There is no shortage of business ideas in today’s world. However, one of the hardest challenges entrepreneurs all around the world face is trying to decide if their business idea will actually work in the real world. This decision takes time, dedication, and thorough research. And, it is also the most ignored step by many entrepreneurs. When you start a business, you are betting everything you have on that venture. If it succeeds, good. But, if it doesn’t, you will end up losing the time and money you invested in the business. And, it is not a loss that you can afford as an entrepreneur.
This is the reason why you should always be careful to avoid a possible business failure. So, how do you decide if your business idea is worth it? Here are the 10 most effective ways to know if your idea will succeed.
1. Define your business idea
When you define your business idea, think about the core reason why you’re starting your business. Managing a business is hard work. If you are passionate, the journey would be easier for you. The second question to ask yourself is; Are you trying to make people’s lives easier in a way? A business that solves a common problem or pain point in everyday life is much likely to succeed in the long run.
2. Identify your target market
A target market is a group of people who are more likely to want your product or service. To identify who your target market is, ask yourself questions like; Who will be using my product? What pain points will my product solve? Identifying your target market will help you improve your business for the better.
For example, let’s take an imaginary business called DOGGO that sells dog collars. Their primary target market is dog owners. After identifying this target market, the group at DOGGO can interact with people representing this target market to identify their unique needs and pain points. The data they collect can be used to design better products. And, when doing marketing, DOGGO can specifically target dog owners with Facebook ads, Instagram ads, and more.
3. Check the sustainability of your idea
If your business idea is not sustainable, you may not be getting the results you expect by investing in the business. A sustainable business will give a unique solution to a problem faced by customers. If the solution has never been heard of before, your business will much likely succeed. While offering a unique product/service, check if your target market is large enough to reach your business goals. If the target market is not large enough, consider tweaking your business idea to appeal to a larger market, or drop it altogether. Do your research thoroughly when checking the sustainability of your business. If your product/service is scalable, has a large target market, and people are interested and willing to pay for it, your business idea is sustainable.
4. Determine a unique value proposition
Offering a unique value proposition is a great way to stand out among the crowd. A value proposition can be either better customer experience, better products, or giving back. Putting emphasis on a unique value proposition will make your customers interested in buying from you rather than from your competitors.
5. Do competitor research
Competitor research is one thing you absolutely have to do to know if your business idea will work. If there are no competitors for your particular niche, it might mean that there is no demand among customers for your product or service. Marketing will indeed be harder when there are too many competitors. But, having competitors also means that there is high demand. And, the best thing is that you get a chance to learn from your competitor’s mistakes.
6. Talk to your potential customers
Talking to potential customers representing your target market is the best way to get feedback. When listening to feedback, don’t forget to count in constructive criticism. These can be very valuable and will help you understand what changes you need to do to your business. And, remember that feedback from family and friends may not always be honest. They may avoid criticizing you because they don’t want to hurt you.
7. Determine how much people are willing to pay for your product/service
When determining the price of your product/service, start by researching the pricing systems of your competitors. Use this data to decide on your own pricing. Then, you can talk to potential customers and ask them if they are willing to pay that price for your product/service. If they think your business is worth it, they will say yes. If not, they will suggest the price they are willing to pay. If the price is fair to the value you offer, your business can go a long way.
8. Develop a prototype
Sometimes, your explanation might not be enough for customers to be convinced of the value of your product or service. So, try to develop a prototype first if it makes sense for your business idea. If your potential customers love the prototype, there is a good chance that many others will love it after you launch your business.
9. Test your business idea
This is related to developing prototypes. To test your business idea, try selling a few of your prototypes. For example, the company DOGGO that was mentioned earlier can try selling dog collars at a place where dog owners gather. Likewise, try to do some selling either physically or online. If you see a demand for your product or service, you can start your business confidently.
10. Start small
When you have a great idea that you are excited about, it is natural to want to go all the way. However, it is super important to know when to scale when starting a business. Trying to do everything too soon can easily make your business go under. So, always start at the smallest possible place. You can eventually expand when you get a steady customer base. Starting small will give you time to figure out if your business idea is going to work. If you feel that the business is a failure, you won’t be incurring too much of a loss because you started small.
Each year, more than 70% of new businesses fail. According to statistics, only 25% of businesses will make it past 15 years. So, it is clear that finding a sustainable business idea is a challenge. So, before you start investing in your idea, do some research and analyze the possibility of your business succeeding or failing.
If your business idea passes all tests, you’ve got yourself a business. If not, congratulations! You just saved the time and money you would’ve otherwise spent trying to keep a flopping business afloat. Remember, it’s never too late to come up with another awesome business idea that has a better chance at succeeding.