So you’ve got a big business idea. It could be something you’ve been stewing over for several years. Or it’s a spur-of-the-moment idea you feel you could actually commit to.
Regardless of the stage of your idea, you may be asking:
- Am I willing to quit my job to pursue this?
- Do I have to sacrifice any money to make this work?
- Do I have what it takes to be an entrepreneur?
Many times, these fears can be summed up in one question:
- How do I know my new business idea will actually work?
Life isn’t built on certainty, and the variables of success are too many to count. If you could ensure your ultimate success early in your entrepreneurial journey, wouldn’t you?
Of course you would.
These steps aren’t part of a mindless checklist. They require intensive research and effort. They’ll also call for a dose of introspection and plenty of thinking time. So if you’re looking for an easy checklist, you’ve come to the wrong place.
But if you’re willing to put in the work to follow through on your business idea, these action items are for you.
The first step is asking the right questions. If you can channel the questions you have in an effective way, you’ll learn to better understand yourself and get a stronger grasp on your business idea.
The second step is putting your business idea to the test. Technology enables you to test the concept behind your business before you go all-in. Using social media and other channels to test your business plan will let you know if you can succeed in the “real” world.
In this article, we’ll hand you the keys to both of these action items. First, we’ll cover some questions you should ask yourself as you think through your business idea. Second, we’ll share some of the best ways we’ve seen entrepreneurs put their ideas to the test.
5 Questions to Ask About Your New Business Idea
1. Why do I want to start this business?
We’re not talking about your business plan here. We’re talking about your why.
Now is the time to realize if you care about the business or if you’re chasing something else – fame, money, or approval. Fame, money, and approval aren’t bad in themselves. But if you make them your focus, you’re digging a hole for yourself and the business.
Uncovering your “why” —your core business motivation —will be an advantage when you hit tough times. Your “why” will guide you through the challenges every entrepreneur is bound to face.
Take a look at the mission statement for the Disney company:
The mission of The Walt Disney Company is to entertain, inform and inspire people around the globe through the power of unparalleled storytelling, reflecting the iconic brands, creative minds, and innovative technologies that make ours the world’s premier entertainment company.
Everyone surrounding Walt Disney knew that he was an incredible optimist and a master storyteller. These core motivations haven’t changed since the company’s early days. They impact every movie Disney releases and add the spark of magic people experience at Disney World.
As the founder of your company, this is the same kind of impact that you can have on the lasting legacy of your business.
2. Am I willing to do whatever it takes to make this happen?
Successful businesses rely on a leadership team with total commitment to the company vision.
If you’re not willing to sacrifice a great job, free time, social life, or other things that are important, you may not be ready to launch your business.
There was once a man passionate about duck hunting. He was so passionate that he actually turned down a career in the NFL to follow his vision. He ended up inventing several duck calls, and that’s the beginning of the story of the Duck Dynasty. That man was Phil Robertson, and he and his sons still run this hugely successful company.
Does your business idea have to be your biggest passion? No.
But do you need the inner resolve to push through the hurdles that are sure to come your way? Unquestionably, yes.
Where there’s a will there’s a way, and this resolve increases the chances of your business succeeding.
3. What is the problem my business idea solves?
Let’s face it: not having a problem you can solve with your new business makes success less attainable. We call these pain points. Unless your customers see a way your product can improve their lives, they won’t buy it. Simple as that.
If you don’t know the problem you’re trying to solve or the way your company is making the world a better place, you’ll have no selling point for your product.
If your company is groundbreaking, there’s a chance you’ll have to show people a problem they didn’t know they have. Take Ford Motor company, for example. Henry Ford is famously known for saying
“If I had asked people what they wanted, they would have said faster horses.”
Another example of a company that solves a huge problem is GrubHub. The company was started by two developers working for Apartments.com. Working late, they were frustrated with the lack of food options and the constant issue of having to give credit card numbers over the phone.
So they built Grubhub—a directory for restaurants plus a service that allowed people to order food from the comfort of their homes.
This is a problem most busy people had, but everyone just dealt with it. Grubhub posed a solution to a previously unsolved problem for many Americans.
4. How big is the market my business could reach?
Ask questions about the market you want to reach. This approach is simply an extension of the question “What is the problem my business idea solves?”
Let’s take it a little further:
- Is this problem something only a certain group of people have?
- Is this problem affected by where my customers live?
- How many people have this problem?
- Will my product be something anybody can access, or does the amount of money they make come into play?
Simply asking these questions means doing substantial market research.
Wouldn’t you want to dive into the research if it meant more money?
There are two ways to make a lot of money:
- Sell a high volume of products at a reasonable price.
- Sell fewer products at a higher price.
If your target market is small (i.e. entrepreneurs in Chicago with a net worth of over $2M) then your product needs to be worthy of and sell for a higher price point.
On the flip side, if the potential market for your company is large, you’ll need to find some way to convince that market of the value of your product.
5. What strengths and weaknesses do I bring to the table?
What do you think is the most important factor of success in your business?
YOU.
Start now and do some serious self-assessment. You won’t want a personal downfall to mean the demise of your business later on.
When it comes to entrepreneurship, many founders are really good at one or two things. Yet they lack ability in several others.
For example, some entrepreneurs are great at marketing and sales but are chronically disorganized. It pays for them to recognize this and to hire other people to manage the company operations.
