We first had to pitch to JMU students in order to see if they were interested in being instantly alerted of local deals. Throughout the process we developed a database of students' phone numbers. This was our selling point to businesses when we pitched our idea. We decided to make a list of local restaurants in Harrisonburg that we could contact. When we first invisioned our venture we were planning to use familiar restaurants that JMU students already frequent such as Jimmy Johns and Tutti Gusti. This ended up being the wrong approach because the more successful businesses were more reluctant to use our service. The chain restaurants were not flexible in their marketing tactics due to corporate regulations. So we later took the approach of targeting less known local eateries. After fourteen failed pitches, we finally got our first deal with Franco's.
Our next step was to research mass texting services. There were many to choose from with varying prices. Eventually we chose "Trumpia" texting service as the best fit for our venture. However, we thought it would be a strategic move to not purchase the service until we got our first restaurant deal. This ended up saving us $45 dollars because we only got one deal and we were able to send the deal to our contacts through our personal unlimited text messaging plans.
After researching the methods that Groupon uses to conduct their business, we realized the key to their success-yet a major problem for our venture. We found that the business that Groupon advertises for do not pay the company until a certain amount of customers purchase their deal, and then the deal will become active. This puts the businesses at basically no risk of trying the service because they will only be charged if they have a large increase in sales. One of our main challenges was businesses' reluctance to pay for our service because they were not convinced it would necessarily generate increased sales. The only way we could attempt to duplicate Groupon's method would be if we sent out local deals and then went in later and asked the restaurant if they had an increase in sales, and as for payment after the fact. This would be risky and we were nervous that the businesses would not necessarily be truthful. This led us to our beta approach, however it requires a lot of time and the businesses could end up not continuing our service after they use the free trial.
We had originally thought that this would be a successful venture. However, the reality of our business wasn't as profitable as we had thought. It turned out that businesses were reluctant to want to purchase our service, so we came up with a "beta" version where we wouldn't charge any businesses for our first advertisement for them. After pitching our idea to local businesses the managers all seemed interested and told us to get back with them after they got in touch with their owner. Unfortunatley, this only slowed the process and our follow-ups were not successful.
The difference between how successful we thought it would be and the reality of the situation was due to the fact that it took our group a while to come up with the "beta" version idea as well as targeting the right local eateries. The smaller businesses were normally more interested, so targeting them to begin with could have made the key difference for our success. We had also spent a long time researching on the internet for the right mass texting service that would allow us to contact our database for the lowest cost (while being effective). If we were to start this venture over again, we would have included the "beta" version as well as contact the less common eateries from the start.
Even though this business wasn't as profitable as we assumed, we were able to gain a lot of experience through pitching to the various local businesses and gaining feedback. We could have attempted to sell X number of tee-shirts, yet we took the avenue of expanding our knowledge in a service based industry.
If we could offer advise to future entrepreneurship groups we would suggest to take time to conduct market research in the area. This can be easily done through actually starting the project and not spending time on assuming or researching the internet. We would also suggest to pick an idea that you could enjoy doing given that you will be working with this business the entire semester. Finally, we believe that it is okay to change an idea. You are not committed to any business and if it doesn't work, change it. Not only will this business project reflect your grade, it will also help you succeed in any future business venture.
