Have you ever watched the show Shark Tank? I love the ABC show for a few reasons: it helps me understand how smart investors analyze businesses, entrepreneurs and ideas.
Conversely, nothing gets me more upset on that show than when I see people who have put a ton of time, money, energy and effort into developing a product or business that is a good idea to them … but no one else. If you’ve seen the show, then you know what I am talking about – that entrepreneur who is crazy enthusiastic about an idea that solves a problem they had, but no one else ever encountered or worried about. They leave the show without any offers of money, and tell the camera that they are going to prove those shortsighted sharks wrong.
Example: The Wake ‘n Bacon – a wooden prototype alarm clock that wakes you to the smell of bacon. Fun idea, but probably not worth anything more than a second thought. Too bad the inventor didn’t vet his idea with others first who may have given him some valuable feedback that would have saved him a lot of time and money.
The secret to avoiding this fate is simple: Before you start, you need to discover whether or not there is a market for what you want to sell. Is it something people actually want to buy? There are two steps to figure this out:
1. Find a need and solve it: There is an old saying out there, “do what you love and the money will follow.” While noble and inspiring, it is also not always true. What if loved 18th century Flemish furniture? Outside of a stint on Antiques Roadshow, there probably are not a lot of ways that you could follow this passion and make a living.
Do what you love and the money won’t always follow.
The trick is to find something you are excited about (though maybe not necessarily “passionate” about) and figure out whether there are people out there who want or need what you want to sell. Is there a market for it? If so, what will they pay for it? Why would they choose you? If there is no one around who wants your proposed product or service, your business will fail. So, before you decide on a business, before you choose a name or get a business license, before you tap your 401(k) or credit cards, do your research and see if there is a market for your proposed solution.
Related article: Six Tips to Gain New Customers
2. Do your homework: Is there a market need for a coffee house in your neighborhood? Why would people choose you over Starbucks? What can you offer that they do not? Market research will tell you.
What you need to do is, without emotion, analyze your idea and solution. There are several ways to get the feedback you need:
- Form a focus group: Gather your friends, family and colleagues – people whose opinion you trust – and run your idea past them. Do they like it? Would they personally patronize your proposed business?
- Ask online: If you have a website, poll visitors. LinkedIn also allows people to post polls. Get some feedback. Twitter is also a good tool for this.
- Check in with trade associations: Almost every business and industry has a related trade group associated with it and these organizations typically have a lot of helpful research and data.
- Check in with the competition: Contact a business owner in a neighboring city who is in the same business. Because you are not in the same locale, he or she will be far more likely to give you some honest feedback.
- Surf: The web of course is a treasure trove of information.
The important thing is to make sure that you brainstorm, so that when people hear about it, they are wont to say, “I like it, and for that reason, I’m in!”
About Steve Strauss
Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest, The Small Business Bible, now out in a completely updated third edition. You can also listen to his weekly podcast, Small Business Success.© Steven D. Strauss.
Bank of America, N.A. engages with Steve Strauss to provide informational materials for your discussion or review purposes only. Steve Strauss is a registered trademark, used pursuant to license. The third parties within articles are used under license from Steve Strauss. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.
Bank of America, N.A. Member FDIC. ©2017 Bank of America Corporation