Have you been thinking of a new business idea for a while but just haven't been sure how to know if it'll work or even if it's a good idea?
Follow our tips below to try to validate your idea to see if you can make it work!
The first thing you should do when you believe you've had a business idea is to take your phone out of your pocket and look! Has anyone else already thought of and started your idea too? If so, are they doing it exactly the same way or do you see a way where you can improve on their offering in a way that's financially viable?
Don't be disheartened if you see something is already offering the same or similar business services/products. There doesn't have to just be one choice for consumers! Just focus on how your idea can be different or have a better value proposition than the rest.
2. Write it down
Start at the most simplest point, write down your business idea. Even just starting to write your idea or ideas down can really start the process of you internally challenging and justifying them to yourself. There are many questions you should try to answer to yourself at this stage:
What problem are you solving?
Who is your target audience?
Where is your target audience?
How will you monetise this idea?
What are the key features of your idea or product?
It's very common for startups to focus on the solution they believe they are providing without first having focussed and researched what your potential customer's problems are. Often products or services are launched and struggle to gain traction because they haven't properly assessed what the problem is they're solving.
3. Test your assumptions
Speak to friends, family and even strangers if you can find them. Ask for unfiltered and honest advice. Is it a problem they have themselves? If so, what would be their perfect solution to make their lives easier?
Often market research consists of a poll on social media or questionnaires sent out that remain unanswered. Try going back to basics, go out to where you think your potential customers are or if they are businesses, try going door to door with questions (keep it short to keep their attention and make the best use of their time if they're busy).
Speaking directly to the people you believe is your target audience can help you understand if they have the problem and like your solution but it also gives you a chance to find out directly how much they are willing to spend and what their budgets are. This means that you can properly forecast sales knowing your customers find it a fair and reasonable price.
4. How much?
Based on your discussions with your potential target market, you need to understand how much people are willing to pay for your product or services.
There are a number of ways to determine this:
If you have competitors already, how much are they charging?
How much does it cost to deliver each service or make each product?
Once you've worked out the physical costs, how much do you value your time at?
If it's a service that you're offering, what's the typical budget a consumer has for your service? Is it a luxury purchase/spend or a necessity?
You'll need to understand your pricing points in order to be able to accurately forecast your finances which will be necessary if you want to seek investment/loans. But you most importantly need this to ascertain whether it's even financial viable in the first place. You don't want to pour your effort into a new start-up to find out it's not going to generate enough revenue to continue trading.
5. Get Started
So you've spoken to all that will listen and been to see some of your physical target market? Great. Now you need to start on the basics. Thinking of a name, designing a logo and building a minimum viable product (MVP).
When these things are mentioned immediately it's assumed that lots of financial investment needs to go behind the initial start up. In fact there are lots of ways to do this without spending a lot of money.
Stay tuned for our next article on how to start a business on a low budget.