How to Know If Your Business Idea Will Work
How do you know if your new business idea will work? Before you quit your day job, how can you know that the idea is viable and whether or not a market exists? After all, you can have a lot of ideas, most of which won’t pan out. And you want to know which ones will pan out before you start a business that fails, as most of them do.
What You Must Do to Know If the Idea Will Work
First, imagine your potential customers. This isn't going to be everybody but the few who will want to buy what you are intending to offer. What do they want? What do they need? Never start a business because you want to be in the middle of the subject, like starting a sports bar because you want to talk about sports all day. Don’t start a daycare just because you like children.
The key is knowing what your ideal customer is willing to pay for you to do for them. For example, I knew someone who worked in the wellness and nutrition area. This is a wide field, but she knew the market and the customers very well. She couldn’t initially see how to create a business in this area. We first identified her ideal customer, the client she wanted to target. What problems did that person face, and which would they be willing to pay well for someone to solve them? We looked at the problems they faced and business ideas that could be presented as solutions to those problems. These had to be serious problems or widespread ones many need resolved that don’t have a lot of competition.
Identifying your ideal customer and understanding their challenges gives you the confidence that your business idea is viable. First, this ensures that there is a paying market. Second, it identifies the consumer profile to which you will be marketing the product or service. You need to have information about the market before you even bother investing in the business, and you need the second to successfully market the product.
How do you do this with regard to your own business idea? First, write down all your ideas. You’ll ideally have dozens of ideas to mix and match, test against various customer niches. You could have multiple products to offer to a small market or one product that fits a niche that no one else serves. But you want to have many options to consider before you say they aren’t really a good option. Don’t censor yourself. What seems silly or impossible now may be a breakthrough now, especially if combined with something else. You can always improve upon it later.
When you can’t come up with ideas, write down your frustrations, the problems you wish were solved. If you have this problem, surely others will do, and some will pay you to solve it for them. Listen to others’ complaints, too, since that is a potential market.
Think about your ideal customer. Where do they live? What do they do for a living, or how do they earn an income? How do they spend their free time? How do they find out about new products, whether it is word of mouth of other parents or in store advertising when they are shopping? Get specifics, like new parents taking advice from parents with a little more experience and solved the problem the new parents are having. Put yourself in their shoes and consider what they would consider to be important. For new parents, getting the baby to stop crying faster is the highest priority, so any solution must be immediate or nearly so. For busy working adults, convenience and time savings are what they value most. For stay at home parents, low cost typically trumps convenience. Understand their problems and how they would consider it solved.
Understand your prospects so that you can better sell your product or service to them. It can help to imagine the customer as a family member or friend, so you can better relate to them. Write down a profile of that person in detail, from a profile of how they live to what they want their lives to be. Then you can understand how to offer a product or service to them to buy, and the channels and positioning that will make them want to buy it. If you can imagine the person and how you’d present the product to them so they say of course I’d want that item/service to solve this problem, you have both your market and your marketing plan.
If you can do this, you know your business idea will work.