The first step in starting a business is to come up with different business ideas. These are usually based on your strengths and weaknesses and can come from a variety of places. Some of these business ideas will be viable and some of them will not. A lot of businesses fail not because their owners do not understand how to run them but fail because these owners do not do proper research and preparation and do not validate their ideas to see which of them are viable and which ones are not. Below, we will look at a few simple steps to validate your business ideas to ensure that your business takes off as expected.
Find Out If Your Idea Is Already Taken
Sometimes, an entrepreneur has a business idea and when they do their research, they see that another bigger company is already doing what they planned on doing. The best way to find out if someone is already doing what you want to do is to do a simple online search.
Once you input your niche into a search engine, you will find out if your idea is already taken. If it is, dig deeper to find out if there is enough space in the market left for you. This will let you know if you can break into this market and if the business idea you have is viable or not. You could also try to either broaden the niche or narrow it depending on what you find out.
Once you do your research, get rid of the ideas where it would be too difficult to get into the market or ones where you cannot tweak the niche to get a share of the existing market.
Rate Your Remaining Ideas
The ideas that seem viable and where you can get into a market should be evaluated on potential profit, investment cost, and personal interest. Personal interest is already covered because when generating business ideas, you should have already picked niches and markets that interest you.
Next, you do not want to start a business where the initial investment cost is too prohibitive. You want an initial investment cost that will not be too high, so that you are able to take the hit should the business not be as successful as you want it to be.
Potential profit is straightforward too. You want ideas that lead to a business that will be profitable in a reasonable amount of time.
Each of these three criteria should be used to rank each business from 1 to 10 in each category. Add up the totals for each business and then get rid of the ideas that rank 15 and below.
Do Revenue and Expense Forecasts
For the remaining ideas, it is time to do revenue and expense forecasts. For each of the remaining ideas, you should open a spreadsheet and on one side, write down all the expenses you think you will incur. Next, write down the revenue estimates for each idea.
Once you have the expenses and revenue forecasts, you will have a better idea of the profitability of each business idea.
While you may be considering on doing everything on your own, it is always a good idea to get other people involved in the process. They will bring in different perspectives and they might see something you do not. Contact your family, friends, and colleagues and send everything you have so far. That will allow them to get a better sense of what you are working on.
Test the Market
This is a very important step as it will save you time and money in the long run. There is no point in starting a business unless you know that your customers will love it. This is the best way to know if there really is a market for your products and services and if you will have customers willing to buy from you from the first day you open the business.
If you are creating a product, it is always a good idea to create a prototype first. You can create this prototype yourself but if you are looking for something a lot more professional, hire a company to do it for you. Do not produce a huge quantity but have enough pieces to send out to enough people. If you do not want to send the item to people, you can always take a few photographs of the product and send that instead. This will also help keep your initial investment low.
If you are drop shipping, the best way to showcase what you will be selling is to start an eCommerce website. These are relatively easy to create using platforms such as WordPress and Shopify. Ensure that you have an accurate and detailed description of the product plus a lot of well-lit photographs from as many angles as possible. This will help people have a better understanding of the product.
Below the product description, you can let people know that the product is not yet on sale and that you are just collecting feedback. You can send the links to your friends and family and of course, post them to your social media channels. If you have a really good product, you could use this as a stepping stone to your online marketing strategy.
You can also walk into a store that is in your niche and pitch the product to the manager or someone who is involved in inventory and sales. If they see it is a good product, they will ask to add it to their inventory. If this happens, you know that you have a market for the product.
If you want to sell as service, you can create a website, a simple landing page or even cold call or email your ideal customers. You can use all three of these channels to pitch the service and they will let you know if they need your product.
Learn New Business Skills
It pays to be one step ahead of an evolving market if you want to succeed in businesses. Education is one way to ensure you have the skills you need to survive. These days, it has never been easier to study for business qualifications at all levels. Many colleges offer distance learning courses for students, which you can take in your own time.
For example, an MBA is the gold-standard for anyone wishing to boost their skills in business. If you want to study for an MBA, The MBA Tour is one of the best places to meet people from business schools from all over the world. They select all the schools on their roster very carefully meaning that their events attract top talent. Go along and use the experience to help you decide whether an MBA is the right path for you. You can find more information via their website including ideal locations.
Once you have done all the above, you will have a better idea of whether or not there is a market for your product or service.
Not all business ideas lead to good businesses. This is why it is so important that you validate the ideas you have. Do not feel bad about throwing some of your ideas away; if they do not pass the test, they were never good ideas to begin with.