Sometimes, a prospective business owner will begin putting their idea into action the right way by looking for premises and vendors, employing developers, and renting an office. A few months later, when the product is ready, reality sets in, and consumers are dissatisfied, there is no more money for marketing, and there isn’t a projected number of new registrations or sales. The business owner gives up, explains that the market has not yet developed, and goes back to work.
To avoid getting into this situation, the project should begin with testing the idea rather than writing code: research the market and competitors, speak with customers and assess the commercial possibilities. Only then should you start the launch. Let’s examine why and how this is important.
What might be wrong with the idea
Not all ideas are destined for success; some won’t result in a successful enterprise. Consider the possibility that you believe busy managers do not have enough time to prioritize their health. You decide to start a telemedicine marketplace to help them. Here are some possible risks:
- The problem you think of does not exist. Let’s say you consistently believe that busy managers don’t have time to visit the doctor. But you use yourself and a few close friends to make judgments. It might turn out that you are the exception and that other people do not have these problems.
- There is an issue, but the fix is unsuitable. Consider the possibility that managers do not have the time to care about their health. Does telemedicine, however, work for them? Perhaps they are not yet ready to believe in “doctors on the Internet,” and making a service that involves calling a home-based expert much more in demand.
- The market is too narrow. Even if there is a problem and your proposed solution is appropriate, this does not guarantee that your business plan will generate a profit. Perhaps just a few hundred of these managers work and only visit the doctor every six months. You are not really after 1,000 not-very-high checks a year.
- The cost of getting clients is too high. Okay, even though there are numerous possible customers. Will you be successful in attracting them to your service and making money? It might turn out that attracting a new customer for your services will cost you $500, but you’ll only make $300. You will only lose $200 on each client as a result.
Why test an idea
There are a lot of potential dangers, but you may partially avoid them by doing a preliminary inspection. It is why you must confirm that the idea is good before releasing a product or service:
To exclude the influence of their own cognitive biases. Managers may wish to launch a business in a field in which they have expertise. They are asked for advice and teachings, and people follow them on social media. It could be unnecessary to verify the hypothesis in these circumstances because “I know the industry extremely well.” Unfortunately, experience, no matter how much of it, is not always enough to save. The economy may still be in decline, and the market may still be too small.
To avoid wasting time and money. If a full-fledged service is performed right away, it is easy to spend several months and hundreds of thousands of dollars. Get something that users do not require at the output at the same time.
To create a highly desired product. It can also work the other way around: as you test the concept, you’ll learn where to concentrate your efforts to build a profitable business and make money.
How to analyze an idea
It is good to spend two weeks on this activity in full-time mode. If all you have is half a day, it will take nearly a month to complete the check. If I had a few hours per day, it would take two months. It will be possible to complete all the processes at this point and decide whether to pursue the idea further or not. However, you should not rush because concluding too soon might be risky and statistically wrong.
Step 1: Determine what problem you wish to solve.
Start with the issue you want to focus on. In the telemedicine market example from earlier, it can be stated as follows: “Top managers do not have enough time to visit doctors, hence they have health problems. Then describe the solution you are proposing: “Telemedicine Marketplace.”
The problem of congestion can be solved by the development of public transport, the construction of new roads, or by changing working hours to avoid rush hour. The problem of poor project management – new software or educational projects for managers. The problem of poor knowledge of English – online classes with a teacher, a mobile application, or a trip abroad to immerse yourself in the environment. There is only one problem and many solutions.
Your first decision will probably not be viable. But this is not a reason to abandon the project: the idea can always be improved. Such a conclusion may well be the result of the verification phase – to continue working on the same problem but to look for a different approach. Therefore, I recommend choosing a problem that will be interesting for you to deal with for a long time and automate business processes successfully.
Step 2: Recognize your target audience.
Specific users of the product include educators, developers, builders, managers, analysts, and manicurists. Their needs should be met, and your solution should assist them in doing so.
You must get to know users as well as you can if you want to develop a successful product. What problems do they meet? What problems are they running into? How are they now resolved? What, given the circumstances, does or does not satisfy them?
Let’s imagine you wish to address the issue of slow workflow in businesses. To achieve this, you should design a system that allows you to designate accountable parties and give tasks a status. You believe that this functionality will enable quicker document processing and data visualization tools will help you.
However, it turns out, for instance, that there are too many responsibilities for one employee — they physically do not have time to accomplish them — after speaking with accountants and buyers. Your solution won’t, therefore, be of any use to them.
Take a few users of your product under your care for interviews. Learn about their wants and difficulties.
Step 3: Research competitors.
Competitors are for everyone. Some other goods and services address the same issue as Direct. Those who seem to have the same resource but provide different solutions are indirect. For instance, Netflix, which also seeks to fill the user’s spare time, is an indirect competitor of an educational site’s direct competitor, another educational platform. Competitors can take surprising forms, such as a paper notebook or a simple opposition to finding a solution.
Often, while getting to know the audience in the second stage, it is possible to calculate competition. Consider what products and services your target clients use to tackle the issue at hand. Your rivals are other options for completing the task.
Examine their functionality, interface, audience, and evaluations to determine their strengths and drawbacks. What issues with the audience are competitors not resolving? Consider what might be a benefit that will help you stand out.Use task management tools for scheduling the tasks of competitor research.
Step 4: Set success metrics.
It will be challenging to decide whether to further develop an idea if you don’t decide how to judge whether a test of a concept is successful right away. For instance, are 30 leads not enough considering what we received? If the landing page conversion rate is 7%, the concept will undoubtedly succeed. It is clear in both situations.
Within the limits of the test, choose the measure you’ll be working with. For instance, this may be the number of calls, the price of a lead, or the cost of a click. Additionally, specify the objective you hope to achieve, such as “Get 20 applications for no more than 500 dollars.” If fewer applications are received or they are more expensive, then you should admit that the test was unsuccessful. And if you have lots of things to do and forget to do them, with the help of a calendar, you will get notifications.
Step 5: Get ready for the contact point.
Create a platform where prospective buyers may learn more about the product and take a specific action, such as placing an order or leaving a request.
The platform might be anything as simple as a Google form, Facebook group, or Instagram page. However, I advise taking a bit more time to create a landing page. This solution provides the following benefits:
You can put up a retargeting and analytics system. You can learn more about your clients and keep their information in mind for upcoming marketing initiatives.
The landing provides additional space for expressing meaning and style. Customers can be taken by surprise right away by an uncommon design (although this is not necessary at the test stage).
Step 6: Explain the product to people.
It is a prepared contact platform; the next step is to let potential clients know about it. Ask your friends to share the link on their pages, post it on social media, and send it to topical conversations. To reach as many individuals as possible, run targeted advertisements.
Count the number of users who click on a banner or link and then complete the desired action to evaluate advertising on two levels at once. People who actively visit the page are likely to quit since you made a mistake in how you phrased your advertising message by promising them something they couldn’t get. On the other hand, if the ad receives few clicks and the page conversion rate is high, then it makes sense to refine the ad.