Many people have great ideas, but very few are able to transform these ideas into successful and profitable businesses. This is often because there are far more factors at play than simply having a great idea! It’s also the reason why it’s so important to spend time doing the necessary groundwork and researching your business ideas before investing too much time, energy and money into them. Thorough research will help keep your expectations in check, while also uncovering any potential challenges or potholes in your thinking. But how do you go about researching an idea? Here are four quick and easy things you can do to help you evaluate your big idea.
1. Do a price point check
Regardless of your product or service, identifying the right price point is vital to successfully starting up any business. By figuring out how much can you charge, you’ll quickly learn how much you need to sell to make a viable and profitable business. But figuring out your price point can be tricky. If priced too high people won’t buy it, but if you ask for too little then your profit margin slides or people may presume that your product is poor quality. To figure out your perfect price, you need to first factor in all your costs and then see how you can maximise your margins while still remaining attractive to customers. It’s also a good idea to look at what competitors are charging, as this can serve as a good guideline to what your future customers may be prepared to spend.
2. Learn about the need
The best way to learn about the needs of your target audience is to simply ask them by putting together a focus group of relevant people. The point of this exercise is to figure out whether there is in fact a demand for your business idea, how people feel about existing products currently available within your market, and how much they would be prepared to spend on your product or service. Reach out to friends and see if they would be willing to help you test out a business idea and provide some feedback. Your goal should be to put together a broad group of people, instead of simply focusing on close friends and family who are more likely to give you a biased response. By sending out a quick and straightforward email survey you can gain valuable insights from honest responses. Social media means that you now have access to a far greater network of people than you previously would have, so don’t be afraid to ask for feedback and/or advice via a status update too.
3. Understand your competition
A great way to help develop and improve your business plan is to analyse your competitors. If you can figure out what they are doing wrong, you can adjust your business to cater to your customer’s needs by providing a superior product or service. A good starting point is to read customer reviews of similar competitor businesses. For this exercise make sure you focus on the very bad reviews, as these are likely to give you the most insights and guide you on where you can improve, or what you should avoid.
4. Do a SWOT analysis
Although it may seem obvious, few things are more beneficial to researching your business idea than conducting a good old-fashioned SWOT analysis. A SWOT is an analysis of the strengths of your business idea, product or service; the weaknesses of your product or service, and potential opportunities and threats to the industry. By gaining a greater understanding of the strengths and flaws of your business idea, looking at everything from product development and cost, to external factors such as foreign exchange rates, politics and market trends, you’re sure to gain a better understanding of whether your product or service is likely to become a success in the current environment.