This is a guest post by Nick Sonnenberg, a serial entrepreneur with a passion for creating companies that disrupt the way people live. Nick is the co-founder of Leverage and the former CEO of CalvinApp.
Do you have some unique or flashy idea for a new business? It’s not strange that you do – a lot of people are attracted to the idea of becoming entrepreneurs.
If you are serious about starting your own business, the first thought that probably goes through your head is:
“Is my business idea feasible and profitable?”
This guide is created with only one goal in mind: to provide you with enough information that will help you decide whether market “wants” your idea, product or service and whether you can actually pull it off.
1. Test Your Idea: Search for Honest Feedback
You will often come across people who have excellent ideas that sound great at first. When it comes to execution, though, they quickly realize they can’t pull it off.
You probably have a lot of ideas too. Take a pen and a piece of paper and write them all down.
Then just let it rest for a few days while taking a quick look at the ideas every day. In the meantime, your subconscious mind will evaluate the possibilities. And you will make projections as to how you can start a specific business.
After a few days, take your pen and paper and start scratching off all of the ideas that now don’t seem profitable or feasible. You should only be left with one or two ideas.
Now, it is the time for you to seek feedback from potential customers.
If, for example, you are looking to tap into the hospitality industry and open a restaurant, you should test it out by inviting a group of people over and serving them food. In the end, make sure you ask for their honest feedback.
Do not tell them about your idea of opening a business. Try to get some good feedback that can help you out.
2. Evaluate If Your Idea is Profitable
It makes no sense for you to start a business if you do not know its potential for profitability.
It’s logical to think that any business can turn a health profit. In every industry you have a number of people making tons of money every day.
What you should do is research. Find out how much money you should invest in your business idea, the fastest way to achieve profitability, your anticipated expenses and budget.
If everything still seems reasonable, you are free to go forward and make it happen.
Some business ideas may require little to no investment at all. Some popular digital marketers have created 6-figure businesses with starting investments of only $100. However, that doesn’t mean they didn’t make any projections in the beginning.
If you are looking to tap into digital entrepreneurship, you should be doing a lot of calculations on when and whether your business is supposed to be making any profit and what will be the exact steps to get there.
3. Create a minimum viable product (MVP)
You might think this advice will not work for those who are not selling a product, but you are terribly wrong. A service of any sort can be considered a product, and it can be tested from the initial phase.
A minimum viable product is that simplest form of your idea that you can still sell as a product.
If you are selling an SEO service, then performing a quick audit for local businesses will tell you whether you have a potential of making a lot of money in the industry and how you can improve. You can outsource this part to other experts on a contract basis.
Or if you decide to run a coffee brewery, you can try and create a sample using one of the many homemaking coffee brewing methods that require no investment. Try and search for customers who would love a free sample. If they like it, continue selling the product. If they don’t, listen to their feedback and improve until you figure out how to make it right.
4. Ask for Advice Those Who’ve Been Where You Are
The most quality advice you can get is from people who were in the business you want to enter. You can simply ask people direct and specific questions, and you will most certainly get the quality answers you are looking for.
In case you do not know a successful entrepreneur or someone who can give accurate information about a specific industry, you can always leverage LinkedIn.
LinkedIn is a goldmine for successful entrepreneurs and business owners who are happy to help when they can. Just make sure you are not presenting yourself as a direct competitor. Then you will be able to meet some new people and get the quality advice you were looking for.
5. Analyze Competition
It is tough to start a coffee shop if there are dozens of competitors on your block. A great way to test a business idea and its viability is to analyze competitors and determine if there is enough room for you.
Analyzing competitors is fantastic for one more reason. You get to collect information about your competitor’s secrets to success. If you are a good enough researcher, you may even come to some secret ingredients that will help you along the way.
The process of starting a business is stressful and it involves a lot of hard work. But at the end of each day, you should feel happy you are building your own business.