Small business is risky business. We’ve all heard the statistics—the majority of start-up companies fail. Nevertheless, there continue to be those among us—the bold and the brave—who pursue entrepreneurship despite the risk of failure.
If you’re one of this select group, setting out to start your own company, give yourself a pat on the back. Entrepreneurship requires laying it all on the line—your current career, your financial security, your ego and your future. It’s an admirable venture, but one that should not be undertaken without some careful consideration.
Even the best and the brightest entrepreneurs can fail. You may have the best business plan out there, but if there’s not a market for your offering, you’ll never succeed. So before you put it all on the line, make sure your audience truly desires what it is you’re offering.
1. Ask questions
Prior to taking any action, give your idea a lot of thought. Business consultant Victor Kwegyir wrote a whole book on the need to ask questions before delving into a business endeavor. A few major ones he advocates asking are:
• Who are my customers?
• Do they need my product/service?
• How competitive is the market?
• What price can I expect my customers to pay?
2. Conduct research
There are two ways to gain answers to the above questions, both involve a bit of research.
• Online search:
Pretend you are your customer. What word or words would you use to seek out your product? Enter this word or phrase into a search engine and see how many results appear. The companies behind these websites are your competition.
A keyword research tool such as Google Adwords will provide you with more information about the popularity of this keyword, most importantly, perhaps, how many times it is searched each day. This data will give you a read on the demand for your offering.
• Direct feedback:
Never neglect the power of conversation. Simply asking friends and family what they think of your idea is a free and easy way to gauge its potential for success. In seeking out the opinions of others, try to talk to as many people in your target market as possible.
3. Try it out
Before producing 500 new products, try to sell just one. Use an online marketplace such as etsy or eBay. And rather than set the item price, let customers bid. This will give you the clearest picture of the value of your product in the marketplace. As Darren Dahl mentions in his recent article for Inc., you may receive a wealth of support for your idea, but without placing your offering on the market you’ll never know if it will actually bring in business.
Those looking for direct assistance in launching a new business may wish to seek out the guidance of our start-up accounting and CFO services experts.