3 Keys to Successfully Turning Your Passion Into Profit
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In the ever-changing entrepreneurial space, it has become evident that passion is the constant driving force behind every successful business. Passion not only cultivates excitement about the brand but is essential to creating a company culture and brand identity that resonates with consumers.
While exuding passion is at the core of success in both life and business, savvy entrepreneurs know that turning passion into a thriving and profitable company requires more than just a strong emotional connection to the brand. According to a recent study, 25 percent of startup businesses fail within the first year. Thirty-six percent fail by year two and 44 percent admit defeat by year three; however, lack of passion is rarely the cause for failure. In conjunction with passion, there are several key factors that must be taken into account to build a brand that has longevity in the marketplace.
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1. Collect data.
One of the challenges entrepreneurs typically face when working so closely with a brand they feel very passionate about is a loss of objectivity. While you may feel the offering is superior to its competitors, in a crowded, well-developed space, it is crucial to highlight key points of differentiation to ensure consumers know the value of the product. The best way to achieve this is by gathering unbiased data to support claims and prove that there is a need for this particular item in the marketplace.
In addition to gathering information to back product claims, it is imperative to collect data pertaining to the consumers who express an interest in the product. Track key data points such as demographics, psychographics and packaging preferences of the target audience. This will aid in marketing efforts and ultimately save money when expanding the business.
2. Invest in a financial expert.
According to a recent study, incompetence as it relates to managing finances, taxes, pricing and planning is the largest cause for business failure. One of the most important ideas to take into consideration is the value of hiring an expert to manage the company’s cash flow properly.
As a budding company, it may be wise to hire an external financial planner. Look for someone with experience in inventory, sales function, payroll and most importantly, the ability to forecast accurately. In my experience, businesses typically fail due to one of two things: inferior products or money issues. Investing in a great financial expert is one of the most important decisions a businessman can make in order to safeguard his success.
3. Think regionally.
It may sound counter-intuitive; however, entering a mature or national market at a small scale will deplete cash flow and resources rapidly. I recommend pursuing one or more key market(s) and/or retailers that have expressed an interest and a need for the offering, and build up credibility in those locations and retailers prior to expanding nationally. Businesses can accomplish this by providing an experience for consumers through sampling and testing in select regions.
Additionally, it is important to never overlook the low-hanging fruit that will help to build rapport within the product category. To establish yourself within the market, target those consumers who are purchasing your competitors’ products. These individuals are currently spending the dollars on a similar product, so convincing them to switch to your product will prove much more effective than promoting to a consumer who has never previously had a need for the item. By implementing these tactics prior to broadening the target audience, you’ll support incremental business growth in a way that is both manageable and successful.