You can have the greatest idea in the world for a new product, or service, but if no one will buy it, you will not have a business—at least not for long.
Even worse, 8 out of 10 reasons for failure had to do with wrong product, disconnected customers, or market problems. Or, in simpler terms, the startup founders built something that few people really wanted… a solution looking for a problem, or need, that just wasn’t there.
So, if you have this great idea for a new product or service, how can you determine if there is any “real” market for it?
The easiest and quickest way is probably to follow the general advice of Kevin O’Leary of Shark Tank fame, and find a company already in the business (a would-be competitor actually) and try to sell or license your great idea or new product to them. Then you can go on to develop another great idea.
But, if you are highly intent on being an entrepreneur (I recommend reading “Entrepreneur! Can I Be one?“ before making that decision) there are a few things you can do to keep from falling into the “no one will buy my stuff” trap.
Here are a few things you can do:
1. Check your passion.
How passionate are you about the product or service you want to offer? If you aren’t deeply passionate about it, it is unlikely you will be able to create passionate paying customers or clients.
2. Is the total market large enough?
You can’t build a scalable business just by talking with your friends and the people in your neighborhood. You need to use all your sources for information, including competitors, to get a feel for the potential size of the market.
3. Look for the pain!
How big is the problem your new idea is going to solve? You can sell a solution to someone’s problem much easier than you can sell something by simply fulfilling a modest desire.
4. Use your connections.
If you have investors, get them involved. Most investors have both the knowledge and desire to help you—use them. Talk to your banker, attorney, accountant, and the like. Talk to potential vendors.
5. Use your Advisor Group.
If you don’t have advisors yet—set up an advisory group as soon as you can and ask them to help you analyze your potential market relating to your new product.
6. Develop a Marketing Plan.
A “real” marketing plan, including the business model to support it. Having a great product and no plan for a scalable business—is death!
7. Build your team.
If you have the product, the market, and the plan to scale your business—you’d better be able to build the team that will take the plan to fruition.
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I know that the siren call of the startup attracts many entrepreneurs, and lures them into an enthusiastic fervor that is often very different from the real world of business.
But, unless you just want to try out entrepreneurship for the adventure, you had better take heed of at least the few items presented above.
Even when you do everything right in developing your Marketing Plan and business model, there are a myriad of problems that will crop up and threaten your new or upcoming business.
That’s why over 5 million businesses “disappear” every year. And I will again point out that there is a common thread of causation that flows through every reason given for a business failure.
Watch for future posts where I’ll lay out what I believe is the underlying reason for the high rate of failure for young and new startups.