Testing a potential business idea is expensive... isn’t it?
Actually, no. It doesn’t have to be.
There are in fact a number of clever and affordable tactics that can help you to test your idea. These can help you gauge whether or not it will appeal to your target customers and help indicate if it has the potential to be a roaring success.
There’s no excuse for not testing your ideas before you start investing time, effort and money in bringing them to market.
Because at the end of the day, testing matters. Failing to do adequate market research can spell disaster for a new product or service.
A recipe for success
Coca-Cola’s launch of New Coke in 1985 remains one of the biggest marketing fiascos around. But there are plenty of other companies which have fallen into a similar trap.
According to a survey conducted by marketing solutions providers Yesmail Interactive and market research firm Gleanster, 80% of brands lack the customer data needed to launch an effective marketing campaign. Is it any wonder that 72% of all new product launches fail to meet their profit targets?
Taking those figures at face value, that remaining 8% must have some serious luck on their side.
When Fortune researched the reasons for the failure of start-ups, top of the list with 42% was a lack of market need for the product being launched. And when The Guardian interviewed celebrity entrepreneur Theo Paphitis about why so many start-ups fail, he was very clear: “The reason people fail is because they don't do their homework.”
Is it just us, or is there a pattern forming here?
If you want to assure the long-term success of your business (and rely on more than just luck), you need to do your homework.
In the words of Philip Kotler: “Marketing starts before there is a product. Marketing is the homework the company does to figure out what people need and what the company should make.”
5 essential steps to testing your business idea without spending a fortune
Appearing on Dragons’ Den is one way of finding out whether your idea has legs, but there are easier ways to test your theory.
We recommend breaking your testing exercise into five key activities:
- Research your idea
- Compare findings vs idea
- Test your idea
- Think in reverse
- Create a prototype
None of these steps need be costly or time-consuming. In fact, most can be achieved at minimum cost but maximum benefit to your prospects of success.
Let’s take a look at each step in a little more detail.
1. Research your idea
Your first step is to find out exactly what your target customers want and ascertain if there is a genuine opportunity. Don’t just assume you know your customers or what they want. And certainly don’t get fixed on an idea simply because it’s something you want to sell.
To successfully launch a product, you need to be certain that the audience has an appetite or need for it. That means perfecting the art of listening. Tools such as data analytics, social media, online surveys and persona techniques allow you to listen to your audience and understand their requirements. These tools are often cheap (or free) to use and are a great starting point for your fact-finding mission.
2. Compare findings vs idea
Correlate what you learn from your research against your product or service idea. The results you get from your research might contradict what you originally thought, but you need to embrace these findings. It’s really important to base all your decisions on fact – and fact alone. Go with your head, not your heart and fine-tune your idea to ensure absolute audience relevance.
And remember: don’t go ahead if you can’t reconcile the results with your idea.
3. Test your ideas
By testing your ideas in concept with real customers, you can tweak your ideas in response to their feedback. The response you get will vary from person to person so it’s important to remember that not everyone wears their heart on their sleeve. When speaking to people, consider their body language and the speed of response alongside what they actually say.
It’s a really good idea to hold these discussions in a confidential forum so your ideas don’t get leaked (especially useful if your customers are particularly enthusiastic about them). As an entrepreneur, your intellectual property (IP) is arguably the most valuable asset in your business, so protecting it is a priority. Make sure you take steps to enforce your creative rights and use simple but robust non-disclosure agreements when talking to others about your ideas. Find out more about how to protect your IP.
Again: don’t go ahead if you can’t reconcile the results with your idea.
4. Think in reverse
You might want to use our reverse timeline method to plan the fundamental steps to product or service success and ensure the idea is something you are capable of delivering successfully. This process means starting at the end point – with a positive customer review, for example – and working backwards to identify what you need to do to achieve that result.
Approaching the task in this way helps you identify exactly what kind of research is required and lets you really think about who your audience is. It will also allow you to continue fine-tuning your idea or processes to ensure you can afford to deliver the idea efficiently and without compromising the customer experience.
5. Create a prototype
One of the best ways to test a business idea and get some honest, authentic feedback is to build a prototype. Think of this as the final trial stage of your product or service development; it doesn’t need to be the perfect end solution, just something you can put to the test.
What you’re after is a minimum viable product (or MVP) that you can take to potential, but still very real, target customers.
Platforms such as Appear Here can help you take your prototype to the high street. Offering hundreds of available spaces to set up (temporary) shop, it makes bagging yourself some retail space far simpler than you’d imagine.
If it does sell, you’re onto a good thing. And even if it still needs tweaking, you’re still probably onto a good thing.
How other businesses are testing their ideas in practice
Blondies Kitchen: Location, location, location In terms of location, the friends behind Blondies Kitchen – a milk and cookies bar in London – couldn’t have chosen a better position for their first market stall. In front of the ticket barriers at Old Street station meant that hungry commuters couldn’t help but notice them (or the smell of freshly baked biscuits). From there, all it took was a picture of Chelsie Collins and Kristelle Levy’s cookie sandwich on Instagram to get them the coverage they needed to take the venture to new heights.
Bluebird Tea Co: Pop-up masters Pop-ups are also a great way to test the product and everything else that goes with it, as the Bluebird Tea Co team discovered. Krisi and Mike, the couple who launched and run the online business that now boasts three UK stores and around 30 employees, saw the potential in pop-up shops early on.
Since the company started in 2013, the pair have done numerous pop-ups at different times to test whether people liked the product and the customer experience. Later, they used pop-ups to test geographical areas, promote the brand, and increase revenue. Speaking about their success so far, Mike explains: “There is no substitute to getting in front of people and showing them your product. If anything, I'd do more of them if I could go back.”
Your test for success
Once you’re happy that there is a gap in the market for your product or service, it’s then (and only then) that you should start spending money on creating the end product or service.
Our guide to getting you started in business has information about everything you need to set you and your business idea along the road to success.
Testing your business idea doesn’t have to cost the earth, but it may just be brilliant enough to change it. Get the market research right and who knows where your idea could take you.
Law for the online generation starts here.
Do you have an idea for the "next big thing"? You may think your idea is perfect the way it is, but it's wise to test it out before you spend a lot of time and money developing a business or product for which there's no market. Here are six steps to help you make sure your product is something the world wants, before you launch it.