How to make sure a business idea has merit before running with it?
May 22, 2010 10:34 AM Subscribe
How do you make sure a business idea has merit before running with it?
I'm tired of getting incredibly excited about an idea, working diligently in my hours out of work to bring it to conception, then poking a hole in the business plan three weeks later.
I've been interested in entrepreneurship for a long time, but I never learned how to carry out market research for products (Web services and applications) that don't have an obvious competitor.
How do you make sure a business idea has merit before running with it? How do you personally judge the value of an idea before finding a way to execute on it?
I'm tired of getting incredibly excited about an idea, working diligently in my hours out of work to bring it to conception, then poking a hole in the business plan three weeks later.
I've been interested in entrepreneurship for a long time, but I never learned how to carry out market research for products (Web services and applications) that don't have an obvious competitor.
How do you make sure a business idea has merit before running with it? How do you personally judge the value of an idea before finding a way to execute on it?
One technique I use to do research of this type is to use Google Adwords for research. If you have an Internet service or product, you can research search volume, and costs before developing a product. You can even build landing pages and take leads while under construction. For a small amount of money, being able to gauge actual interest of the buying public is hugely enlightening and useful.
posted by Philbo at 12:36 PM on May 22, 2010 [2 favorites]
posted by Philbo at 12:36 PM on May 22, 2010 [2 favorites]
If you can execute on the idea without significant marginal cost to yourself from the effort, I'd just do it and see what happens. I saw a bit on TV this morning about the guys behind the Awkward Family Photos site. They got a book deal. I'm pretty sure all the market research in the world would not have predicted the success of that web site.
posted by COD at 4:51 PM on May 22, 2010
posted by COD at 4:51 PM on May 22, 2010
From what you describe my best suggestion would be to start "phantom" selling your idea or service before you implement the needed resources to provide it. Sort of like buying stock with play money and seeing if your hunches pan out.
Put your idea out there, say it will be available at such and such date and see what surfaces from your initial offer. You can use an email list, pre-established contacts, direct mail or the telephone. Detail the responses you receive and what cash they would generate if you actually provided the service or product.
This will give you a ball park idea of what you may be able to bring in upon start up and give you some wiggle room to get everything running from a stand point of time and up front capital. Plus, if there is no interest, the proof that you are barking up the wrong tree.
posted by bkeene12 at 8:55 PM on May 22, 2010
Put your idea out there, say it will be available at such and such date and see what surfaces from your initial offer. You can use an email list, pre-established contacts, direct mail or the telephone. Detail the responses you receive and what cash they would generate if you actually provided the service or product.
This will give you a ball park idea of what you may be able to bring in upon start up and give you some wiggle room to get everything running from a stand point of time and up front capital. Plus, if there is no interest, the proof that you are barking up the wrong tree.
posted by bkeene12 at 8:55 PM on May 22, 2010
The products still have competition. What are people using now? For example, 10 years ago, I was doing a biz plan for a new kind of satellite.It meant that you could just send a tech into the field with it, instead of having to airlift a huge satellite and a couple of workers. So you look at the demand for that and the costs and so on. I also used stats to show a correlation between Internet traffic usage, bandwidth growth and demand for satellites.
Look up substitutes. Imperfect and perfect substitutes. Complementary goods. Those concepts may help you get started.
But, really, what you need is a business plan, not just a marketing plan. You need to look at what it will take to create a whole solution and to get it to market in a profitable, sustainable way.
posted by acoutu at 9:43 PM on May 22, 2010
Look up substitutes. Imperfect and perfect substitutes. Complementary goods. Those concepts may help you get started.
But, really, what you need is a business plan, not just a marketing plan. You need to look at what it will take to create a whole solution and to get it to market in a profitable, sustainable way.
posted by acoutu at 9:43 PM on May 22, 2010
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It's not like you can google "will my business succeed?"
There are no guarantees. Even if you have a great idea.
posted by lakerk at 11:38 AM on May 22, 2010