Inspiration strikes and the idea for a new business or product is born. In the excitement of the “ah-ha” moment, it is easy to self-proclaim that this is “the most brilliant idea ever!”
Yet, how do we know if our concept is a marketable business idea or only a pipe dream? Knowing the answer is the difference between a lucrative, satisfying endeavor and a costly crash and burn.
So, to answer that question, we will look at some of the crucial steps necessary to qualify your business idea before you make a serious investment of time and money.
Your Opinion Doesn’t Matter
The first order of business, quite literally, is determining if you have a tangible idea— and it isn’t a matter of your opinion. In most cases, you will need the backing of financial institutions and possibly government grants.
Lending officers don’t take your passion and opinion as collateral and won’t risk any endeavor without research that proves the viability of your idea. Even if you plan to fund your project privately, a wise investment shows promise in the numbers, not only the “dream.” You have to know if a real opportunity is waiting to happen.
The Importance of Market Research
It is wise to test your theory BEFORE jumping straight into business. So how do you prove your business idea is as golden as you think? Market research.
Market research is, without bias, finding all relevant information about a product or service concept, including:
● Industry history
● Potential Target market and area (consumer base)
● Competitor analysis
● Education and expertise
● Cost of production
● Cost of marketing
● Business Costs (rent, supplies, labour, etc.)
● Pricing (minimum/maximum)
● Delivery information
● Supplier availability
● Manufacturing needs and solutions
● Potential profit
● Financial needs
You will find an eye-opening amount of information about how original your idea is by finding the answer to who, what, where, when, why, and how for each item listed. In addition, whether it fills an unfulfilled niche in the market and if people in your trading area are willing to spend money on it— and how much.
You can find most of this information online through government and competitor websites, industry experts, and news articles or blogs. However, even with all this information, you can’t be sure if your idea is on the right track. Afterward, you will organize this information into a professional business plan to assist you with grant and funding applications.
But how do you determine whether your idea will indeed sell? It’s easy— you ask.
Focus Groups and Surveys
There is nothing more valuable to an entrepreneur than knowing precisely who your target market is and whether they will buy your product or service from you.
While it may be intimidating, you will need honest, “no holds barred” feedback from people in your target market. After researching your ideal customer, you will know who is in your target focus group.
Go straight to the source and ask every willing participant whether they need your idea, how often they would buy it, and what they would pay. Whether by phone, email survey, or in person, getting the truth is vital to your business launch— or pausing it.
Most entrepreneurs cringe or shy away from this part of their research, mainly because they are intimidated by a critical word or the harsh reality that their fledgling concept is a flop. However, this feedback is a blessing, whether positive or negative and could save you a fortune in the long run.
If, after accumulating all your data and survey feedback, you decide to move ahead, congratulations! You have a realistic business idea!
Finding the Resources to Launch
You are correct if you think this sounds like a tremendous amount of work. But unfortunately, most entrepreneurs don’t know where to start after the light bulb moment.
For innovators in Central Alberta, help is close at hand. CARIN, or the Central Alberta Regional Innovation Network, offers a state-of-the-art Incubator program to guide entrepreneurs focused on agriculture, manufacturing, and technology through idea conceptualization to fruition.
For more information on how to develop your business idea in Central Alberta, please inquire online.