This week I read a scenario about a group of adults who wanted to start an online business to learn about business through hands-on experience. There is a lot to consider when forging into the wide world of self employment. I explored whether the group should select a product or a business model first. I also had to weigh in on what type of product the group should select for their business, but was limited to snowboards or chess.
Whether to select a product or a business model first feels a bit like the chicken and the egg scenario. Which comes first? Ultimately I decided the group should select a business model in order to accomplish the goals they established for starting a business. I feel like they can then hone in a product that fits the parameters of their chosen business model and other constraints such as finances, time, etc. Several of my peers recommended they select a product first. After hearing their arguments, I became less certain of my own recommendation.
The next step was to select a product, without regard for a business model. The two choices were snowboarding and chess. To help with this decision, I did some suggested research using Google Adwords. Using Adwords I determined the demand for both products based on web clicks and the competition. I’m not sure I accurately interpreted the data presented, but this is what I discovered. A lot of folks like snowboards, but the competition for clicks is high – meaning there is a lot of info available for consumers to choose. Fewer people are interested in chess, however there is less material on the subject floating around in cyberspace. If the group created an online presence with chess, there would be more less competition but less demand as well.
A no-brainer, right? Go with snowboarding. But what about the cost of starting a business with such a high-dollar item. Chess has a much lower start-up cost, and there is less risk if the business doesn’t succeed. I’m still not quite convinced chess is the way to go. It seems so boring. How can a website about chess create revenue?
Here’s another idea, if someone in the group were an author, why not sell a book on a site like Amazon? I have a friend who wrote a book. She decided to self-publish through Amazon. They have a brilliant model which allows the author to market their books on Amazon.com, a web-based company that just happens to have a large audience of readers. The books are then manufactured on demand. This reduces unwanted inventory. I bet there is less profit though, not sure about this. There was an option available for reduced price books when a large production run (order) was printed at once. My friend was able to purchase a large amount of books at a discount and sell them at her book signing. She didn’t have to order thousands, which she wasn’t sure she could sell at once [then she would be forced to awkwardly give them away as Christmas gifts or leave them on the shelf of libraries all over the county.]
My friend’s book business takes me back to asking what comes first – the business or the product? She wrote a book first then she decided to sell it.