As you begin to develop your business idea, you need to determine its strength and viability. Below is a checklist of criteria to help in evaluating ideas that seem to match what you’re looking for. Ask yourself the following questions when evaluating an idea for a business or product:
1. Does it satisfy or create a market need? Introducing a new product without first testing the market is like jumping off a cliff blindfolded. In fact, many businesses fail because there is no adequate market for their products or services. Before you risk your resources on a new venture, it is necessary to get an objective picture of your prospective market. Although accurately determining the customer reaction to a new product is difficult, a new business owner must try to get hold of as much information on the market as he or she can either through a formal market research or through secondary research. The rule is: find a need and fill it. To the extent possible, do not offer a product or service so new or unusual that people cannot understand why they should buy it - unless you want to spend most of your time and resources educating the public. Big companies, with their deep pockets, can afford to launch a massive educational campaign for breakthrough products. Home businesses, given their size and nature, often do not have the resources (capital, personnel, technology) to mobilize such campaigns. Also, do not offer a product you love to make but whose market potential is weak at best.
2. Will the product maintain market appeal? Beware of fads and fleeting trends as these markets change quickly that your business cannot achieve a sufficient volume or a sufficient share of the market. If your product, however, is a fad, make sure that you can move fast enough to capitalize on it before it dies. Also determine if your product or service can be used nationally, or is it simply limited to your geographical area. With the increasing globalization of business, you may need to look at the international market and see if there is significant foreign competition.
3. How unique is your product? The goal is to be able to differentiate your product from your competitor. You need to show why your products and services are unique, distinct, or of considerably superior than your competitors. Every product in the world can be sold or presented in a new way. If you seriously intend to capture a significant market share, your potential customers must find more value from your product.
4. How useful is your product? Many new ideas and products are successful because their creators identified an unmet need in the market. Identify at the onset how your product or service will be used, and determine the frequency of product use. Some business ideas fill a real need, but in some cases the need have to be created through promotional advertising and promotions. This information can help build your marketing strategy.
5. How much competition exists? Remember, there is never a "no competition" situation. You product will always have its competition. Determine the kind of competition you will have - locally, regionally, and nationally. Look for heavy or moderate competition - the fact that competition exists in that market proves a demand, or at least a need for what you offer. However, test for market saturation. Unless you are offering a groundbreaking product, stay away from market with extremely few competitors. Lack of competition could mean that your business idea is not profitable to begin with, or that your idea is so new and unique that no one has thought of it yet. Few players in the market could also imply that the market may be controlled by a monopoly or a cartel, the barriers to entry are too high for a small firm, or that the demand is too limited to sustain another entrant in the market
6. Have you priced your product competitively? The right price for a product or service is one of the essential elements in a solid business model. Don't do yourself injustice; the wrong price tag is like a ticket to disaster. Economic survival is the primary consideration underlying all pricing decisions. Ideally, a price should meet three requirements: it should match the competition; it should be attractive to your potential customers; and it should earn a profit for you. Set your prices, not by competition, but based on the needs of your business. Depending on your products, consider pricing yourself on the higher side: the higher you price yourself, the higher you position yourself.
7. What is the level of difficulty in the creation or implementation of the product? You need to consider the economic factors in the execution of the product, such as time, capital investment required, and marketing costs, personnel needed, among others. Also determine if you have the engineering, production, sales, and distribution facilities adequate for the product's implementation. You may have an excellent business idea, but if you do not have the economies of scale to produce it, then you might be better off to consider other products (or at least a scaled down version).
8. What are the growth possibilities? Your business model stands to succeed if the demand for your products or services can be expected to grow with a change in the economy. Check if your product can survive a major technological surge or obsolescence.
9. Can I get backend sales? Back-end sales are all the products or services you sell and resell to customers or clients after they have made their initial purchasing transaction with you. Determine if your product or service will warrant repeat sales. There is real business value in building a pool of repeat customers. The bulk of the sales, cash flow and current profit comes from utilizing and then better utilizing a back end.
10. Is the product safe? The safety of a product use is an important consideration for many consumers, particularly for manufactured products. If you are in the service business, you need to make sure that your personnel are properly trained with the goal of satisfying your customers foremost in their minds. Educate your consumers on how best to use the product and include clear instructions to avoid costly legal entanglements. Make sure that your business is insured against various forms of liabilities that may arise.
11. Can my product be promoted with strong advertising copy? Emotion sells. People are often motivated to buy a product or service because of some emotion, whether it is greed, fear or want. Response to advertisements often increases whenever you inject these elements into your ad. Sit down before you write the ad and ask yourself what you want to feel. Then translate these feelings to written words for your advertising copy. Stress what people can gain from ordering your product or service (financial reward, becoming the envy of others, knowledge to get ahead in life) or tell them what they lose if they do not order (loss of time and convenience, discounts for ordering before a deadline).
12. Will you be left with an inventory? Avoid inventory risk; make sure that even you will buy the product. If you have inventory, consider getting homeowner's or renter's insurance policy to protect your business against all possible disasters, be it fire, tornado, hurricane or earthquake.
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About the Author: Trina Newby is President and Founder of Women About Biz, a powerful and effective membership-based network for Businesswomen. Let us show you how to grow your business at Women About Biz http://womenaboutbiz.com.
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Many coaches, consultants, virtual assistants, solopreneurs and online business owners only offer two different items to their clients. One is a free subscription to their newsletter where they share tips, articles and business news with their subscribers. The other item is one-on-one coaching or consulting service offered at the regular hourly rates.
If you only offer a free newsletter and a one-on-one service to your clients, you are losing customers. Some people simply can't afford your one-on-one services at this time, while others may want to get exposed to your expertise at a cheaper rate, before trying your more expensive services.
So, how can you reach the people who are not ready for the one-on-one service, but are still interested in your expertise? You do that by creating products that you can sell in addition to the services that you already offer. Here are several different products you can create for your business:
- Digital products. As a professional who works with customers, you already know what your customers are interested in. You know what problems they want to solve, and since you are the expert, you know how to solve these problems.
Turn this information into a marketable digital product by publishing and selling it. Depending on the topic and the information, you can create digital products of various lengths.
- Audio products can be delivered through two different channels. They can be instantly downloaded from your web site in a popular audio format (MP3, Wave, etc.), or you can burn them onto a CD and physically ship the product to the customer.
- Teleclasses and Teleseminars. Teaching classes over the phone is an excellent way to demonstrate your expertise to many people at once and to offer your coaching or consulting sessions at a lower price point.
Teleclasses are a great example of repackaging your knowledge and selling it over and over again. Material taught and discussed during teleclasses can be reused to create special reports, e-books and audio products.
- Workshops. Workshops (teaching classes in person) can be used to teach to many people at once, instead of doing one-on-one sessions.
Start a list of products that you can create for your business. These products will help you reach a wider audience, increase your revenue and promote your expertise. Your products are also a vehicle for landing speaking engagements, cross-promotional opportunities and press spotlights, which in turn results in additional promotion to your business.
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Reach More Customers Now! Biana Babinsky is the online business coach, expert and author who teaches business owners how to make money with their products. Get her Complete Step By Step Information Products Guide at http://www.avocadoconsulting.com/rlinks/zinfo to learn how to create your own products and use them to reach more customers online.
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