Here’s where I play devil's advocate. There is a lot more to creating a successful business than having a great idea. A great idea may not be a commercial idea, and even a commercial idea has to be able to get enough sales to make it viable.
Before you start spending too much time and money on setting up your business, reflect on the following points:
- Does your idea fill a gap in the market?
- If your idea is already happening in the market, can you do it better?
- Is your service or product going to be different than what already exists?
If the answer to all three of those is ‘no’, then walk away. If you want to have a successful business you need something that is either unique (for your community), better than what already exists, or have a real point of differentiation.
If you feel that you do tick one or more of those boxes then you need to test your idea. If your business is quite similar to others you will be able to shortcut some of these steps, but if you do try and get as much information from those other business as you can.
Start by thinking about the problem that your product or service solves. How does it make things better?
Then think about what sort of person will be the main user. Who would you consider to be your ‘perfect customer’
Narrow it down as much as you can and in as many ways as you can to find your target market.
Example:
I have developed a pair of extremely comfortable shoes that also look good. What is the best target market for my shoes? Is it:
- People between the ages of 25-45?
- Women between the ages of 25-65?
- People who get sore feet from standing?
The correct answer is women between the ages of 25-45 who get sore feet from standing.
You don’t just want to identify who ‘might’ be your customer. You want to identify the person that this product or service fits perfectly. This is the target market that you want to work with more than anyone else.
Other Examples:
- New homeowners with combined incomes of over $90,000
- Parents of young children with eczema
- Owners of small trades businesses within an hours journey from Rangiora
If you can demonstrate that your product is viable to your target market then that puts you in a good starting place.
But challenge your assumptions. Sometimes your product or service may not suit the target market you expect, but there may be a whole other group of people who will be interested.
Then have a look at how many people might exist in your target market that you can capture. If there are enough people to realistically give you an ongoing income, you might be onto a winner. If not, you may need to rethink your product or service, or re-scope it to meet the needs of a different or larger target audience.
This is where you really need to think about what makes your product or service special. Write these down.
- What problem are you solving?
- How will your product or service solve it?
- What are the key features of your product or service? This is the stuff that makes your customer's life better. Keep this simple and avoid technical terms or language your customer won't understand.
- What are the assumptions you are making - it will be useful to test these.
- Very roughly, how much do you think your product or service is worth? Is this a one off charge, or are you going to be generating an ongoing income from customers.
At the moment the question is "should I sell this product?", so if your product or service is not fully developed don't panic. This process may actually change your mind about some of the details of what you will sell.
This step is vital for most businesses, but if you have an original idea or product then you also need to be careful. You don’t want to give your amazing business concept away so make sure you can trust the people you are talking to, or that you are not giving enough details away that someone else could beat you to market.
You may need to consider your Intellectual Property position. If so, we recommend visiting the Intellectual Property Office as a first step, and then possibly talking to an Intellectual Property lawyer such as local IP expert, Infinity IP
But that warning aside, ask as many relevant people as you can:
- Your target market; this is the best group to ask.
- Professionals; anyone who you feel would have a valid opinion such as a bank or a business coach.
- Other business owners; you’d be surprised how helpful other businesses can be if you are not directly competing with them.
Try to avoid asking friends and family. This is the worst group to ask as they are more likely to give you positive feedback when what you actually need is honesty.
As much as possible, get face to face with people. This gives you the opportunity to ask questions and gain a good understanding of what does and doesn’t work for each person. Surveys are OK, but not as valuable as conversations.
Remember, you are not asking questions in order to sell your product or to justify your ideas, you are asking questions to get an honest opinion on the viability of your idea. So don’t try and change their minds if they are negative. Encourage people to challenge your assumptions so that you are forced to think about what might not work.
Try and ask the question “What?” and “Why?” as much as possible.
- What is the problem that my product or service would solve?
- Why is this a problem for you?
- Why do you think my product or service would be better than another to solve it?
- What would stop you from purchasing a product like this? Why?
- What would you be willing to pay for this?
Going through this process should give you an idea about whether there is going to be an appetite for what you have to sell. This gives a starting point to setting the goals for your business, and for putting together a solid plan.