Others may be technically skilled but have no concept of how to pitch their product.
If you correctly analyze your business strengths and weaknesses now, you'll do yourself a favor in the long run. - Dan Lok Click To TweetThe success of Apple had to do with partners who complimented each others’ strengths and weaknesses. Steve Wozniak and Steve Jobs met while working a summer job.
At the time, Wozniak was building a computer. Jobs, on the other hand, saw its potential to solve a global problem.
Without the insight and business sense Jobs brought to the table, Wozniak probably would never have put the computer on the market. And of course, Jobs would never have had a product without Wozniak’s analytical and technical abilities.
6 Ways to test your New Business Idea
Now that you have gone through the big questions, it’s time to put your big idea to a potential test.
1. Use social media to test your ideas.
Isn’t it funny how one simple post asking a question on Facebook can get hundreds of comments? How quick are people to share their opinion on Twitter?
These are opportunities.
Start sharing the problem you’re solving with your friends. Ask them directly if they would buy the product you’re trying to sell. See if they’re willing to share details about the company you’re trying to build. Ask for their feedback on potential business models or marketing ideas.
If you’re extra adventurous, try starting a Facebook page and running some simple ads to a landing page that explains the product you want to develop.
Chances are if you can get engagement on social media around the idea you’re building a product around, there will also be people who want to invest money in it.
Social media is also a great way to get an idea of other perspectives as you build out your business plan. Just remember to take everything with a grain of salt: not everything people say on social media should be taken to heart.
2. Start a newsletter.
A newsletter about your business idea will have so many benefits. First, you’ll be able to test whether people are willing to make a commitment to your business.
An email is one of the most valuable things you can have when it actually comes time to launch your business. Email gives you direct access to a potential customer who is already invested enough in your idea to give you personal information.
Finally, it’s going to be incredibly valuable to you to regularly share the progress you’re making on your business as you figure out how to build it. You’ll be able to stay accountable to potential customers and get continual feedback as you test and implement your product.
3. Get yourself in front of investors.
What’s one of the best indicators of success? When someone is willing to commit to and invest in whatever you’re building.
You can look for potential investors by networking. You may have already been keeping your eyes open for potential partners in this business venture. If so, offer to take these people out for coffee or pay for their lunch and ask for their advice and ideas.
Use LinkedIn to pitch investors who have been involved in companies similar to yours. Make a point to connect to these people. This way, when you’re ready to ask for investments, you will have a network of people who already know and trust you.
If you don’t want to go the route of traditional investors, you could try crowdfunding. Kickstarter, SeedInvest, and Patreon are several options if you’re going for smaller investors.
Finally, maybe the best option for you will be to create an MVP (a minimum viable product) that you can test on the market for a lesser price than what you eventually want to charge.
This way, you’re already accountable to the market while you’re bringing in the first bit of money you’ll need to grow your business.
Regardless of how you choose to get your initial funding, the basic idea still stands: you won’t know your business can be successful until someone can put their money where their mouth is.
4. Create a survey.
Are you looking to do more market research and understand a bit more about your potential customers before you raise money? No problem.
You can create a quick survey using SurveyMonkey, Typeform, Google Forms, or FormAssembly where people can give you their true opinions about what you’re building.
Ask family and friends to complete the form as a favor to you. You’d be surprised how much they know about you! Then market your survey to a broader group of people.
5. Get an understanding of the financial side.
Do you have any idea how much it’s going to cost to create your product? Or if it’s even reasonable to think you can make money off of it?
How much of the work will you need to outsource? How many employees will you need st a minimum and how experienced do they have to be?
If you don’t feel equipped to do the research on this yourself, flesh out the idea with someone who can give you good advice.
If you can’t make money, your business will ultimately fail.
And it’s better to find that out now rather than to run into a hiccup you could have avoided by doing the proper legwork in advance.
6. Do some background research.
Most people like to call this “researching the competition.”
Know your competition and their successes. The time you invest in this research will be valuable when you’re assessing how to build your business.
Besides, it will let you know if your potential market is saturated or if you have the potential to create a true win.
Here are several tools you can use to research your competition:
- Social media profiles. What does a product similar to yours do for an Instagram page? How active are the founding members and C-level employees on social media? Do they run ads on Facebook or Twitter?
- Google. Search “Products for (Problem You’re Trying To Solve)” or “(Industry Name) Companies”. Take some time to assess the top pages that come up during your searches. Is your competition spending time creating content around the problem you’re solving? What are they doing to get noticed?
- Keyword Tools. Want to know how your business can succeed? Study what people are searching for in your target industry. Keyword tools like Ubersuggest or Ahrefs allow you to study the analytics of certain search terms in your target industry. With these tools, you can see who consistently ranks for keywords in the space you’re targeting. The companies who are ranking for your target keywords are the ones you should begin to study.
If you’re interested in diving deeper, Dan goes into more detail about the idea in this video.
Wrapping it all up
In the end, you can’t determine the profit of your business by doing the same thing as another entrepreneur. You won’t have a guaranteed path to success by following a set of rules.
Your business will succeed because of your hustle. It’s going to make money because of your determination to keep going.
Finally, your business will power through difficulty with your ability to research, test, and adapt. You can start the process while your business is still in the idea phase.
If you start the process of research today, you’ll set your business up for long-lasting success.
