Testing business ideas
According to the Small Business Administration research, only half of new businesses survive for the first five years and only one-third of new businesses are able to survive for 10 years. This means that the other 50% fail in the first five years.
There are many reasons why new businesses fail in the first few years and this could be from lack of leadership, expanding too quickly, or simply being out of touch from customers. One of the best ways to ensure that your new business isn’t flawed is to test this rigorously before launching. Through testing, this ensures that there is a viable, sustainable and growing market for your business.
So how should you test your business idea?
One way to test your business idea is to conduct market research. By carrying this out, you can find out more about the market that you want to operate in or the type of characteristics that are present in your market.
There are several types of basic market research that you can conduct, which proves to be very effective. The internet is now one of the first places that many go to, this contains a huge amount of information which can be viewed from the comforts of your own home. Simple online searches can now reveal who your potential target audience is including your competitors and suppliers. However, don’t underestimate the technique of going out yourself and gaining first-hand information from your target audience. Whichever method you may choose, you need to know who your customers are and what they think about your products or services-it can be the difference between success and failure.
To gain valuable feedback, don’t just limit your target audience to friends and families as they will be less likely to point out the problems of your business if there are any. Speak to potential customers that you don’t know and talk/show your product or service and if their answer is that they won’t buy your product, find out why and consider how you can change your business plan accordingly to fit in with your audience needs. Whatever your response is, take on board the feedback as this is a valuable source of information.
Level of competition is also another crucial factor to consider under testing and market research. Create a spreadsheet with a list of competitors and consider key factors such as why they are successful, what are their strengths and weaknesses? How do you compare against them? and so on. Once you have collected this data, this will give you more idea of what they are offering to your target market.
If there are too many competitors in the market and you cannot compete on price. Rather than thinking about lowering price, consider whether your unique selling point is stronger than your competitors.
Evaluating your market research
This is viewed as the most important stage of testing. When evaluating your results make sure you pay attention to each response and don’t ignore any negative feedback as important flaws in your business idea might be exposed. However, if there are weaknesses in your business idea, it is best to find out now before you commit any further since you can alter your ideas to better meet the needs of the market.
The market research and testing you've conducted so far ought to be a good indicator of where you need to go next with your idea. So before launching your business, make sure you test this in order to highlight your strengths and weaknesses which you can further improve on.
Workplace Property has over 35 year's experience providing commercial property and industrial units to let for start-ups in the region of Peterborough, Stamford, Bourne, Deeping and Spalding.