Is Your Business Idea a Winner?
So you’ve thought of a great idea for your next business. At least, you think it’s a great idea. Here are some questions you should answer to increase the chances of having a winner on your hands.
8 questions to gauge the potential of your business idea
- Can you identify a specific target audience for your offer? Can you picture a “customer avatar” – a notional “ideal customer” – for what your business is selling? If the audience is vague, you’re facing an uphill struggle. A vague market is too expensive to reach, too time-consuming to sell to, and your product is likely to be lost in a sea of competitors. Make your life easier by identifying a specific audience you can serve and impress. If they like your product, they will naturaly promote it on your behalf.
- What problem are you solving? Does your business solve a pressing problem or is it a solution to a problem no one really cares about or to which there are adequate alternatives?
- Are you a painkiller or a vitamin? Painkillers sell themselves; vitamins need effort, marketing, educating/convincing the market. Yes, you can build a successful “vitamin” business but it takes more effort, time, investment and there’s greater risk attached. Make sure your business is a painkiller. Give people what they want, not what you think they need.
- Is this a business or a job? Very often people think they are building a business when all they’ve really done is created a job for themselves. Yes, it can be a high-paying job, but it’s a job nonetheless. The hallmarks of a job?
- If you stop working, it stops making money;
- There’s a limit (either price-imposed and/or time-imposed) to how much you can earn;
- The majority of the know-how/expertise resides in you.
- Is your business based on a temporary advantage/changing situation? Are you relying on a temporary social, economic or political climate to make your money? These types of businesses can be extremely profitable but they are short-lived. You need to cut your cloth accordingly, i.e. don’t spend like the money will always be there, it may dry up faster than you realise.
- Is your business built upon someone else’s platform? What happens to all the YouTube-based businesses if YouTube decides to close their channel for whatever reason? What happens when Amazon decides to sell something at half the price as one of their independent store operators? What happened to those businesses who specialised in building MySpace pages for companies? If you business is built on a third-party platform, realise that there is an element of risk involved. That being said, you can still grow a successful business using this model.
- Are you offering a high-priced service? Would you rather sell 1 × $100 product or try to sell 100 × $1 products? It’s much easier to sell the former. And it’s much easier to survive as a business when you price at the higher end of your market. Trying to sell high-volume, low-price items can give you the feeling that you’re on the hamster wheel – running furiously but getting nowhere. It’s hard to maintain, it’s stressful and it can lead to burnout. We know what you’re thinking. Lots of business thrive charging very little or even nothing, e.g. Google, WhatsApp, Facebook etc. Those businesses all have one thing in common: they have billions of users and monetise you to advertisers. (“When you can’t see the product, you are the product). Do you have billions of users? Millions? Thousands? Hundreds? Low-pricing works provided you can create a large number of users relatively quickly. If you can’t, charging something – preferably on the higher end – is your key to survival.
- Can you pre-sell your product? Before you invest large amounts of time, money or effort into your venture, can you sell it to your intended audience? Not your mum, not your friends, not your family but a stranger who’s in your target market. It’s easy to test. Build a one-page website (you can find freelancers who will help you with this on Upwork.com) promoting your product with a single buy button (if you have something ready to sell) or a register button link to collect an email (if you’re trying to gauge interest for a product/service that does not exist yet). Promote the page cheaply using Facebook ads. (You can thoroughly test the idea on a target audience for as little as $20-100). Facebook is an incredible tool as arguably the most targeted, specific market demographic data out there, i.e. your market is on Facebook. If you no one is clicking on your ad, if no one is registering their email, if no one is buying, alarm bells should start ringing.
- Create a business that solves a real problem.
- Identif your target audience using a customer avatar, a notional representation of your ideal customer.
- Pre-sell your product to gauge interest.
- Go to Themeforest.com and choose a “one page” WordPress theme to your liking.
- Go to Upwork.com and post a job asking someone to setup your WordPress theme as (i) a one-page sales page (if you already have a product/service to sell) or (ii) a one-page email-capture page promoting your product/service. Choose one or the other. It should cost about $50-100 for a good freelancer to do this for you.
- Promote your one-page website using Facebook ads to gauge interest.