A good way to determine if you have a good business idea is to test it. Create a prototype and give it to your family or friends. Ask them what value it gives them. If people get value, they will be willing to pay for it. The higher the value, the higher the price.
Starting small and scaling on your winners is a great way to ensure business success. This is true for products as well as for ad campaigns. Use data to test, refine and scale up. Don’t be afraid to walk away from a product or service (or even business) if you see failure. Failure is not something to be scared of or ashamed of. It’s just another lesson learned on the path to success.
Remember that every successful entrepreneur, athlete and celebrity has DECADES of failures and all we see is the successful top of the iceberg.
The important thing is to learn from your failures and don’t repeat them.
When it comes to developing a prototype or service you must remember that it doesn’t need to be perfect. It is just a prototype and therefore you shouldn’t spend too much time on it. The people who help you test also realise that this is a beta product in test mode. The important thing is that you gather data from the test and see if you can refine your product or if you need to abandon it completely.
Important data from your test product could include ratings, reviews, comments and suggestions from your test subjects. You could also look at other product usage metrics to understand if your product is successful or not.
- If you’re selling an online course, how many people started AND completed it?
- If you’re selling tofu, which flavour variants are most popular?
- If you’re selling beadwork to tourists, which products are added to cart the most and which are sold the most?
You might find that making small tweaks to your product or service offering will drive up the conversion rate or sales or completion rate.
Price is an important factor too: are you going into the market at a price that is too low or too high? Too low and people will believe that your product isn’t valuable enough to solve their problem. Too high and they’ll look at a competitor for a cheaper price.
You don’t need to set up a full shopping cart and fulfillment process for a prototype. Offer it for free to your test customers and ask for honest feedback. Hand deliver it instead of using a courier company. Remember though that all factors including shipping and packaging are part of your product experience and these need to be ultimately tested too.
Data is your friend.