Is your life long dream to have your own skin care, hair care or beauty line? Before you invest all your cash or other’s cash in a project, evaluate if this project is a go or no go! Here are 3 easy tips that will help you see if your product will work or not.
1 . Whatever the product is, get clear on who your client is and what problems’ they are having. Then create a product.
Lots of clients start a business because they love a product but realize that there is not a market for the product or the numbers don’t work.
I suggest starting backwards – find out if your product has a market first then create it.
For example, PPD free hair dye is in fantastic demand with the rise of hair color allergies. So few companies are producing true PPD free hair colors, so the small business that creates and successfully markets a solution for the hair dye allergies is going to clean up.
The big boys work on volume and small margins, leaving niche markets like these wide open.
2. Create your budget.
When starting any new enterprise writing out a basic budget is a must.
Before you decide if it’s a go or not, research all of the cost.
Typically, product development cost include:
- R&D time if customized or making a product from scratch
- Product per unit cost
- Packaging cost (include shipping cost to manufacturer and possibly decorators)
- Labeling cost (include shipping cost to manufacturer)
- Shipping cost to distribution facility or your own business establishment
- Product insurance
This is just to make the product, not including the business operating cost and marketing budget.
Once you add all of that up, let’s say the cost is $4.00 per unit, assuming a minimum order.
3. Next, analyze the market and your competition.
Once you have a guesstimate on your product cost. Look at the market for comparative products, and trust me they are out there.
You want to see how much they are retailing them for. If your cost is $4.00 and products in your category are retailing for $8.00 then look at how you can reduce your cost.
You need to have enough margin in your products to handle the reality of running a business.
If you cost are $5.00 and retailing for $70.00 then I’d continue evaluating this business. There is enough margin in the product to make a living, and that would make the project a go.
I’d love to hear your thoughts! Leave a comment below!