Profitability Factor for New Products and Services

Entrepreneurs should develop a profitable plan for providing a new product or service, such as for earning income from a reliable group of customers. The customers should have a preference for the product or service or should have a practical purpose for using the product or service. Many customers would probably enjoy the luxury of eating a new gourmet pizza and would probably also benefit from using a new soap.

Specific Level of Income for Potential Customers

The level of income for the customers can be used to evaluate the level of potential profits that could be earned from the product or service. Some business owners decide to earn profits by focusing on the middle-income customers in a city. The property managers at Dallas Luxury Realty only offer services for managing rental property that is for middle-income tenants and only want to participate in a small business market for the Dallas property management companies.

Customers for a New Product or Service

Several factors can influence the decision for providing a new product or service for some customers. A small business owner could decide to make some homemade soft soaps, such as with liquid Castile soap and some grapefruit-scented or clove-scented oil, but there may not be several customers who would want to buy the soft soaps. The business owner would probably earn a low level of profits from a small group of customers for the uniquely-scented soft soaps.

Decisions about Providing a New Product or Service

Small business owners should evaluate the preferences of the local customers and should also evaluate any problems from a lack of products or services in an area, such as services from personal shoppers for busy customers. The decision about offering a new product or service should also be based on the skills of the small business owner. Some entrepreneurs are required to rely on a partner, such as a chef, who has the skills for providing the product or service, such as for preparing gourmet foods for events.

Decisions about New Small Businesses for Entrepreneurs

An entrepreneur could develop a practical business concept into a new product or service for some small business owners, such as developing a new tool caddy or organizing a professional network for plumbers, electricians and HVAC technicians. The plumbers, electricians and HVAC technicians would be exposed to more business opportunities as members in a new professional organization. With an innovative concept for a new product or service, an entrepreneur could expand a small business operation with franchise contracts for offering the products or services in several cities.