So you have a business idea? How do you know if it is feasible? Where do you begin? Ah, the age-old “starting a business dilemma.”
Here are some ways to test your idea.
1. Ask your friends and family for their opinions. This is really your first round of gut-instinct research but nothing more. In the business world, you can’t necessarily take the word of friends and family as gospel unless they know business or the industry you are looking to enter. Friends and family aren’t really your best gauge of a business idea - but they are usually the easiest group to approach, and by talking about your idea to them, you can hone your business pitch.
2. Ask professors, professionals and mentors. To get a more unbiased opinion of your business idea, go to the experts. If you don’t know any, seek them out. If the experts echo the opinions of your friends and/or family, you may be on to something…or not.
3. Write a business plan. There are software programs and online templates available for writing a business plan. One example is BPlans.com. You could also turn to your local SBA or SBDC office for assistance or your community college or university for a course in writing business plans. Even check out SCORE where retired professionals consult entrepreneurs for free.
4. Do market research. Part of any solid business plan is an entire section evaluating the market or potential customer base. The Internet is an invaluable research tool for any aspiring business owner. Reports and white papers abound on almost any topic and on any industry so get Googling. And don’t forget to check out the competition.
5. Make a prototype. If your business involves a product - particularly something that is not yet on the market - do your homework and find a way to make a sample. This sample product can help you garner more extensive opinions about your idea or get funding to make it happen. If your product idea is truly unique, explore getting it patented. Check out the US Patent & Trademark Office’s web site for more information or you may even want to hire a lawyer to help you protect your invention.
6. Test a service. If you are offering a service, identify your ideal customer and offer to perform the service at a discount. In some cases, service providers will take on a pro bono client - usually a small nonprofit organization - to test out their service and build their client portfolio. Don’t get in the habit of giving it away but sometimes it helps to get some real work under your belt and hae something to show for it.
7. Go for the low cost of entry. If you are thinking about getting office space in order to start your business, think again. Until you have a proven demand for your product or service, taking on unnecessary overhead could kill your business before it even begins. This is what makes many online businesses so attractive - the low cost of entry.
8. Don’t go for the quick hit. A good, solid business grows over time. In some cases, an idea takes off but these wild success stories are not the norm. Be prepared for slow and steady growth and have a contingency plan for bumps in the road.
They say if you are still in business after the first five years, you’ll probably stay in business - but you never know what can affect your business staying power.
Even very established and successful companies failed after 9/11, for example - a totally unexpected event that was devastating in ways too numerous to count. There will always be events beyond your control that could affect your business. Work on the things you can control and have backups for everything else.
Next time we’ll explore the basics of “Funding the Business Idea.”