Many people think they’ve come up with terrific ideas that translate into great businesses. But even if you’ve thought of a fantastic new product or service, you must have the right business model, funding, pricing, marketing and team to make it work as well as enough customers who are willing to pay you money for it.
The main reason businesses fail is not due to a lack of capital but rather a lack of knowledge. Having the knowledge necessary to run your business is by far your greatest asset as it often means the difference between a good business and a great one and between success and failure. Unfortunately, many would-be entrepreneurs make a big mistake of going into business solely based on what they think people should buy rather than what people really want to buy. Many inexperienced business people think they have great products or services they’re sure people need and want only to find out later that they cannot even give that product or service away for free. So how do you avoid having this happen to you?
Here are three simple and inexpensive things you can do before you go ahead and plan your new business venture to make sure there is a viable, sustainable and growing market for your business.
Identify Your Targeted Market
You should plan on spending a few hours online researching and identifying your market. Find out how large the current market is for your product or service. Is the market new or an existing one? Would your product or service fall into a new or old category? Another good way to define your market is by attending trade shows. At a trade show or exhibition, you can find out what your potential customers are looking for and who they are. You also can see what is being sold by your would-be competitors and at what price.
You must determine if you can give your customers the same product or service at a lower price or if you can add some value to it wherein you can charge more. Just seeing how many people are around your potential competitors booths can speak volumes. Are there regular swarms of people there to take a closer look? By answering these types of questions, you should be able to identify your targeted market and find out if your product/service is hot or not and how much money you should charge for it.
Determine What Would Make Up your Perfect Customer
Advertisers often develop lists to help them identify the perfect customers for the products and services they’re selling. This is a good way to identify your perfect customer. Just jot down some general questions and answers such as “Is my perfect customer a man or woman?”, “What age group do they fall in?”, “Are the single or married?” and “What motivates my perfect customer to buy a specific product or service?”. While this may seem trivial and a waste of time, it’s actually an important thing to do because this knowledge will provide you with some valuable insight into how your sales process should be set up. It will also help you tailor your product/service so that it better suits your perfect customer.
For example, if you’re thinking of starting a vehicle reconditioning business, you might discover that there is a want or need for vehicle pick up and delivery service to busy professionals in your area. Knowing this can help you tailor your service so your business can meet this demand.
Test and Measure Demand
Large brands spend a lot of time and money testing advertising campaigns and hiring focus groups. You can do the same thing but on a smaller scale. You can find out what type of interest and demand there is for your products/services by attending trade shows, expos and other industry meet and greets. By getting out there and networking you will meet key players in your industry, establish new relationships, network yourself and get feedback on your particular product or service. When you test the waters like this, you will be able to find out if you product or service is actually something people need or want to buy or something that will generate little or no sales or revenue.