Not all big ideas are winners. It’s not that they aren’t good, it’s that there is little to no market for them. Needless to say, that’s a dealbreaker when it comes to launching a business based on that idea. You could invent an amazing device or be the best in the world at a certain service. But without sufficient customers, you’ll have no income, which means no profits.
Save yourself the heartache of pouring time and money into an unviable idea: Learn how to evaluate the market for your product.
Step 1: Is there a problem you can solve?
The key to selling anything is to meet your customers’ needs and make them happy. There are new products and services coming on the market every day. What makes yours unique? Is there a particular need you can address? A way to make your customers’ lives easier? Unique products and services might not necessarily be more viable.
By the same token, opening something common, such as an auto shop, doesn’t make your idea unviable. Each business is unique. Your value proposition is what you promise to solve for your customers in a way that your competitors do not or cannot.
Step 2: Is the market ready for you?
One key element of a viable product or service is its urgency: Do people need your offering right now? If not, will they need it in a few years? Things change quickly, and while it might be tempting to get the jump on your idea, you should ensure that enough customers are in a position to use it. The other component of market assessment is the size of the market.
Even if some people need your solution right now, you need a critical mass of customers to ensure that your business can scale up. Again, this might be a matter of timing.
Step 3: Is the cost worth the price, and vice versa?
Your price needs to be set at a level that your customers are willing and able to accommodate — but you also need to turn a profit. Can you sell the product or service at a price point that’s sufficiently higher than the cost of offering the thing? Determining price potential also requires a thorough understanding of your target audience. If you’re offering repair services for luxury items, you can push that price point a little higher. But if you want a broader consumer base, you’ll have to lower the price.
If the service is expensive to offer, is it worth lowering your price? Finally, it’s worth considering how expensive it will be to advertise, generate leads, and convert customers. Your geographic location, proximity to other businesses, and potential to market online are all key factors in this regard. If it would cost you more to acquire a customer than you would potentially earn from that customer, you don’t have full market viability.
Step 4: Is it sustainable?
Although most businesses should expect to be in the red for the first year or two, eventually, you’ll need to start turning a profit. Is your idea one that can continue generating income, whether through acquiring new customers or by upselling to existing ones?
Will you be able to restock and renew the resources you need to produce your product or service? A strong market for your product or service is one that can continue for years. Perhaps your service is something that will need to be done regularly, or your product is something that will expire after a few years.
Either way, it’s often worth it to develop complementary offerings to ensure that you can establish customers’ loyalty to your brand.
Wrapping Up
A viable market idea is one that’s cost-efficient, scalable, and pertinent to your target audience’s needs and desires. Ideally, you are offering a unique solution that’s both timely and appropriately priced. This is the sweet spot of market potential. Evaluating your market is the first thing you should do after coming up with your big idea.
Do your homework to avoid launching a business that isn’t sustainable: That’s a lot of heartache and lost time and money. If your idea turns out to not be viable, that doesn’t mean it’s forever unviable. And with tweaking, you might be able to salvage the idea and turn it into something that’s not only viable, but better than your original thought.
If your idea is viable, great! Use what you learned during market evaluation to help guide the creation of your marketing strategy. With good research at your back, you can fine-tune your plans to ensure a successful launch — and continued market success
