Articles

Business Tips From the Editor - July 2026

BUSINESS TIPS FROM THE EDITOR

July 2026

Richard T. Hendee, Editor
The Silver Fox Advisor

                          “Poor Market Validation"

Poor Market Validation is one of the factors leading to many business failures after the first couple of years of operation. Just because an entrepreneur has what seems to be a good offering or a wonderful idea, that does not guarantee success in a very competitive marketplace.

I have often seen situations where the offering was tested with friends and relatives, who often are not the most ideal individuals to approach because they may have certain biased opinions due to the personal nature of the situation and not necessarily the business nature. 

Additionally, if the offering or idea is something new that has never been available in the marketplace before, there is not much in the way of research that can be obtained to determine if the offering is something that is needed and will actually sell. Further, price points come into play also, whether the offering or idea is a good one or not; if perceived in the marketplace as being overpriced, then it may not fly off the shelf as anticipated. 

Something that I don’t think is used enough in product validation is a “Focus Group”. If done by experienced professionals, “Focus Groups” can provide great insight into product or service market acceptability as well as pricing. It is my understanding that some of the larger grocery store chains, like HEB, use established “Focus Groups” for testing of products with their private label before the product hits the retail shelves. One example I heard about is an HEB ice cream tasting “Focus Group”. When HEB rolls out a new flavor of ice cream, it goes through this ice cream “Focus Group”. Apparently, HEB wants its “Cookies & Cream” ice cream to taste better than any of the other “Cookies & Cream” ice creams on the market, so this ice cream tasting “Focus Group” goes through many rounds of taste testing until there is a consensus among the group that the HEB product is the best on the market. When I heard about this ice cream tasting “Focus Group,” I tried to find out where I could sign up!! 

It is a shame that more new business owners don’t do a better job in market validation before they risk their own capital and the capital of others before they open their doors for business.

I recall a situation in my neighborhood when a business opened up in a small neighborhood strip center. The business was called “Zesty Fruit Treats”. I didn’t know the owners, nor did I ever go into the store, but I had a pretty good idea when their sign went up that this concept likely had not been market tested. I am sure the owners thought the idea was wonderful, which it may well have been.

But in reality, most fruit does not have a long shelf life, so if the inventory didn’t turn over quickly, I would think there would be a lot of lost inventory. From a sales standpoint in a local neighborhood retail center, you probably have maybe three window time frames to sell your product: In the morning as people head out to work, in the late afternoon when the workers come home from work, and in the evening after families have had dinner.

In the morning, Zesty Fruit Treats was competing with all the coffee and pastry shops. After working all day and driving in traffic, most people just want to get home. As far as after family dinners, Zesty Fruit Treats was competing with all the ice cream and cookie shops.

I wish my example had a happier ending, but Zesty Fruit Treats did not last long. 

The example I used here were both food-related, but the same thing is true for other products and services as well. Just think about it: how many nail salons and dry cleaners can one neighborhood support? Further, from a B2B perspective, how many IT service providers can the business community support? Or how many commercial insurance agencies are needed in the business community? Some market validation could very well shed some interesting insights!

If you are a small business owner with a market validation issue, don’t jump off the cliff without spending some time and money on a proof of concept and market acceptability. Seek the advice from one of our professional Silver Fox Advisors who can provide guidance as you chart that course into uncharted waters. We encourage you to visit our website at www.silverfox.org.  There you can learn more about our great programs and community outreach endeavors, or about selecting a Silver Fox Advisor whom you can engage, or perhaps even about becoming a member yourself.

Financial Statement Literacy

Financial Statement Literacy

Herbert Kalman
A Silver Fox Advisor

The primary purpose of a financial statement is to provide reliable information about a company's financial performance to help owners and management make informed business decisions. These standardized reports act as a "report card" of a business's activities.

Key Objectives

Supporting the balance sheet should be supporting schedules for all accounts such as:

The following are examples of some balance sheet schedules.

Following is the income statement of ABC Distribution, Inc. for the year ended December 31, 2025. 
 

Many of the income statement accounts have supporting schedules.  Following are just a few examples.

 
Like many businesses, income earned by ABC Distribution is taxed to its owners.  Owners will generally take distributions from the company to pay taxes and for personal use.  The statement of retained earnings reflects such distributions and their impact on retained earnings.

 
Summary
These financial statements provide significant information regarding the health of the company including:

The financial statements and supporting schedules provide management with information necessary to make good management decisions.  The value of this information increases when the report is provided to management early in the month following.
Further analysis and a description of ratios will be discussed in the July SFA newsletter.