Customers always come first!!!

From the SBDC Vault

By Michele M. Miller
SBDC Director

At the Small Business Development Center of Northwest Illinois (SBDC) we believe the top five reasons for business failure are:

• Poor planning or poor preparation. Lack of a well-written business plan
• No working capital (money)
• Poor choice of locations
• Not understanding your market (customer needs)
• No marketing (let people know you are here)

So how do you know what your market, i.e. your customer’s needs are? Think about this from the point of view of your customer. What product or service do they want? Why do they want it? What makes your product or service different from your competition?

Let use an example that will demonstrate this point: We are a hungry family of four and have a limited budget. It is 6:00pm and everyone is ready to eat now! We have to make a decision on a place to eat. Did I mention that we only have an hour before we have to be at little Jeannie’s music recital? By the way, it needs to be accessible, because mom has special needs. Here’s our thought process:

• We need a restaurant that has quick service (address our time limit concern)
• We need a restaurant that offers a variety of choices (our four family members)
• We need a location that is close by (we are hungry now)
• We need a family oriented location (our family of four)
• We need a restaurant that offers a menu that is affordable (limited budget)
• We need a place we all like (family of four has four different opinions)
• Accessible and comfortable (mom's special needs)

Do your customers really go through this type of thought process when they make a decision on going out to eat? Absolutely! As the owner of this restaurant you need to know what your customers want before they know they want it!

Here are some resources you can use to find out what your customers want and how you can make your establishment “THE” business. You need to analyze your market.

According to the Small Business Administration all customers have four essential characteristics:

• They have a particular need. People have all kinds of needs including basic survival needs (eg., food, shelter, health), rational needs (eg., dependability, durability, economy), and emotional needs (eg., love, sex appeal, status, security, acceptance, and power)
• They have enough money to buy what you are selling. Keep in mind that just because someone wants to own something you are selling does not mean they have enough money to buy it
• They have decision-making power. The key here is to spend your time wisely. Find the person who has the actual authority to say "yes" or "no" to buying your product or service
• They have easy access to your product or service. Accessibility is important. For example, if you wish to sell baked goods to people in your neighborhood, you must either take your goods directly to your customers or have a small shop where they can come to you

Based on these common characteristics, your job as a business owner is to answer the following four questions:

• What need does my product/service satisfy?
• Who needs and can afford what I am offering?
• Who has the authority to say, "yes" to the product/service I am offering?
• How accessible is my product/service to my customers?

Your answers to these questions form the foundation of your marketing research effort.

Once you have addressed these questions you need to understand the state that makes up the market (customers) that you are looking to buy your products or services. The US Census website has information to address this. There are also experts in your local community that have community profiles that document the numbers of people that live in your communities.

In your business industry there are also associations that have this information available. The Encyclopedia of Associations (available at the Highland Community College library and others) will give you listings of Associations that are available for your industry. What can they offer you? The right association can offer you a State of the Industry report (an idea report that gives you information about your market, trends, expectations of the future, and much more). Trade shows, mentors and other training features.

There are also market analyses available for purchase from companies. These reports can be a valuable tool to use but be careful; the company should be from your area or have a deep knowledge of your area and your industry. They can be costly, so be sure you know what is in the report, what are the features of the report, and cost for annual updates.

This is just the beginning of the in depth market analysis you should have about your market (customers). Not knowing this information will cost you your business.
Need more help? Contact our office: The Small Business Development Center of Northwest Illinois at 815-599-3654 or email us at Michele.Miller@highland.edu. We are here to help!