Have an amazing idea for a new business? Great. Before you start spending your money, going to family and friends, go into debt, or seek investment it is important to test the market potential for that idea. Not only will this information help you decide whether or not to spring forward, it will give you valuable information on how to go about it. The majority of small businesses fail within five years if starting up. Here are some great steps you can take to test the waters without drowning:
1. Research: Has your idea been done? Is someone already starting to work on a similar start up? What made them succeed/fail? You can learn a lot from another concept’s failure. Look for holes in other’s execution to determine how you may succeed where others have not. Just because an idea has been tried or is being done on some level doesn’t mean it’s being done well or to its full potential.
2. Seek the Similar: Ask people who are in the same industry what they think of your idea. For example, if you’re thinking of developing software for restaurant reservation systems ask a restaurant manager or owner for their opinion. How high is the demand for the software? Which types of restaurants would be likely to pay for it and how much? You could find someone who has built something similar, like a booking system for medical clinics, and ask them about their experiences.
3. Be Open: Afraid that someone may steal your idea if you talk about it? Ideas are a dime a dozen and most people are excited about their own. Like Edison said, success is ten percent inspiration and ninety percent perspiration Don’t let fear stop you from obtaining valuable feedback.
4. Talk to the Targets: Who are your potential customers? Do they need/want your product? Would they be willing to pay for it?
5. Bring it to the Bank: Asking your bank manager for advice is a great way to test the viability of your business. Experienced bank managers have seen lots of ideas and are trained to look for the attributes of success and failure for start-ups. Having a conversation with the bank is a great source of insight and can give you an idea of what hurdles you’ll have to overcome to generate profit and secure funding.
6. Keywords: The Google Keyword Tool gives you insights into searches for particular keywords, such as the number of global and local searches per month. By searching keywords and phrases relevant to your idea you can get a sense for the demand for your product.
7. Build a Free Landing Page: By building a landing page you can gauge the interest level in your product or service and even determine people’s willingness to purchase it. Muse Chimp provides a great guide for doing this in conjunction with Google Adwords.
8. Test Yourself: Last but not least there is a crucial and frequently overlooked aspect to starting any business: what you want. You must ask yourself how much time and money you are willing to invest to get your idea off the ground. Starting a business can be a lot of work and doesn’t suit everyone. As Vidal Sassoon once said “The only place where success comes before work is the dictionary.” What kind of lifestyle do you want to lead? Do you want to travel constantly? Do you want a family/ how will starting a business affect your family? What are your exits?
After taking these eight steps you should have a solid idea of whether or not you should act on your idea and at the very least will have learned a lot about it.