The Secret Behind Validating Your Business Ideas

Continuation From Monday…..How To Validate Your Business Ideas

Company Specific Research (Competitor Analysis):

In most cases your idea will not be 100% original. In other words, chances are, someone out there is already manufacturing or selling what you would like to offer. Find the company in question and research it to the best of your ability. Try to determine if the product or service in question is as profitable for this company as you anticipate it to be. Plus, if would be able to compete with them successfully.

Example: If another company already offers electronic gadgets for pets, determine the size of the company and the size of the market. Ascertain what kind of revenue the company is generating in this product category. What is the size of the company and what sort of a buying power they have within the industry. Do they anticipate expanding this business in the near future, etc…..

Product Specific Research:

Study competitor’s product and determine how your product will be different from what they are already offering. Ascertain if there are patents that would impact your potential product or service offering. Attempt to determine the cost of your product and if it would be possible to put it together without a substantial investment. Think about possible distribution channels, how your product will be sold and how it will be perceived by the customers.

Example: Determine how your pet gadget will be different from what is already on the market. It has to be substantially different or the chances of success diminish rapidly. Determine if there are patents that would prevent you from manufacturing or offering your Pet Smart Phone. Try to figure out how much it would cost you to manufacture one unit and how much it would cost to manufacture 10,000 units. Plus, would it sell best through the store, online or through the various distributors.

Discuss Your Idea With Industry Insiders:

Try to find someone within your network who is somewhat familiar with the industry or the product in question. Do not be afraid to share your ideas with them in full. Ask for their honest opinion and feedback. Determine what their initial reaction was and why. Ask for what they would do next and how they would approach this business. Attempt to extract as much information out of them as you possibly can.

Sam Walton, the founder of Walmart was famous for his masterful execution of this skill. It was reported, by countless people, that Sam would ask 5 minutes of someone’s time and then proceed to extract decade’s worth of business related experience out of such unlucky souls in a matter of hours. One food mart chain executive had reportedly said “Sam drained me of all of the information I had after barraging me with questions for over 2 hours”.

Example: Find someone who sells pet products or pet gadgets directly to stores and approach them. Ask them for 5 minutes of their time and introduce your idea. Ask for their feedback and what steps they would take next. Worst case scenario, they might think that your idea is idiotic. Best case? You might get a distributor or even an investor.

To Be Continued Tomorrow….(Why Am I Seeing This On A Financial Website?)