Excited about your business concept?
Great! But, best test it before taking the plunge, particularly if you are a first-time business owner or unfamiliar with the industry you are considering entering. Without careful consideration and planning, launching a new product or concept could be a waste of critical resources if it fails.
Background research is essential to establish:
- Is there a demand (what is the size of the market and your potential share of the wallet?
- What is your target market profile and how willing are they to spend)?
- What are the trends in your industry (e.g. pricing, product or service design, remote working ability, changes in customer demands and tastes, international technology & scientific breakthroughs)?
- Who and where are your competition and how well are they servicing the demand?
- What are the start-up costs and break-even forecasts?
After completing the initial research, field testing is the logical next step.
Field testing your idea may take various forms, such as developing trial versions (prototypes) of your product or service, online or e-mail surveys probing customer attitudes to what you offer as well as experimentation with different marketing and distribution techniques. Focus groups are extremely useful, but it is best to bring in market research experts to conduct these.
To make sure the test is a real test of the product and its' desirability, you want to build a minimum viable product (MVP). This is your idea in its simplest, usable form that you can actually sell. Once you have an MVP, your target market can engage with it. An example would be for a website designer to create a dummy version of a website with 3 pages, with imagery and sample text. In this way, customers can see and experience what they would get for a website bundle priced at Rx.
Gathering feedback from multiple sources will result in a lot of data - both positive and negative, even contradictory. The power lies in how this information is analysed and utilised. It's important to resist the urge to ignore the negative and over-emphasise the positive. Being open to constructive criticism helps to refine the product or service offering and to distinguish between short versus long-term business opportunities. Testing also identifies business ideas that are not commercially viable before significant resources have already been committed.
Testing an idea takes time and money, but failing to test could be a painfully expensive, even fatal mistake for your business.
2 comments
Background research is essential to establish basics such as: the market demand (size and willingness to spend) the profile of your target market trends in the industry (e.g. pricing, product or service design, remote working ability, changes in customer demands and tastes, international technology & scientific breakthroughs), the nature of your competition (who and where are your competitors?), the start-up costs and estimates of how long it will take to break even and then become profitable. The above is crucial and forms the foundation of your Business Vision and Mile-stones to achieve, I fully concur.
Build your foundation correctly and solidly before commencing with the house structure :)