How Do I Know My Business Idea Will Be Profitable?

I’ve often thought about the myriad of reasons for startup business failure. Because creating and operating a business involves so many details, it’s easy to understand why problems galore plague entrepreneurs.

Many mess-ups are not fatal. The owner can recover from non-crippling problems that result from unexpected circumstances or misjudged steps. Persistence and adaptability are key ingredients in the owner’s arsenal of personality traits that help to make up for mistakes.

But there is one very tough problem to correct – a poor choice of the basic business idea!

If the whole subject of your business is wrong – if you have employed an incorrect model – or you have overestimated the “sell-ability” of your product – you could be in for a very rude awakening.  A bad business idea to begin with is almost always the kiss of death.

Entrepreneurs every day strike out to create new businesses based solely upon a personal hunch (dream maybe) that the owner feels about his great business idea.

Wouldn’t it be wise to test that idea, at least to your own personal satisfaction, that its viability is shared and endorsed by others as well – especially those that will be purchasing your product or service?

Of course, the best way to do that (assuming you don’t have the money to hire a Madison Avenue research team to do a national marketing study) is to identify a group of potential customers for your product or service and poll them as to their likes and dislikes, what they will purchase, and where they spend their money (in the niche) currently.

Phone calls, letters, emails, and personal contact can all be employed to validate your business or product idea.

It’s also possible to set up a feedback-gathering mechanism on your web site or at a physical location to garner opinions and preferences.

Some of the typical questions you might raise include:

* How often do you use this product/service in a week, month, year?

* What brand(s)/models of this product do you own?  What do you plan to buy in the near future?

* What kind of features/benefits are you looking for in this type of product?

* What would you be willing to pay for a product of this type and quality?

* What would it take to get you to try this new product?

* Would you like to be placed on a notification list to receive a discount coupon (or free trial) for our new product?

You are trying to generate as much specific product or service feedback as you can get from potential customers who’ve been highly targeted for this survey.

Don’t forget to try to get a survey respondent’s contact information (see the final question) – this is a great way to generate new customers and it doesn’t cost you any more than the survey itself. If your survey is online, a form is probably the best way to do this.

Two words of caution . . . first, be careful not to bias your validation by giving too enticing an incentive in exchange for the interview feedback (if that’s what you plan to do), especially on the Internet.

There is a good-sized crowd online that bounces around chasing freebies and will quickly (and without thought) fill out a form to get at the nice reward.

Second, don’t rely upon the opinions of friends and family too much – they may be overly enthusiastic because they don’t want to hurt your feelings.  They probably don’t have a passion for your chosen niche like you do; hence, their feedback doesn’t come from the point-of-view of a potential client or product purchaser.

Remember . . . just because you think your idea is a winner, there is no guarantee that others will feel the same – you are not your audience. Do your research before you get too far down the business startup path.

It would also be wise at this point in your business timeline to check and research your competition.  It is often extremely difficult to make headway in a marketplace that is dominated by one or more Goliaths!  If that is the case with your particular niche, I always suggest you “go to the edges.”  What does that mean?  It’s just this:  don’t be like all the mainstream businesses in your niche competing to sell similar products or services.  Go the edges of the niche to find territory that others aren’t dominating.  Position your business differently that the established dominant businesses so that you don’t have to compete head-to-head with them.  Carve out your own space and offer something different so that you can stand out and become an authority in a particular segment of the market place.

Wouldn’t it be wise to test that idea, or verify your business plans, at least to your own personal satisfaction, that its viability is shared and endorsed by others who you hope will be your future customers?

To your online business success,

Steve Browne

www.SteveBrowneDirect.com