Most successful entrepreneurs know their industry intimately and have expertise in their product or services. They’ve taken the trouble of accurately pricing these goods and services as well as made sure they’re not impinging on other business’ intellectual property. Despite these steps, failure to understand the market in which you are operating is a recipe for disaster.
It’s best to learn early on if your market will not support your planned product or service before you spend thousands of dollars on a business that just isn’t going to generate the sales needed to support itself and provide a profit for the owners. Once you know this, you can shift your efforts in a different direction and better allocate your resources in a more productive way.
You may have developed the most awesome gadget that you and your close circle of friends have ever seen, but if the buying public isn’t willing to pay for your new thingamajig, it will all be for naught. Keep in mind that market research will also need to be mindful of pricing. If you can sell a billion units, but the pricing is wrong, you will still fail. Your market research needs to determine (as closely as possible) whether your product or service will sell at a price at which you can ultimately make a profit. You may need to pay a marketing professional to help with this research, but it could save you money and potential heartache in the long run. In our next and final article in this series, learn the hidden risks in wearing one too many hats.
John R. McCallum, CPA
John R. McCallum is a member with GranthamPoole PLLC and a recognized leader in the field of cost segregation and various real estate taxation matters. He has also written, taught, and spoken on many topics in the area over the years. Please contact John at firstname.lastname@example.org, www.linkedin.com/in/john-mccallum, or 601-499-2400. CPA License # 5323
The above does not represent tax advice. Each situation is fact-dependent, and you should seek the advice of a competent advisor. GranthamPoole PLLC is a provider of tax, accounting, advisory and strategic services, partnering with clients across a broad spectrum of industries and sizes.