If you’re reading this, it’s likely that you have a business idea in mind and are curious to find out if your idea will be a massive hit or a colossal dud.
But how do you test a business idea? Fortunately, there’s a process you can follow to determine how your idea will be received in the real world. So here are the 8 steps to testing a business idea before launch:
1. Create a buyer persona
Always begin with the end-user in mind. It will help you in more ways than one. You’ll know for sure who your customers are, where you can find them and what features they value the most.
2. Prototype your idea
Start with building a working prototype of your product or service. It could be something simple without all the bells and whistles. The objective here is to source feedback from a small group of users to perfect your final product. After several rounds of iterations, you’ll see your idea evolve from a working prototype to a fully functional product or service.
3. Gauge Demand
You wouldn’t want to invest money without knowing for certain that there’s good demand for your product. One way to gauge demand is to put your product or service out there. You could do this in several ways, one of which is to create a landing page to accept pre-orders for a product. In the case of a software or service, you could launch a beta programme to get early adopters interested in your offering.
4. Get the pricing right
Due to disparities in purchasing power and rising competition, it’s important to get the price right. Too high, and you lose out on sales. Too low, and you’ll hurt your revenue. One of the tactics you could use is to look at how your competitor has priced their product. Once you have that data, you could then sell at a higher or lower price than your competitor. If it’s a service, you could offer free trials in combination with different pricing tiers as a way to increase adoption.
5. Optimise your marketing and sales strategy
More often than not, it’s not the best product that sells but the product with the best business strategy. Ouch! The reason is simple; consumers need to see and connect with your brand before considering making a purchase. Luckily, it’s easier than ever to get your brand out there. Your landing page, blog, and social media pages can act as perfect messengers for your brand.
6. Raise adequate capital
Your product may be market-ready, but it will take you time to build a steady revenue source. Until then, your only source of capital is the money you’ve invested in the business. Ideally, you’d want to have 6-12 months of operating expenses at hand. After the first 6 months, you’d have enough data to demonstrate your ability to earn a profit. This is when investors are more likely to come on board if you need additional capital to grow your business.
7. Consider scalability
One of the commonly overlooked aspects when starting a business is scalability. Scalability is the ability of your business to meet rising demand. If you decide to sell a hand-made product, it will impact your ability to scale. This is why it’s important to have a plan in place that can help you scale your business when the stars align.
8. Evaluate your skills
I wish a brilliant idea were all it would take to build a successful business. But this is far from reality. An idea is only as good as its execution. So take the time to reflect and assess your skills. It’ll make your life as an entrepreneur a lot easier. Trust me on this one.
Launching your own business is, without a doubt, one of the proudest moments of your life. Yet, the excitement of launching a business can blind you to obvious red flags. So take a step back and look at your idea objectively before deciding to go for it.
“To me, ideas are worth nothing unless executed. They are just a multiplier. Execution is worth millions.” said Steve Jobs when quizzed on what’s more important of the two.
However, you can only execute an idea to the best of your abilities. And if you’re lacking in one or more areas, it’s going to show up in your execution.
But if you’re hell-bent on starting your business, which you should, try out the Wealth Dynamics entrepreneur profiling tool before diving in. This entrepreneur personality test is an apt stepping stone as it’ll help you uncover your dominant entrepreneur profile and point you to the skills you’ll need to develop to launch and lead a successful business.