How to Test Your Business Idea
It can be tempting to think that everyone will love your new business idea as much as you do.
But that rarely happens. Take James Dyson. He kept testing and refining his vacuum cleaner idea until he came up with something that worked – and that people were prepared to pay for.
In reality, the product or service you eventually bring to market could be very different to the one you started with. And that's a good thing. It means you've done your homework, listened to potential customers and acted on their feedback. Your thinking can change too, as and when better ideas come to you.
What can testing tell you?
Speaking to potential customers can reveal valuable information. But it’s not simply a question of asking what they think of your business idea or products or services. The critical questions are – would they buy from you and how much would they pay?
Ask potential customers about their current buying habits – how, when and from who they buy – and how much they spend. Find out how they could get better value for money from you. You must find ways to be special so that customers have a reason to buy from you and not one of your competitors.
Also find out what potential customers think about your branding, packaging and how you plan to deliver your products and services. Welcome all feedback – good and bad. It can help you to create a better business with more attractive products and services – as well as preventing costly mistakes.
When should you test?
Do it as early as possible, so you can learn and improve. Acting on feedback as early as possible enables you to either rethink or refine a business idea to increase its chances of success.
Even having a very basic version of your product, something potential customers can see, pick up and sample, will result in more reliable feedback. You can then act to improve your offer, before testing it again. Continue the process until you have total confidence in what you plan to sell. Failure to act on customer feedback can prove fatal.
Market research isn’t something you just do before starting a business. You should continually be seeking feedback from your customers, so you can improve your products, brand and business.
Basic market research tips
There are many simple ways to test your business idea without having to spend a lot of money:
Carry out Google keyword research to find out how many people are searching for products and services like yours.
Read online reviews and comments on social media to gain free insight into what customers want and what makes them dissatisfied.
Social media can also help you find willing testers – those who would gladly test your product before you go to market.
Just ask. The team at Innocent famously tested their smoothie idea at a festival. They put up a sign asking customers if they should give up their jobs to sell smoothies. Festival goers voted by putting their empties in bins marked "yes" and "no". With an overflowing "yes" bin, a hugely successful British smoothie business was born.
Check out the competition online. The presence of other businesses in your market demonstrates demand for your product. Find out who they are, what they sell, how and what they charge. Now find ways to be better – which doesn’t necessarily mean cheaper.
Put together a small focus group of potential customers and ask them what they think about your idea. Don’t use family and friends – they could be reluctant to criticise.
Ask other business owners you know for their opinion on your business idea. Crucially, can they spot any potential problems?
Build a simple website and attract visitors via social media. Test demand. Tell visitors you’re planning to launch soon and ask for their email address so you can keep them better informed. Maybe email them a simple questionnaire to find out more about what they want.
Register on BOSS (Business Online Support Service) and try the interactive course on Sizing Up the Market, taking you through the market research process.