I kid, I kid, but from two perspectives I want to impress upon you how nice this route is. First and foremost, people that might consider starting their own business, the number one reason I've come across for why they choose not to do is probably something you've grappled with in the past. "Oh, I would start this business if only I had the money. You know, it takes money to make money, and you can't start a business with nothing." I won't deny that starting a business without a cent to your name is a tricky endeavor (but not an impossible one, read on friend!) But I will tell you that product development is going to be the most expensive part of your business, hands down. If you can start a business without having to develop a product, which is in essence what I will be doing with Kronch, all the better! Also, for someone like me (you may very well not be like me), putting together the business network is both enjoyable and the process less laborious than tedious product creation/testing/the whole nine yards. If you are an engineer by trade or perhaps an inventor, it may behoove you to focus on product development and outsource the distribution of the product once completed.
Unfortunately you're going to find little help with that sort of thing on this blog. I'm not an inventor nor have I invested heavily in product development before. I would love to help you but it would be the blind leading the blind, I'm afraid!
Still, if you have thought up until this point that being an entrepreneur and being a product developer are one and the same, this brings me to my second perspective. What is an entrepreneur? Some people get really pissed when you call yourself that. "Oh, a real entrepreneur doesn't call himself an entrepreneur, it's something that only other people can call you." I've heard that one before! And it's sort of wrong and snobby in a weird way- my former boss, Stelios Haji-Ioannou, has the job title of "Serial Entrepreneur" written on his business cards. But that doesn't really help us define what an entrepreneur is.
We could say that an entrepreneur is simply someone involved in the creating of new enterprises. By this definition, a product creator can be an entrepreneur, but it does not necessitate vice-versa. I have also heard that an entrepreneur is one that takes lower yielding resources and translates them into higher yielding resources by a redefinition of the accompanying system. This one I like because it lends a primary goal to the profession along with offering somewhat of a definition, but ultimately the first take on it suffices for me. If you introduce a company, you're an entrepreneur.
It doesn't mean you're a successful entrepreneur, however, and you may never make a single sale--especially if you spend years developing a product to bring to market, and then nobody wants it! And that's even imagining that you can barrel your way through that much product development phase without seeing a penny for your efforts and not give-up halfway through, or be thwarted halfway through by any number of external circumstances, such as regulatory issues, manufacturing issues, oh boy... the list goes on!
So maybe the first lesson should be thusly:
Imagine the simplest business you can possibly imagine. Now, imagine that your job is to simplify that business even further.
What does this mean practically?
Imagine all the functioning parts of your future business. Break it down into component pieces, and outsource everything you can. A business should never be entered into as a complex affair, but as a network of interconnected contracts and agreements that put wheels into motion. After the wheels are in motion and the cash begins to flow, you can begin to assess what activities would make sense to bring "in-house" and do yourself or hire someone to do. But the sooner you can get things going, the sooner you can lead yourself to profitability, and the sooner you can arrive at profitability, the sooner you can quit your day job and really bring it alive.
The type of business that will arrive at profitability the quickest is one that does not need to engage in product development.
So let's take a look at Kronch and see what's going on there.
Kronch is a Danish brand introduced by The Henne Pet Foods company more than 10 years ago. It has become a Danish staple that sells a Norwegian Salmon Oil supplement for dogs and cats. I will be acting as importer in the U.S. Salmon oil is well known to have great positive health effects for animals. The product sells itself well because it's a good product.
The second lesson is thusly:
You can choose to act deceptively and guile people in business or you can act honorably. You will find that, in this day and age with your digital fingerprint all over everything you do, the former form of business will get you nowhere fast. Best to sell a product that does a good thing and people want. Identifying what people want is a process I'm going to outline in another entry, but identifying a good product to fill that want is separate process entirely. As in all things, the long term dividends are paid to the man who keeps his word and reputation in business intact.
In the groundwork stage I had identified Kronch as a potential product due to having known the family running the company. It is a well selling product in another country so it stands to reason it might be a well selling product here. Furthermore the family was not uninterested in the prospect of expanding to the U.S. and so we began to discuss it a bit more seriously. Thus the amalgamation of data grab began as follows:
Number One : Market Research.
Pet Foods are a $9.2 billion per year industry in the United States.
Health Food Trends - Since 2005, people in the United States have shifted in eating habits to, on aggregate, healthier lifestyles.
A study showed that people tend to reflect their eating habits on their dogs.
Therefore this initial assertion points to a growing market: The health food market for pets. People love their dogs and love their cats and want them to be healthy and live long lives. Products that can deliver on that, it stands to reason, should be increasing in demand.
With the preliminary market research accomplished, this led to the next very important step:
Number Two: Financial Budgeting
The budgeting of the company sounds like a rote exercise in imaginary play land but in reality your financial budgeting is going to lead you to a lot of conclusions that you wouldn't have reached if you don't do it. The financial budgeting is not to predict with any degree of accuracy what your revenues will look like (who the hell knows how much product you'll sell, really?) but to get a full grasp on what your expenses are going to be as the company unfolds "as it should." Also this is your chance to get in touch with your business model's revenue model. How does it make money exactly? You can't predict how many users will use it, but you can predict how much it will sell for -- and by making your financial budget you're figuring out all this good stuff. What's the price of the product, what's the cost of the product, what's the cost of your inventory space, what are the travel costs associated with each expo visit. I factored these in and did so in a way that I compartmentalized each expense as it related to the aspect of the business. This came in really useful in early stage planning and I recommend it. To explain it more concretely, my initial Kronch financial projections has expenses and incomes related to conventions/expos, sales through website/retail outlets, costs of goods sold (a full inventory list with costs associated), Advertising Expenses and Order Processing Expenses. By delving into each one of these subcategories and contacting vendors in the arena of those services to get an accurate quote, it began to form a bread-crumb trail that led me elsewhere. Once you start the wheels in motion it becomes easier to follow them! Ergo I can't stress enough the importance of developing a financial model and budget for your business.
Number Three: Pet Expo List
The third thing I did was develop a list of every Pet Expo on the East Coast of the United States and put that data into an excel sheet and make a calendar from it. Expos are one of the best places to meet people in your related industry as well as feature your product to people that are already really interested in that kind of product. Do your homework and find out what kind of expos are the ones you should be visiting.
After I completed those three things and had a meeting with the owner of the company we both felt more comfortable moving forward. And that led on to attending the first expo, a process I will outline in the next entry!