Researching The Viability Of Your New Idea
Checking your new business idea is viable is part of your market research. You’re probably doing this already by talking to friends and family. But it’s usually better if you collect research from the market, rather than conversations from people you know (who may tell you what you want to hear).
To help collect accurate information about your business idea, try the following research tactics.
Use the internet as a detective
There is a lot you can do from your laptop or phone with the internet being your best friend to discover what’s happening in your chosen market. Go undercover and search for:
- Your main competitors, what they say and offer
- Comparative prices and services
- Experts commenting on your industry trends
- Social media opinions and blogs
- Supplier and set up costs.
Start to build a picture of your industry characteristics. Is demand increasing, is there room for another business, can you compete at the current price, do you have an edge or difference that allows you to grab market share from competitors?
From this initial research if you can demonstrate a clear competitive advantage and the business opportunity has a stable long-term future, then it’s looking promising.
Ask potential customers
Nothing beats asking someone directly if they would buy what you’re offering, at the price you want to charge. To help you do this, profile your ideal customer by describing their demographics (gender, age range, location, income level, profession etc) or if you’re targeting businesses, list their characteristics (business size, location, what they sell).
Then identify the people or businesses that match your customer segment and make contact (call, interview, connect in social media, send an email) or find their details in business directories and ask them:
- What they like about your business idea
- What they don’t like about your idea
- If they’d buy and how often
- If and why they’d switch from their existing supplier
- What they are prepared to pay.
The key is to obtain feedback that gives you a direct answer (even if it’s negative) to really know what people think.
Talk to industry insiders
Suppliers, industry associations, chambers of commerce or local business support agencies should all have an opinion on the chances of success for your idea. They’ll hopefully have a good working knowledge of your industry, market trends, any latest innovations as well as insight into the volume of purchases (and therefore sales) of similar businesses to guide you.
Also ask them:
- If the market is likely to continue to grow
- If your pricing is realistic to make a profit
- The best way to distribute or sell to your customers.
Though often the main reason to talk to suppliers is to research costs and the terms they’ll give you, take the opportunity to find out about the industry and your market potential at the same time.
Test market with actual customers
There is nothing better than selling to real customers to test the market. If people are buying, and especially re-ordering, it’s the ultimate proof your idea is viable.
How you do this will depend on the type of industry you are in. You could:
- Develop a working prototype
- Create a minimum viable product (MVP)
- Produce limited runs of your product
- Deliver a service part time while you’re still working.
Balance this market validation with the cost, so you’re confident to keep going if the feedback is positive. Anything to track what customers actually do is like gold and should give you a better estimate of demand.
Use this collection of insights, research, data, feedback and conversations to guide your decision and if your information points to a viable business, use our Business Plan and Cash Flow templates to plan out your launch.