Many people have great ideas, but their businesses flounder in the marketplace because there really isn't an audience for their product or service. In this second installment of our 10-part series to help you launch a business, we'll help you evaluate your big idea.
Of course, thorough research will help support expectations about a business's success as well as uncover any potholes in your thinking.
Start now by asking yourself these questions:
- What problem does my product or service solve?
- Who will buy my product or service?
- Why will they buy it?
- Where will they buy it -- specialty shops, department stores, online, smartphones?
- What do I need to charge to make a healthy profit and will people actually pay that?
- What products or services will mine be competing with?
No business -- particularly a small one -- can be all things to all people. The more narrowly you can define your business and your target market, the better. So it's crucial that you create a niche for yourself in the marketplace. It's the key to success for even the biggest companies.
Wal-Mart and Tiffany's are both retailers, but they have very different niches: Wal-Mart caters to bargain-minded shoppers, while Tiffany's appeals to upscale jewelry customers.
To find out if your business idea has a chance of succeeding in the marketplace and to help you create an effective marketing plan, you'll need to do more than just answer the questions listed above. You'll also need to conduct more formal market research.
It's a good idea to meet with an advisor at your local Small Business Development Center or talk to a business or marketing professor at a local college or university. These sources can offer guidance and help you decide exactly what information you need to gather.
Generally, you'll need to collect information on three crucial aspects of your business:
- industry information
- target market
- your competition
You can dig up trends, statistics, surveys and other data from sources such as the U.S. Census Bureau, and industry associations. Once you're able to substantiate the viability of your idea, then you can confidently move ahead.
Download these free forms from Entrepreneu.com's FormNet:
Tomorrow -- Day 3: Calculating Your Costs