Coming up with an idea for a business is incredibly exciting, but before anyone gets carried away, it's always best to test the waters first.
Knowledge of your business is said to be the best weapon you can have as a business owner. Not just in terms of a college degree, but also in understanding of how the business or industry works. The knowledge you possess often determines how successful your business will be.
With that being said, one of the biggest mistakes you can make as an entrepreneur is to assume that you know the market, that you know what they want to buy. It's very easy to get caught up in an exciting business idea with a potential market and convince yourself that this market will go for it. This type of thinking will only set you up for failure.
You can avoid falling into this trap if you test your business concept first. Defining your business concept and testing it with your defined target market will help you determine if it will be a success or not. The process can be time-consuming, but this will help you avoid making costly mistakes moving forward.
Here are some tips to keep in mind when testing your concept for viability:
- Identify Your Market
This step allows you to get a real feel of the playing field. Do online and offline research on the industry or category you're planning to take on. Get data on how big the current market is in terms of money. You can also look into trade shows in your field. This allows you to study your potential customers as well as your competitors.
- Build Your Customer Profile
Come up with a detailed profile of the ideal customer for the product or service you're trying to sell. Go beyond age, gender and class and include insights like their main motivation for choosing a particular product or service. Having this type of knowledge will give you a solid idea to work with when you tailor your processes.
- Test and Gauge Demand
There are plenty of ways you can effectively test your business concept, even with a limited budget. You can start with something small, like a targeted online survey or a focus group discussion. You can also test the waters through trade shows, expos, and industry conventions.
- Build Your Network
During your testing phase or even before that, you may already have a list of people who can be potential customers or suppliers. Continue to build that network and keep in contact with these people on a regular basis. Remember that the idea behind this is not to make a direct sale to your contact, but to develop a relationship that can lead to referrals.