New business ideas, once developed and implemented, can lead to increased sales and profit.
But here’s the thing:
New business ideas take small business owners into the realm of uncertainty.
Will they attract prospective customers? Will customers buy? What if the new business idea bombs and you lose all the money that you’ve invested into its development and introduction onto the market?
No one talks about the massive graveyard of products and services that died quickly, leaving their originators with financial loss and crushed egos.
For every 100 new business ideas that are brought to market less than 10% are successful. The remaining 90% are simply market failures.
How then do you minimise or avoid losing great sums of money in trying to bring new products and services to market?
New products and services need to be treated with caution. Small business owners need to have a plan in place to minimise their risk.
The starting point for researching risk is to determine upfront whether there is market demand for your new product or service. Market research costs can be minimised by talking to prospective customers to gauge interest. Even secondary research such as determining a market niche can be obtained from checking out whether there are magazines and websites that cater to the prospective customers you want to target.
If your feedback from your sample customers is overwhelmingly positive, consider going ahead. But if it’s poor, you’re going to have to rethink your product or service and perhaps tweak and refine it.
Next up, you need to sell your product or service in a test market to find out whether customers will buy or not. A test market limits your financial exposure in sales and advertising as well as distribution costs.
New products and services take time to gain market acceptance. So don’t expect results overnight. Putting a stop-loss on your new business idea limits your initial investment to find out if it has legs. What this means is that if your business doesn’t make a certain level of sales over a predetermined period and you can’t foresee any improvement, you pull the plug.
Even if your initial test market is not as successful as you anticipated, you can always try to resuscitate your product or service. Investigate your product or service features, advantages, benefits, offer, guarantee and marketing.
New business ideas can be risky but if you want to find out more on how to take similar simple precautionary measures that can inject some reality into your brilliant idea before you plunge into a full-scale market introduction and lose your shirt, let me know how I can be of help to you.