4 Tests to Fail-Proof Your Business Idea
You've put in the time, and you're ready to launch your new business idea. It's an exciting time. But how ready are you?
I don't need to tell you how much risk is involved in venturing. Financially, it is very important that you test your idea before you commit to a big launch.
The knowledge you gain from testing your idea will help determine if it is ready for the market and improve your business plan. You'll set yourself up for success by preemptively identifying problems and minimizing risk. And hopefully, your nerves will be eased.
Use one or more of the following strategies to test your idea before it launches.
1. Test your idea with a venture capitalist.
Venture capitalists are brutally honest. That's why it's a great idea to pitch your business idea to them. They're not going to lie or sugarcoat their feelings. Show them your business plan or product. What do they think of your plan?
In my experience, venture capitalists are very talented at quickly identifying holes and problems. If you've forgotten to address something important, they'll tell you. If they're interested, that's a great sign. What you learn will help you be a better entrepreneur.
2. Show your prototype to product retailers.
Product retailers are at the front line of retail: they have a unique understanding of what consumers like and dislike because they literally watch what sells and what doesn't. They know what consumers want. They know what consumers are asking about.
Your idea needs to be easily understood when you show it to retailers. If you have a prototype made, it doesn't need to be polished. Rough drawings might even work. On a slow shopping day, visit a local retailer where you think your product might be sold. What do they think? Is it a good idea? Is it a bad idea? These people are in the trenches every day. They'll tell you if your product stinks. You can go one step further and try to get a retailer to place an order. Would they be willing to actually carry your product?
3. Try to license your idea.
Even if you've decided you want to venture your idea, not license it, you can gain valuable information from pitching potential licensees. If they're intrigued, that's a great sign you have a solid idea. Licensees know a good idea when they see one. You might find a partner who can help with sales, distribution, or manufacturing.
4. Get consumer feedback.
Reach out to your target demographic. Not just your friends and family, but people who would actually want to buy or use your product or service. They're much less likely to be biased.
When I had the idea to change the shape of the guitar pick, I asked the staff at a few local music stores to distribute a survey asking customers which designs they liked best. What I learned surprised me. More often than not, Moms were buying guitar picks for their kids, and they didn't like images of women in bikinis on them. We quickly started designing more kid-friendly images. You don't necessarily need to follow the feedback you get, but you should definitely get some. It's impossible not to learn something productive.
Remember: no one opinion matters more than another. Products that companies weren't interested in licensing have gone on to be very successful. Sometimes product retailers are wrong. Doing these tests will give you insight, rather than a concrete answer as to whether you should move ahead.
The more tests you put your idea through, the more confident you can feel about its chances of success.