Small Business Products And Services
What is a "business product" or "business service"?
Ok, the two in some ways are the same, but it does cause some confusion. A product is tangible. You know the chair, that's a product. Or a computer is a product. A service is like computer repair service. Someone repairing, that's a service; You're doing something for someone. That doesn't mean that when you're selling product or marketing a product that you don't want to give good service. That may be why confusion comes in. You want to give good customer service. But the two are different. You can have a business built around products, selling computers, or building computers, or you can have it around servicing computers. That's a service. Consulting is a service. Teaching is a service. Speaking is a service. These are all intangibles. Whenever you've got something, whether it's a computer software or a computer, anything like that or a chair, that's a product.
What are the odds that my new product will be successful?
There are all kinds of figures out and, and I'll give you the worst. The worst one was that there was a study done some years ago by the Boston Consulting Group on all kinds of products, and they found something like 1 of 1,400 products that people thought up actually came out and actually were a successful commercial product. You can narrow that down quite a bit as they were looking at all kinds of products; big kinds of products and everything else. You may have heard of 8 or 9 or 10 products succeeding; I think whether a product succeeds or fails really tends to do with businesses rather than products themselves rather than the marketplace. Regarding the product; it really depends on what you with the product. I am again referring to my master in this: Joe Cossman. I've really learned a lot from him. Joe had a lot of success; he also had some failures. He said that really the basic thing is what you do with the products that's different. He took not only the Ant Farm, but also a potato 'Spud Gun' which sounds like a strange name. It was a toy; potatoes are mostly water and you took this little gun, put the potato in there and fired, and it fired a little piece of potato. That product had failed miserably in the market place; awful. One way Joe used to find products was that he used to call plastic factories around in his city (which happened to be Los Angeles by the way), and he would ask them if they had any old tooling. He found out this one company had tooling and also about ten thousand of these little potato spud guns, and they had lost all kinds of money about ten years previously. He bought the tooling and the 10,000 spud guns for $500. He sold 850,000 Spud Guns, but it was a twist that he made to it and the way that he marketed it that made it different than what this person did before. Any product can be successful. I wouldn't look at the success rate. Just remember that the caution note is that any product can fail but any product can also be a success if you do it right.
Which small businesses fail or succeed most often?
I'm not sure that you can say “All of these fail, and all of these succeed,” because there's so much involved in these things. Some of these things, as I just mentioned, depend so much on what you do with the product. I think that you can look at whether there's a demand for this type of business or not, or the uses of the product. For example, I think maybe Joe, if your name is Joe it helps out a lot. There's a man called Joe Sugarman. He's the most known because he used to sell blue blocker sunglasses on television. He sold those for about 10 years, but he sold a lot of other products. He was the first one to sell handheld calculators, and he sold them through the mail. This is another example of a product which had a terrible time getting off the line. He sold them even before Sears did, and when he sold this thing, he sold by direct mail at first, and it failed, it failed miserably, but he kept track. That's another thing that's a good lesson for all of us; in other words, just keep track of what you're doing as well as the results and where they came from. Joe had different mailing lists that he used, and he found out that even though they lost all the money, I mean they lost the money basically, certain lists really worked. The list of engineers is an obvious one that worked, and other lists didn't, so he went back to the people who brought him the money, and he said, “Look, yes, we lost all the money, but I know what's wrong,” and he showed them the things. They reinvested and it was very successful. I'm not sure you can say that certain products are always not good and these other products always are good.
How do I find a new product to develop?
One is, look for failed products like Joe Cosman did. Products that did not succeed. Another is, and I was amazed at this, is magazines, not only current magazines but old magazines. I'll give you two examples, one with old magazines, one with new ones. I was curious about this when I first heard about mail order and everything, and so I remember all these old products. I went back to the library, and I looked at Popular Science from 1957, '58, and I was amazed at the number of products that could have come out yesterday. You can talk to large companies and the U.S. government. They all have products that they can't do anything with. They don't know what to do with them, for one reason or another. A good example is that, I don't remember the company right now, but during World War II everybody was trying to find a rubber substitute because the Japanese had captured all the sources of rubber, and we really needed a source of rubber. So, an inventor created this great product and it did all kinds of crazy things. It would bounce, it did everything except what it was supposed to. It wasn't a good substitute for rubber though. So it lounged around during World War II. Nobody did anything with it, and then after the war it went someplace else, and then this one guy named Hodgson got hold of this thing, and, you know, he got the product and he did a test, by the way. A very simple test, he took it to a party and everybody had a ball with it and he realized, "What a great toy." Thus the birth of Silly Putty.
How do I decide which new product I should develop?
With small business products and services, and deciding which products to develop, I think you should like the product, and also hopefully, you should know something about the product. One of the mistakes I made early on is, there was a product that I liked, it really was interesting to me, they were butterflies, they were handmade in Germany, and I could get them for maybe a dollar or ninety cents each. I saw some jewelry store and they were selling them for twenty or thirty dollars, so I thought, ‘Wow, I can really do something with this'. However, I didn't know anything about jewelry, nothing, not a thing. So I bought some of these, and it failed, I didn't know what to do with it and didn't know the industry. So, I think that when choosing products to develop; you must want to develop the product; it's something that you like, and something that you know about. Now, beyond that, you can look at what's the potential for this product, does it have a limited potential, a very small market, or a larger market. Is it going to cost me a lot to do this? With some things you have to buy tooling and have tooling made, that's very expensive, so it's big investment. Therefore, you can investigate all of these different factors, and make some kind of a judgment. I mean, starting out with, I like it, I know something about it, what it is going to cost me in time, money and everything else, and finally what the potential is. You want to consider all of those things when choosing your small product to develop.
How do I decide what type of service I should offer?
The service is the same thing. For example, as I mentioned earlier, I'm working on one of my recent projects. I run something called the Institute of e-Learning Arts. I know a lot about online education. I worked for an online university for several years, and I think I can do it well, and I've got a business plan right now about the university. However, with universities it's a little different, in that the states have requirements, and that without accreditation it's very difficult to get students, or it limits the number of students you can get. So, what I've been doing is seeking a partnership with a university that both would like to invest, so they have a controlling interest, and will also exercise oversight, so that I can start out immediately with accreditation. I don't have to wait; in most cases it's a minimum of two years, and several years after that to get accreditation. However, I've recently thought about another idea. While I'm doing that at the same time (which is another possibility) - and this is a service, of course - there's something else I can do. So many universities' presidents with whom I've talked are interested in getting online themselves, rather than buying a subsidiary. What a great idea! I can put together a package to train these universities, and get their professors online with their course tutorial. Everybody wants to do this nowadays. Boston University has a doctorate program totally online. I just heard the other day that Stanford now has an MBA totally online. So, everybody wants to get into this, but they don't know how to do it; I don't know how to do it. So, while I'm working this one project, here's something else that I work on almost immediately and I'm going put something together and see what I can do with that. So, yeah, service is the same thing.
