You have a great idea for a new business, is it actually viable?
Unfortunately not all fantastic ideas actually work out to become great businesses. Even if you’ve thought of a fantastic product or service, you need the right business model, pricing, funding, marketing and people to make it work – and of course, enough customers willing to pay for it.
So how do you know if your idea is worth pursuing? Here are a few tips to make sure your idea is a winning one before risking everything and plunging straight in.
Is there a market for it?
The first step towards determining whether your business idea is viable is to carry out extensive market research. You need to establish if there is a market for your business, and whether this is big enough to make the venture a success.
Many great ideas have flopped due to lack of research and this stage should never be overlooked. Not only do you need to work out whether there is sufficient demand for your offering, you must also determine what marketing, pricing and business model will work for your target market.
To do this, you need to find out as much information as possible about your potential customers: How many are there? What type of people are they? Where do they shop? How do they behave and what drives their purchasing decisions? If they are consumers, how much do they typically earn and how much disposable income do they have? How often would they buy your product or service?
Thankfully, you can carry out much research yourself at little or no cost. Market research falls into two main categories: primary (which you conduct yourself) and secondary (analysing data published by secondary sources). The research can be quantitative (based on numbers and statistics) or qualitative (based on attitudes and opinions). Ideally, you want a mixture of all of these sources to gain a reliable picture of the market.
Your primary research could include focus groups, to get prospective customers’ attitude towards your offering first hand; surveys, questionnaires and sizing up the competition. Look at your rivals’ use of technology, customer service, prices, marketing and business models and try to find out what your potential customers think of these things – this will help you to identify areas for improvement.
Often you can access valuable secondary data free of charge simply by asking for it via a phone call or email, or for a nominal charge to cover postage or photocopying. Much of it is also available online: trade and industry associations often publish data such as sales figures, economic trends, and other statistics and reports. Look at industry specific magazines and publications too.
Remember, the goal is to arm yourself with as much information as possible about the state, size and needs of your market. Do enough research to ensure the results aren’t one-sided, and take feedback on board? Be prepared to change your idea according to what your customers want, not what you prescribe as the best solution.