How to Test the Feasibility of Your Idea
When you have a lightbulb moment and come up with a business idea that could potentially make you a successful entrepreneur, it’s easy to forget the basics. Will your idea work? Will people buy your products? Jumping into a business without doing the research into whether or not your idea is feasible could mean a great loss of the important things in your life such as your savings, time, confidence and even family or friends relationships.
And if you’re not one to just jump into things, another thing you could be risking is the motivation to start your business at all. How do I even know if people will buy my products? How do I find out if there is a market for this idea? The idea of having to test your brilliant business idea at all can put a damper on your creative process. And the fact that you might have to spend hours or even weeks to do this research can feel like a real drainer.
Testing the feasibility of your business idea doesn’t have to be so complicated, though. Depending on your particular idea and the industry, it can take less than a day to do some quick online research and feel confident about whether or not you can go ahead with the business. And even if it takes a while, you’ll feel better for having done it afterwards, knowing that you have done the due diligence. Below are some of the simple questions you ask about your business idea to help determine its feasibility.
What are you trying to identify?
This isn’t really a question you need to spend a lot of time on, as the answer should be pretty much the same for all businesses: the viability, growth potential and sustainability of your business idea. However, it may depend on your overall goal for your business. Perhaps you’re not in it for the long run, and you just want to make a quick buck and move onto the next thing. Whatever your goal, write down what you’re trying to find out in the feasibility test for your business idea.
What is the market like?
When you research the market you’re about to enter, there are a few key things you should determine. Before you start asking the following questions, however, keep in mind that you may be surprised in what you find. Keep an open mind and try not to look for the answers that you’re wanting to hear, just to confirm the assumptions you already had about the market.
How old is the market?
The age of the market can help you determine whether or not there is a lot of competition and demand. Getting your foot in early in a new up and coming industry or product can pay off big time later, but there is also significantly less available information. Consider the vape pens or the e-cigarettes. The idea is solid right now, but there just has not been enough research done to grasp the health impacts of these compared to traditional cigarettes. And with big fads like vaping, they can go out just as quickly as they came in.
Does the market depend on another market?
Of course, the sustainability of pretty much everything depends on the sustainability of something else. And in a business sense, probably at the root of all sustainability lies the global and local economy. We can’t deny or fight against that. However, some markets are a little more vulnerable than others. When the market relies on a supply of something real, natural and physical, you have to consider that the resources might run out one day. However, industries that rely on the bases of human emotions (e.g. love, safety, protection, relationships…) could be more resilient.
What are your competitors like?
Understanding the market means understanding your competition. In a pool of supply and demand, you are entering the supply side assuming the demand stays similar. So, what do you have to do to stand out amongst the supply crowd? What are your competitors’ weaknesses and strengths?
What is the customer like?
Who are they, and what do they really need? Knowing your customers can help you focus on the right things and save time, energy and money along the way by not spending them on those that are not likely to benefit or buy from your business. Identify and narrow down the perfect customer: their age, gender, location, education, profession, and even motivation for buying your product. And learn how they can be reached. Keep in mind here to not narrow down your market too much so as to avoid alienating secondary target customers who may want your services.
How can your products grow?
Having learnt about the market, competitors and customers, now is the time to consider the potential development of your products and services. Is there any room for growth in this market? What would your customers want? While you can’t predict what the next big thing will be in our fast evolving world of technology, you can still innovate your ideas little by little to mould into exactly what your customers are looking for.
Market research can be done online (just ask Google some questions!) and there is a heap of free resources out there, starting with the government websites that offer a lot of information for startup businesses. Another way to learn your market is to attend shows and expos. Have a look at what kinds of innovative things your competitors are selling, how they’re selling them, and who they’re selling them to.
Who can you work with?
Now that you’ve identified the market (the product, competition, and customers), how can you ensure that you have the right kind of professional ties to work within it? You need to identify your vendors, suppliers and other key personnel or staff that are critical to the viability of your business. Remember, while it may be your business, you cannot do it alone. Learn who they are, how you can reach out to them and how much it will cost.
Don’t abandon your idea completely.
If, at the end of all the above, you find that your initial business idea didn’t pass the feasibility test, don’t panic or give up hope. Understanding the market in order to build a business that can fit into it is precisely why you did this exercise. Take your initial idea, and add or remove the bits and pieces you learnt in your test. What does your final business idea look like? You don’t know if it will work? Well, start over and test its feasibility again!