Week 1: Evaluating your idea and your goals How to tell if your amazing new product idea is really worth gambling on
I'm a lousy poker player, mainly because I can't help grinning like an idiot when blessed with a winning hand or frowning like a pathetic clown when dealt a dud. I also never make odds on the success of "amazing new products"--online or off--because more often than not, the only thing amazing is the way the product is totally ignored by the buying public.
In my own software business (www.digitalgraphiti.com), there have been times when we've come up with what we thought was an amazing piece of software--a piece of software so amazing, in fact, that we just knew that all of humankind would sit up and take notice, then line up to write us checks. After hundreds of hours and thousands of dollars spent developing the product and finally bringing it to market, we were amazed to find that the only people who thought the software was amazing was us.
We made humankind yawn. Quite an amazing accomplishment.
While you may think that is a good thing, it might actually mean that there is no market for your product. The same holds true for a lack of competition. A total lack of competition might mean that there is no demand for such a product.
Rarely does a product come along that revolutionizes an industry. Rarer still does a product create a new industry on its own.
So how can you tell if your amazing new product really is worth gambling on? The truth is, you can never be 100 percent certain that your idea will sell. No matter how enamored you are of it or how much your friends rave about it, the success of a new idea depends on numerous factors, many of which are beyond your control.
Just a few of the factors that can affect the success of a new product include:
- The viability of the product idea: Is this really a valid product idea that has the potential to generate revenue or just an epiphany that would be best forgotten?
- The people behind the idea: The right team can make all the difference.
- The resources required to take the product from the drawing board to the consumer: Do you have the perseverance, the knowledge, the contacts, the capital and a hundred other things required to take your idea from drawing board to delivery?
- The demand for such a product in the marketplace: Will this product fill a need or satisfy an itch?
- The competition: Is the market already crowded with competitors? If so, what will it take to move your product ahead of the pack?
Before you invest too much time and money into your idea, do a little research to determine if it's an idea worth gambling on. Research the market for similar products. Again, if there are no similar products on the market, that might mean there is no market for that product. If there truly is nothing exactly like your product, research similar products that fill a similar void in the consumer's life. Learn all you can about such products: pricing, market share, track record and so on.
Research the competition, too. Again, if there is no competition, there may not be a market for a product like yours. If there is competition, research the competition fully (little guys and big guys) to help determine if you can realistically compete for market share.
Identify your target customer and ask them for an honest evaluation of the idea and its marketability. Avoid friends and family, as they usually just tell you what you want to hear. If your target customer is a 35-year-old woman, pitch your idea to every 35-year-old woman you meet and gauge their responses. (Just don't break any stalking laws in the name of market research.)
The best advice I can give you when it comes to amazing new product ideas is, it's best to follow your head and not your heart. It's a lesson that took me years to learn. If I had a nickel for every amazing new product I've invested in, I'd go play a few hands of poker.
Tim W. Knox is the founder, president and CEO of four successful technology companies: B2Secure Inc., a Web-based hiring management software company; Digital Graphiti Inc., a software development company; and Sidebar Systems, a company that creates-cutting edge convergence software for broadcast media outlets; and Online Profits 4U, an e-business dedicated to helping online entrepreneurs start and prosper from an online, wholesale or drop-ship business.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.