Whether you’re growing your side hustle into a full-time business or starting from the ground up, building a new business involves a fair amount of risk. That’s why it’s so important to test your business idea before you launch.
Testing can not only give you confidence to move forward, but it can also act as the groundwork for your future endeavor. Through this process, you can solidify your target audience, identify potential issues and estimate your financial needs for launching. In short, testing your business idea will help you prove its viability and ensure that there’s a solid foundation for your fledgling company.
While there are countless things you can do to gauge your target market’s reaction, these five steps are a good place to start.
1. Prepare to test your business idea
Before you begin the actual testing of your business idea, it’s important to write a basic business plan. While it doesn’t have to be totally fleshed out with in-depth financial projections and market trends just yet, it’s important that your plan answers some basic questions about your proposed business:
- What problem will this product or service be solving?
- Who do I want to target with my product or service?
- Is my product or service a viable financial idea?
Once you have a solid plan, you can start testing and validating your business idea.
2. Analyze your competitors
Two of the most important steps in testing your business idea are determining who your competitors are and how their products or services differ from yours. If your business idea has been conceptualized, executed and popularized before, that’s a good sign — it means there’s a need for your product or service. However, if it’s too similar to what your competitors offer and you can’t articulate what makes you unique, you may want to refine your idea.
When you’re starting a business, you should have a good idea of who your potential audience is.
3. Talk to family and friends
This step is a good initial way to understand whether people will be interested in your business. Family and friends tend to be supportive, so make sure your loved ones know to be brutally honest about your future company. Bring up any doubts you may have and ask them for feedback on those. Most importantly, only ask for the opinions of people you trust and value.
4. Talk to potential customers
When you’re starting a business, you should have a good idea of who your potential audience is. Find some individuals who represent that market and ask them about your idea. Potential customers should be able to tell you if you have a good idea, how much you should charge for your product or service, and how quickly you should expect your business to grow.
You can make this process as defined or as abstract as you like — perhaps by asking each person the same questions and logging results, or just having informal conversations with customers and making a note of any feedback you receive. Be prepared to embrace negative feedback; and treat each interaction with a potential customer for what it is: an opportunity to learn. No matter what, thank them for their feedback.
5. Put your idea on a crowdfunding site
A crowdfunding site, like Kickstarter, can be a good way to get your idea out there and figure out how much interest there is. This can be especially helpful if you have an idea that’s specific to a certain niche. Promote your project heavily on social media and spread the word to family and friends. Your crowdfunding project could potentially give you the funding you need to get off the ground.
Already sure that your business idea is a winner? Check out our step-by-step guide to launching your new venture.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
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Published May 22, 2019