So, you want to become an entrepreneur. You have a great idea for a business, and you’re really excited, because you’ve researched it, too! There seems to be a gap in the market, and you’re ready to roll.
Wait just one second.
Before you hang your shingle, I want to cover a few pointers – research methods, actually – to help you determine whether your business idea is viable.
Let’s get started.
First, research and see if you can find other examples of businesses similar to the one you’re thinking of. See if you can find people paying for the service or product you want to sell. If you can’t find examples, don’t get too excited. In fact, this might actually set off some alarm bells. It may mean other people have considered (or even tried launching) similar businesses, and failed. It may also mean it’s not something the market really wants. So find some evidence, somewhere, that people are already buying what you plan to offer.
Second, calculate your start up costs – and your long-term costs. How much will it cost you to provide your product or service? Can you make a profit on it? The value equation for determining whether your business is viable goes like this: You must be able to provide the product or service at a cost that is LESS than what your customer is willing to pay for it. If you can’t make that work, you should probably move on.
Finally – and this is the ultimate test – can you get someone to pay you for the product or service NOW before you invest a whole heap of time in setting up operations, a website, and business development? This is where it gets tricky. What people say they are willing to pay for may be different from what they are actually willing to pay for. Does this business idea have potential? Can you roll it out in scale?
Now, I’d love to continue this conversation below. Share your experiences around determining whether a business idea is viable – how did you decide? What research did you do?
Post your comments below!
[spoiler]Today on Bernadette TV: How to tell if your business idea is viable. Hello and welcome to Bernadette TV, online TV to help you be the best you can be in your business and your life. Today we’re talking about how to know whether your business idea is viable. So maybe you’ve got a great idea for a business and you’re really excited because you’ve researched it. There seems to be a gap in the market but you’re still not sure if you should really go for it. Here are some pointers to help you uncover whether your business idea is viable.
So, first, do your research. You want to find out can you find any examples where people are currently paying for the service or product that you’re planning to offer. Now if you can’t find any examples, that doesn’t mean that it’s a cause for celebration and that there is a gap in the market. In fact, it should ring some alarm bells because that possibly means that other people have considered the same idea as you but decided that it just wasn’t viable or maybe they’ve even tried it but they found that it wasn’t something that a market really wants. So you want to find some evidence somewhere that people are already buying the product or service that you plan to offer.
Next, you need to calculate your costs. You really want to get a good handle on what is it going to cost you to provide the service or product that you want to offer and can you make a profit of it. The value equation goes like this. You want to be able to provide a product or service that you want to offer at a cost that is less than what the customer is willing to pay for that product or service. There has to be a gap. That’s your profit, the space between my hands. So if you can’t make the value equation work, it probably means it’s time to move on.
Finally the ultimate test is this. Can you get someone to pay you for this product or service now before you invest a whole heap of time in setting up operations or setting up a website or investing a lot of time in the development of your business, because the ultimate marketing test is that someone has actually put their hands in their pocket and actually paid for it. That’s giving you the evidence that people are willing to buy what it is you plan to offer.
Now lots of people do lots and lots of market research, but there’s a difference between what people say they want and what they’re actually willing to do. So whenever I do a new project, I always want to see how quickly I can make the first sale, because the moment I’ve made one sale, I know that there’s potential there and something I can roll out in scale.
So there you go. Those are my three top tips for establishing whether a business idea or opportunity is viable. It’s over to you. Put it into action. I’d love to hear how you got on with this at my blog. So come on over to BernadetteDoyle.com and share with me your thoughts on your business idea and how you’ve established whether it’s viable or not. If you’d like more like this, go ahead and hit the subscribe button and YouTube will let you know every time I release a new video. We do it every Thursday here at Bernadette TV. I’d love to connect more with you via email. So come on over and sign up for my email updates and tips and things that I only share via email. So that’s it for now and I look forward to seeing you on the next episode of Bernadette TV.