I was listening to an entrepreneur the other day who was in the process of coming up with new ideas for a clothing product. Would-be entrepreneurs get caught up in fantasies that their product or service is going to be converted into a dream profitable business. She spoke about what pattern design she would use, the fabulous textiles she will require and the modern designs that would knock the socks off potential customers. But when she started thinking through a plan she realised that estimating demand for her product would be crucial. Suddenly, she became gripped with fear as she realised that she could end up with a garage full of unsold smart casual wear.
This is the nightmare for many would-be start-up owners and entrepreneurs. What happens if that product idea that you have fallen in love with flops? You’ve manufactured hundreds and perhaps thousands of products and you can’t sell them. Nobody wants to buy something that has no value to them or no appeal.
Estimating demand for a product or service is not only the concern of kitchen-table entrepreneurs. I saw a report the other day where in the early days Atari had launched a computer game that was based on Start Wars mania in the early 1980s. People had always speculated that because the games did not sell they had been dumped and buried somewhere in the United States. Only recently a report surfaced that someone had found the location and had discovered the Star War games.
Yes, it doesn’t only happen to large companies but also start-ups. Think about all the people who have got into multi-level marketing systems and bought hundreds worth of nutritional products or health supplements. It’s scary when they realise that they can’t sell all these products and that their dreams are in tatters because the potential customers they thought they had don’t want to buy. I wonder how many garages are filled with unsold stock ordered from these companies. You just need to do yourself a favour and go to one of the online classified auction sites such as Gumtree, E-Bay or Craigslist to see how much unsold stock is available in this economy. All sorts of deals are out there. Some with greatly reduced prices. Others with free shipping, sometimes to anywhere in the world.
The thing is that smart start-up entrepreneurs need to be wary of being caught up in fantasies about their potential product or service. To convert a dream into a profitable business requires careful and detailed planning that includes figuring out how to manufacture, deliver, market and sell their products. But more important is to figure out ways to test demand early on in the process so that you don’t end up making monumental mistakes. The Internet offers many ways to test products these days such as through blogs and social media but also through crowd-funding online companies. You can get a sense of the demand for your product or service also by testing it on a number of users in your local market even though you might have to give your initial small run or prototype away for free and then get feedback.
You can get all kinds of great product test ideas in my upcoming book “Breakthrough Ideas”. Only a limited number of copies are available so send me an email urgently and I’ll put you on the waiting list.