How do you know if your product is going to be a winner? Do you know how to reach your market? What happens if you build your product or service and no one comes?
The high rate of product or service failure is a good indicator of how many would be start-up entrepreneurs put something out into the marketplace but quickly find out that the demand that they anticipated is not there. It could be apps, online courses, educational DVD sets or even books.
The problem is if you don’t validate your business idea beforehand you could end up wasting a lot of time and money without achieving any sales. It’s only when you make an actual sale that you can say your product has been validated.
Right up front you have to evaluate your idea to see whether it solves a real problem for potential users. If potential customers have a problem, you need to look at how this problem is presently being solved. Are your competitors doing it in the most cost-effective, fastest and easiest way?
One way start-ups are now testing their business ideas is on the Internet with landing pages that give them an indication of whether potential customers are interested. You can do AB tests, which simply means pitching your idea or concept in different ways and checking the test results. You’ll quickly find out if one approach works better than the other. Other start-ups use online advertising such as Google Ad words much in the same way that direct marketers have used classified advertising.
Entrepreneurs, after doing initial evaluation and testing of their product need to decide whether to build a prototype or sample product. Take a simple example. If you are producing a new type of jam or chilli sauce you can make up a few bottles and sell them on a local morning market – even asking an existing trader for a small area to trial your product. Another example: if you have a manuscript for a book, you may want to turn it into a PDF and sell that first and see how it goes before printing a physical book which will cost an arm and a leg.
The biggest nightmare for start-up owners and authors is landing up with a garage full of unsold products. You need to be very sure of your customer demand projections if you’re going spend money on producing a complete product and then going out to find a market.
Probably one of the worst things that you can do is give your stock to a retailer or bookstore on consignment. The asset that you have produced will often just lie on their shelves and gather dust. They are not going to do any selling for you. You’ve got a create demand for your product or service through your own marketing efforts.
If you want tools or advice on validating your new product or service, you might want to speak to someone in a similar market or industry that you plan to enter before your new business idea becomes one of the casualties in the more than 80% failure rate among new product ideas.