By Dr. Brenda Geer-Frazier
Associate Professor, School of Business, American Public University
Businesses and product development often start due to an unfulfilled need. Like many entrepreneurs, I had an idea that began when I had an unfilled need.
The product development part of my pasta business started when I could no longer eat wheat or pasta with any grain, including rice and corn pasta. I looked at existing pasta products without grain, but I didn’t like any of them. So I started creating pasta in my kitchen, using different types of grain-free flour.
Business Lesson #1: Keep Trying Until Your Product Is Right
Although some of the pasta I made was not great, I knew there had to be a better product and kept experimenting. After conducting more research, I created a delicious pasta that I really liked, made with garbanzo bean flour.
The biggest business lesson here was to not give up or use the first thing that I created.
Business Lesson #2: Do Your Research and Plan Ahead
One night, my husband and I made the decision to investigate if we should create a new business and sell my pasta. This was not our first business, so we wanted to make sure we did not make the same mistakes we had in the past.
In the past, we created a business without doing our research. From our previous experience, we knew that more work had to be done before we took my product to market. We had to test the market, develop a company name and figure out the target market. We also had to decide how to package and market my pasta.
Business Lesson #3: Get Honest Feedback from Your Test Market
My taste buds thought that the pasta was good, but we needed feedback from a test market. I asked other people, who would be honest about the flavor and texture of my new product, to taste-test it.
A common mistake that some entrepreneurs make is to assume that if they like the product, then so will other people. So it was very important for other people to try my pasta to find out if it was a viable product.
We also chose people who would not hold back and be honest in their opinions of my product. With some test markets, your testers may tell you that your product is great because they do not want to upset you. However, it is important to find a group of testers who will not be inhibited by their relationship with you.
Business Lesson #4: Create a Name Easy for Customers to Remember
I now had the idea, concept and research to back up our decision to create a business. The next step in the process was to come up with a company name.
At the time, I had just finished my dissertation and was about to earn my doctorate degree. A few friends were over and we were discussing names for my product when one friend said, “We can call you ‘Dr. Noodles’.” I loved it.
Once we had a business name that was easy for customers to remember, my husband and I formed a Limited Liability Corporation (LLC). We also made sure that our business name did not infringe on the copyright or trademark of another business.
Business Lesson #5: Identify a Precise Target Market
So which customers would become our target market? We had to find out if there were enough people to buy our pasta, so we could sustain a viable business. After conducting research and talking with cooperatives, health professionals, and health-food stores, we knew who would benefit from eating our product and who might buy pricey grain-free pasta.
We narrowed our target market to people between the ages of 20 and 35 who are health-conscious, know the foods that are healthy to eat and have a higher income level. In particular, we wanted celiac and gluten-sensitive people to choose our pasta, as well as individuals who could not eat grain.
One mistake that new entrepreneurs make is that they believe that everyone is a potential customer. This is not true. Other people might buy your product, but you need to market to a specific segment. Otherwise, you may not reach the correct customers.
Business Lesson #6: Develop Your Price, Packaging, Logo and Company Image
We then needed to decide on the pasta’s price. Producing the pasta was not cheap, so we chose a higher price for our product.
After pricing the pasta, we talked with vendors about how to package our product. After reviewing different packages, we decided to go with a more expensive look for the packaging. The cost of our product did not fit the look of a cheaper product.
At that point, we also created our logo and the image we wanted to convey to potential customers. Be sure that your product’s packaging matches the price level you plan on using. Some strategic mistakes take place when you incorrectly price your product or overestimate your target market.
Business Lesson #7: Obtain the Right Licensing and Production Facility
So far, everything was coming together. But we were missing two important things: a license to manufacture my pasta as well as a place to make it.
In order to manufacture your product, it is vital that you know what type of licenses you need. For us, we needed to obtain a food safety license, a state manufacturing license and FDA approval/licensing in order to start production. For you, it might be other government licenses.
Before we could obtain the licenses we needed, we had to find a place to produce our pasta. It had to be produced in a state-licensed food kitchen. A state-licensed kitchen was also necessary and required for our product to get into larger, high-volume stores.
Let’s face it: who would buy a product that was made in a home? When you are first starting out, it is a good idea to rent a shared kitchen. This way, you have less overhead. Once we had everything, we started making pasta.
In the end, it is up to you about how you will take an idea and create a business with it, whether you are self-employed or work for someone else. But be careful to do your research before you spend money, so that you create a business that has a better chance of succeeding.
About the Author
Dr. Brenda Geer-Frazier is a faculty member at American Public University. Brenda has a BBA and an MBA from American Intercontinental University. In addition, she holds a Ph.D. in organizational change management from Capella University. Brenda has over 25 years of management experience and has owned several restaurants. She owns a small business called “Dr. Noodles By Brenda,” which sells grain-free pasta under the name “Dr. Noodles, By Brenda.”