Is there anything worse than investing your time, money and efforts into developing a certain business idea that ends up being a total failure? It doesn’t matter who you are or what you do, you don’t want to see your efforts go down in flames. That’s why most successful businessman today, before they invest themselves into developing a certain idea, always check if there’s a real market for it.
We all have millions of business ideas every single day, but only few of them are real winners. Although to some this might seem easy, most people face extreme difficulties evaluating the marked demand, level of competition and viability of the products and services they’re trying to sell.
Every single day, thousands of companies disappear from the face of the Earth. Why? – Because, no matter how hard they try, people just aren’t interested in buying their products and services.
Whether we like to admit or not, we are all pretty different. We all look at the world from a different set of eyes. That’s why it’s so hard to come up with something that everyone will love.
Last time on this blog I wrote about the importance of knowing your targeted audience and anticipating your potential user’s intent. This time, I want to focus a bit more on how one could see if a certain business idea is worth committing to or not.
One of the best ways to find out if your business idea is any good, is to rigorously test it before you decide to share it with the world. If your new business is to succeed, you must know if there’s a sufficient demand out there for your products and services, at the prices you’re willing to charge for them.
In order to help you with this, I have decided to make a list of ways on how you could figure out if you have a good or bad business idea on your hands.
1. Talk to People and Be Ready to Listen
Although there are no official numbers, many researchers say that there are more than 24 million active online stores out there. That means that there are more than one fifth of a billion businesses who make all their profits solely from the internet. Impressive, right?
Looking at these numbers, we can easily agree upon that the internet is a big enough market to support all sorts of different businesses. Big, medium or small – there’s room for everyone. The only trick is to find out what kind of service will actually be useful to people who shop online.
There a lot of ways on how people could test their business ideas. Of course, you should start by talking to people.
This is just the tip of the iceberg. Most people start by presenting their vision to their friends and family. This is probably one of the worst and most common mistakes that people make when searching for answers about their future business endeavors.
Friends and family will falsely support your ideas because they like you and they don’t want to hurt your feelings. They want you to succeed, so they’ll try their best to encourage your every effort, be it good or bad.
You cannot blame them for that. No matter how hard they try, they’ll never be objective, so it would be wise for you to seek some real feedback from people who’re not part of your everyday social circle.
The idea here is to talk to people who are experienced business professionals, and who will, without holding anything back, tell you if they find your business ideas interesting or not. The only problem with this group is that they’re usually too busy with their own work to focus on your ideas as well. They’re hard to reach, but their opinion is far more valuable than any other that you could get from your social circle.
Be willing to invest a certain amount of effort in reaching out to them.
Next to this, you can always try the so called “Starbucks” test. This test will cost you no more than $5. All you gotta do is to go Starbucks, find a customer that looks like someone who would be a targeted consumer for your business. Approach that person and say: “Hey, my best friend is thinking of starting a business and I’m not convinced he should because I’m not sure of the idea. Could I buy you a coffee and tell you what’s it all about, so you could give me your honest thoughts about it?”
The fact that you say it’s not your idea means the person won’t worry about hurting your feelings, so he’ll more likely to provide you with a straight answer. Try this a few times and see what kind of responses you’ll get.
2. Be Sure That You Can Deliver On Your Promises
Once you have figured if there’s a market for your idea, you should start to think about the logistics. If you, per say, promise people advanced knowledge of Facebook advertising upon completing your online course, you better make sure that you deliver on your promises.
Nothing kills a business faster than bad reputation. One of my close friends once had a local online delivery food service which in the website’s header promised that all order will be on the client’s doorstep in 30 minutes or less. At that time, he had some trouble finding good delivery boys, so his deliveries were almost always late.
Sadly for him, people noticed that. They started writing awful reviews, and before you could say “why is my food cold”, he went out of business.
In this day and age where in almost every line of work you have an endless number of companies competing for that same customer, you need to make sure that you don’t slip up on trivial things. Everyone has a lot of options today. If you can’t deliver on your promises, there’s always someone out there that can.
3. Hard Data Analysis
How big is the market you’re planning to compete in? Who are your biggest competitors? What are their strengths and weaknesses? What are you creating? Does your product or service serve a passion or solve problems? Are you products seasonable or can they be consumed all year long? What is your potential price? What is your potential markup? Are there any restrictions or regulations on your products and services? What do you offer that makes your company different from others who operate in the same field? – These are just some of the question that you’ll need to answer if you want to create a successful online business.
Shopify wrote a great article on this subject. Be sure to read it.
Skipping on detailed market research and validation is a common and very costly mistake that entrepreneurs make far too often when evaluating new ideas for their current and future business endeavors. Driven by false optimism and pure excitement, most people jump into the business world with high hopes, without ever taking the time to actually think about what they’re actually doing and test their ideas in real-life scenarios.
I know that this is hard, but what’s the point in creating something that nobody is interested in buying? Save yourself from rookie mistakes and always test your ideas before you decide to invest yourself into them.
Thank you for reading this post. I hope I provided you with some useful information about how to test your business ideas and see if there’s a real market for them.
Be sure to share this post with your friends and colleagues. Who knows, maybe some of them could actually benefit by reading what I wrote here.
That’s it for now,
See you soon again,
Goran @ AltusHost B.V.