Business Clinic :How do I know my idea will work?
Posted Tuesday, March 12 2013 at 02:00
Assuming your business idea is based on a gap you identified and believe you can profitably fill, a few key areas of information can either lower your risk of failure or encourage you to abandon an idea altogether and look for a more financially viable one.
• Customers: Begin by clearly describing the gap you will fill to yourself and explaining why you believe your idea will solve it.
Next, find out if your potential customers agree with you and the price they will be willing to pay for your product or service.
If they disagree, why do they disagree and what would make them agree?
If you plan to start making flavoured yoghurt drinks that will be delivered door-to-door, how will you advertise it?
Will you use social media forums or send out text messages?
How many customers will you realistically obtain? How large should the bottles be, how many will a person buy at a time and how often?
How many bottles will you sell each year in the first five years?
Is door-to-door delivery suitable or, would customers prefer to go to a supermarket?
Will you be able to supply the right quantities at the right time?
Friends and family are an excellent place to begin collecting information, if you believe they are part of your future market.
Be sure however, to talk to people outside your immediate circle too.
If those future customers are within close physical proximity, select a few and simply have a careful conversation with them, without letting them know that you are asking them about something you plan to introduce as that might be the quickest way for you to help someone else get started on your idea before you.
Once you get closer to launching, you will need their feedback in relation to the almost final product or service, but that comes much later on.
If you hope to export for example, fresh fruit and you have potential customer contact information, endeavour to understand their specifications early on.
Relevant trade fairs are another excellent place to interact with your prospective customers and obtain their opinions.
• Competition: If anyone else already does what you plan to do, what makes your idea different enough to attract customers? Do not hesitate to visit and sample your competitor’s products or services, if possible. Your point of difference must be abundantly clear, not just to you, but to your customers too.
• Costs: What will it cost to get started and begin producing the product or service you have in mind?
You might need a professional’s help in determining all your costs but, it will be worth the expense.
Given all the identified costs, how soon will you make a profit by selling your projected quantities at the prices your potential customers proposed? Finally, how will all this be paid for?
Having reviewed the information you collected on customers, the competition and costs, if you are still excited about your idea, begin thinking about the process to translate it into reality.
Next week: Who are my customers?