How to Know If You Have a Great Startup Idea

Business ideas are a dime a dozen. Furthermore, the startup phase is usually the hardest. Costs can easily start to add up when trying to move your idea from dream to reality, whether when performing market research, building prototypes, or marketing your designs. However, it is essential to know if an idea is viable before you start gathering capital. In this article, we’re going to show you how to know if you have a great idea so you don’t pour time, money and effort into an idea that is unlikely to thrive in the marketplace.

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Ask Others If They Need the Product Enough to Pay for It

A surprising fraction of startups fail because they try to launch a product for which there isn’t a market need. Don’t rely on supportive friends’ promises to buy it as an indication of market demand. If you don’t have money for focus groups, ask people you barely know if your product or service solves a problem and if they are willing to pay you a significant amount to solve that problem.

Determine Your Ideal Customer and How Many of Them There Are

Determine who would be your ideal customer. The short answer is that it isn’t everyone on the street. There is at least one customer segment that will pay the most for your product or service, and you need to know who they are in order to sell to them. Just as important is designing a product to fit their expected way of using the product and understanding how to market it.

Baby products are intended for babies, but your real market is parents with children starting the life stage where they will want your product. For pet products, you’ll need to identify the owners who would want to buy your product. Once you understand that customer segment, you can start to find out how many people fall into that category. If your product meets the needs of a few select customers, your business model has to reach every single one of them when they need your product and make enough money off each sale to sustain the operation. If you have a very large market, you likely have a good idea as long as you can differentiate yourself in the marketplace.

Choose a System to Deliver the Package

You should identify business models that can deliver the product at the prices customers are willing to pay, ideally while giving them everything they need. This is why many startups offer kits containing both the product itself and the tools to assemble it. Complimentary services and products sold with your main product could differentiate you in the marketplace while the complementary sellers will be eager to help promote your product or service.

PowerSportsAuction.com found that many people wanted a simple way to buy and sell motorcycles as conveniently as possible. Thus they created a platform where it is easier to list your bike for sale than putting it up on eBay, while partnering with lenders so buyers can buy any bike they see. By facilitating both the buying and selling, they offer value to both sides of the equation while receiving a modest fee for facilitating the transaction.

Conclusion

Before you get your idea off the ground, find out if there are people willing to pay for the product or service before you go any further. Identify your target customer base and how large it is. Then run estimates for how much it costs to make and distribute the product and if potential customers will pay that much. Make a list of the types of expert advice you’ll need and the best people to provide it. Then start coming up with ideas on how you’d deliver the product or service.