Small business owners who are excited about their concept should test it before taking the plunge, particularly if they are first-time business owners or are unfamiliar with the industry they are considering entering.
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.
After completing the initial research, field testing is a logical next step.
Field testing your idea can take various forms, including developing trial versions of your product or service, online or e-mail surveys probing customer preferences and whether they would buy your company’s products and services, experimenting with different marketing and distribution techniques on a small scale. Traditional markets and merchandisers may be old school, but the principle remains tht you need customer feedback.
For well-resourced small businesses, focus groups can be included in the arsenal of tools. Feedback from as many different sources as possible will result in both positive and negative views. Small business owners should resist the urge to ignore the negative and over-emphasise the positive. Being open to constructive criticism can help to refine the product or service offering, distinguish between short versus long term business opportunities, and identify business ideas that are not commercially viable under any circumstances.
Everything that small business owners do to test their ideas should be within a predetermined budget and in line with the available financial resources.
Being extravagant will not necessarily produce better results than keeping things simple and low-budget. If the idea proves ‘bankable’, the entrepreneur needs to be in a position to make it a reality, hence it is prudent to prioritise and spend money wisely.