If you’re like most entrepreneurs or wannabe entrepreneurs, you have ideas every day. In the shower or bath, when out walking, and as you try to doze off. They just come to you. However, you have to qualify them to determine which are worth pursuing and those that just aren’t viable. How do you do that?
In this article, we briefly explore some signs and questions to ask to make that determination.
Has Anyone Started Offering Something Similar?
This is a tricky one. Sometimes an idea is ahead of its time and pursuing it leads to heavy losses while you wait for the market to develop a need for what you’re offering. When there’s already a company with a similar product or service and their financial results suggest that they’re doing well, then it’s possibly worth going after it.
Dig into their financials to see what they’re doing. If they’re listed on the stock market, you can look up their information and financial reports. Some companies will provide financial reports on their website even as private corporations with information you can glean. Also, you can get a sense of size from interviews given by the CEO and other leaders within the business to find snippets of conversation.
Can You Market Better Than the Competition?
Take a look at their marketing. How does it look to you? Is it up to the standard that your company uses for existing products or services, or does it fall way short? Bear in mind, new businesses often aren’t on point with their marketing if they’re doing it in house or don’t have a sensible budget for it. They can certainly be beaten by delivering attention-grabbing marketing.
What about the price point? Can you offer something similar for a lower price point? The product might be a viable one to push ahead with if you can make the numbers work in your favor. A lower price point gives the consumer more choice and encourages competition. If initially running at a small loss is a plan you’re happy with, you could take out a business loan to help you succeed in grabbing some market share early on.
Can You or Have You Made a Superior Product That is Profitable?
Are you able to innovate in product development to improve upon the competitor’s product? What needed features are missing? Are customers complaining about the product in the reviews across the internet? Is there a way to get a competitive advantage with product improvements and then keep innovating faster than the (slow) competition or will it be a short-term gain only?
Is it possible to sell profitably even if you sell lower volumes in the first few years? What if a price war happens? How will your company handle it? Be prepared to differentiate the product based on usefulness, not only price.
Is the Product Completely New, But You See It as an Opportunity?
There are plenty of new products released annually that have never been seen before. Just because it’s new, doesn’t mean it’s not useful. Conduct research on your idea before launching to make sure there’s sufficient interest in the marketplace; the lack of a competitor could be because there’s low/no demand for the product. Be careful to launch to a willing market or be prepared to risk it on a wild gamble and acknowledge it as such.
The signs of a viable idea aren’t always clear. Sometimes the lack of a similar product means the idea is a bad one. Other times, two competing products might mean the idea has potential if the market is large enough to sustain a third product. Consider your options carefully before deciding to proceed.