Your New Business Idea – Making sure Dream is not actually a Nightmare3 Min Read
So you have an idea for a new business and you think that it will be the next big thing. Well before you tell you, Boss, to shove it there are few things that you can do to work out if it is a viable opportunity.
Here are the steps I always follow for all my harebrained schemes:
1. Identifying the need being satisfied
People need stuff, but the question is do they need what you are going to be selling. More importantly, do they really really need it! This is generally referred to as “the compelling need to buy” and it is the most important question that you need to answer. The more compelling the need the more likely it is that you are onto a winner.
A lecturer once framed this for me most succinctly. If I had a pill that could prevent you and every generation after you from getting cancer would you buy it? Of course! How much would you pay? In this case, the compelling need is huge because who would not want to prevent themselves and their family from getting cancer.
2. Where will my customers come from
Once you have identified the need for the customer you need to quickly and easily find your potential customers. Avoid like the plague broadly categorising you customers using demographics i.e males aged 27 -30. What your looking for here is can you easily find and reach a list of potential customers.
For example, if I invented something that could prevent electricians from getting electrocuted I could easily pick the yellow pages (or any other directory to find target customers).
3. Find out if it is being done already
This is a bit of a no brainier however it must be mentioned. Quite obviously you do not want to spend significant time and money on something that is already in the marketplace.
Oftentimes your idea is similar but not quite the same so you need to work out if this is significantly different and the need is great enough to provide you with a competitive advantage over the existing players.
4. How and where is it going to be sold
It is all good to say I have this great product and people will buy it. Unfortunately business is not like the movie field of dreams (… if you build it they will come) so you need to work out how and where you are going to sell it. Are you going to wholesale it? Or have a retail store or are you going to roll the dice and sell it over the Internet.
When considering these options you need to ensure that the startup costs are minimised to ensure that you give yourself the time you need to get the business up and running.
5. What will people pay for what I am selling
The good old price sensitivity question! This is an extremely important question for you to answer. You need to make sure that your potential customers will, in fact, pay what you are asking. When considering the price you need to understand:
- What and if people could replace your product (or service) for? and how much it costs
- What the other players in the market are charging
- How desperate the need is for the customer
If we look at the example of the cancer pill, could it be replaced with an anything else – not really? Can you get it elsewhere? No. How desperate is the need? Great so you could more than likely put a high price on such an item.
Related article: 6 Tips for Ecommerce Price Optimisation
I always think that the best place to start is with the people that you know, find out if they know anyone else and build your research out that way.
6. How do you make it sustainable
You are not going to have a business for long if you do not understand how and why your customers are going to continue buying. Things that can provide this to you are:
- Giving the product a shelf
- Patenting the product (if you can)
- Secure exclusive distribution
Think about what will keep them coming back, how you protect yourself from competitors and how you can sure up your go to market channels to make it harder for entering your market.
It must be said that even the best-laid plans still go to waste but if you consider all of the above you at least will go in with your eyes open. Good luck with your new opportunity.
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