market of which you are going to start your business. The most basic way to describe a market is as people who would be interested in your product or service and have the capability to buy it legally. An example of this is the Jewish man selling the Star of David tree topper. He knew what the market was, and he gave the statistic that around half of Jewish people are married to non-Jewish people. Obviously, non-Jewish people are not going to buy something like this, thus his target market is only where a Jewish person is married to a non-Jew.
There are basically two main types of research: primary and secondary. Primary research would be going and directly talking to people and see what they think about the project. Judy gave an example of this in class of going to a school. There are different ways of doing this type of research: one can individually interview each subject, go to a school and interview students one at a time and maybe get 10 students' opinions in two hours, or do something such as hand out survey, this way you could get 100 students opinions in only one hour. Secondary research is where you do not personally go out and gather research; you collect and learn from research from other companies. Some companies go out and pay other companies to do research for them. It is also very easy to gather research freely from other companies and government organizations. We will be doing almost all of our research for our business plan in secondary format. Organizations such as the Bureau of Labor Statistics are particularly useful because you can look at data from all over the country quickly and easily.
Another important type of research you need to do is Industry research. Before you go and start a business, you need to make sure there is room for this new business. For example, there are already two McDonalds on Hamilton Ave. and there is no way another McDonalds would do very well. You need to research things such as how much money people will spend on your new product. There are also various other factors, such as the economy. The invention of the internet has made the market area much larger. Now, rather than just selling to people within a 100 mile radius of your store, you can reach millions and billions of people all over the world.
Chapter 5 starts into the heart of creating your own business. It talks about what kinds of products you want to start producing and how to decide on where, when, and how to sell your product. There are 4 key components to a good marketing mix: product, price, place, and promotion. All four of these are important to being successful. Even if you have an awesome product, a really good price, good promotion, if nobody knows about the product you will not be very successful. Chapter 5 expands quite a bit on these concepts and goes on to give advice on making these concepts run as smoothly as possible.
After that, Chapter 5 then goes into some of the specifics for creating a new product. It gives examples of how to do things such as creating a good product brand and how to advertise with the greatest efficiency. It gives specific examples of different types of advertising such as in movie theaters, on signs, and online.
The two products we saw on Shark Tank were not nearly as good of products as they were yesterday. The first pitch of being able to quickly put up and take down Christmas lights does seem like decent idea. The common American who only puts up light one time a year would not want to buy it when the lights are three times as expensive as other lights. I can understand why not all the “sharks” wanted in. He only got one offer and I think that is was not wise of the inventor to turn down the deal. While the “sharks” were asking for a bunch of his company, it seems liked he was struggling with selling his product. I think that with one of the “sharks” help, he maybe would have been able to get in with some bigger nationwide stores and be much more successful. I already talked a little bit about the second entrepreneur. In my opinion, it was an alright product. But, I agree with the “sharks” that there just is not a huge market for Star of David Christmas tree topper. I think it was a very good idea of him to accept the “sharks” offer. However, he was also right that they need to add some other products along with the star.
I started doing a fair amount of research for my brewery. The more I read into it, the more it sounds like it is a lot harder than it seems. You need to get a bunch of legal stuff to sell alcohol, find a distributor and, most importantly, make awesome alcohol that people want to buy. Since we are not doing a full business plan, it will not be quite as hard to finish the project. Because alcohol is a controversial subject, there is a fair amount of research involving it which will help with my research. I will continue to do some research and start to put my binder together by this weekend.
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