So, you've got a terrific idea for a new product, service or business. But how do you know if it's going to sell?
That's a question I hear quite a lot from my entrepreneur clients—and from random people I meet who find out what I do.
Now, some ideas may seem like winners right off the bat. And they may be. But you don't want to invest a ton of time and money based solely on an assumption. Because we all know what happens when you assume anything. ;-)
So before you go forth launching your latest thing, you need some evidence that it is something people are interested in. And more importantly, that there are enough people who want it-and would be willing and able to buy it for a price that keeps you in business.
That means doing a bit of research, and maybe even testing the market. Just because you aren't a big corporation with a ginormous budget burning a hole in your pocket, doesn't mean you can't do your due diligence.
Now, if you've created something based on solving your own problems or filling your own needs you're probably off to a good start. Ditto if lots of your friends or family members have told you they want whatever it is when you show it to them.
But you still want to do a little research on the Internet, at the library, or even the local magazine rack.
Here are five questions you need to answer:
1) Does anyone else already sell or offer what you have in mind (or something really similar)?
If so, this is a great sign. Because it means chances are good someone out there is buying it. If no one offers what you want to sell, this is a red flag. Because instead of just explaining why they should buy from you instead of someone else, you have to explain why they should want it in the first place.
However, it's not a deal breaker. As long as you can confirm there is an interested market for what you want to sell, and that it solve a pressing pain or problem, there's no reason not to move forward. Because if you can be the first-and take over a good share of the market-you'll be in a terrific position as it takes off.
2) How many people sell it?
Competition is good. Too much competition can be a problem. But it's a fine line.
If the market for your idea is enormous then there is plenty of room for competition. And if you have a unique twist, benefit or feature to what you are offering, then competition is not a huge concern. You just have to market your idea to highlight the key difference so you stand out from the crowd.
3) What, exactly, are they selling and how does it compare to what you are offering?
Make a list of the features and benefits of your idea, then a list of your competition's features and benefits. That way you can easily see what makes your product, service or business different or better.
4) Who are they selling to?
You can get a good idea of who your target market might be simply by looking at who your competition is selling to. This is not to say there aren't other potential markets. Or that you definitely want to sell to the same people. But it helps to know who is buying now.
5) How much are they selling it for?
You don't have to sell for the same price. But if you plan to ask for more money than the competition, you need to be prepared to sell the value of your offering. And to show prospects why it's better, different or more effective/valuable than what the competitors are selling.
The last thing you want to do is sell for less just to be the lowest price. Thanks to the Internet, someone out there can almost always beat your price. Plus, it's all too easy to undercut the competition, only to discover you're not making enough to cover your costs—or even sustain your business.
Of course there are never any guarantees. And this is just a starting point. But once you've done all your research, you should have a reasonable idea as to whether or not your product, service or business has a shot.
© 2010 Stacy Karacostas. All Rights Reserved. www.theunchainedentrepreneur.com
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