Small business owners who are excited about their concept should test it before taking the plunge, particularly if they are first-time business owners or are unfamiliar with the industry they are considering entering.
Background research is inevitable and essential to establish basics such as market demand, the profile of your target market, trends in the industry (e.g. pricing, use of technology, product or service design), how competitive the industry is (and who your direct competitors are), what the start-up costs are and estimates of how long it will take to break even and then become profitable. After completing the initial research, field testing is a logical next step.
Field testing your idea can take various forms, including developing trial versions of your product or service, online or e-mail surveys probing customer preferences and whether they would buy your company’s products and services, experimenting with different marketing and distribution techniques on a small scale, and exhibiting and selling at fairs, expos and neighborhood markets.
For well-resourced small businesses, focus groups can be included in the arsenal of tools. Feedback from as many different sources as possible will result in both positive and negative views. Small business owners should resist the urge to ignore the negative and over-emphasize the positive. Being open to constructive criticism can help to refine the product or service offering, distinguish between short versus long term business opportunities, and identify business ideas that are not commercially viable under any circumstances.
Everything that small business owners do to test their ideas should be within a pre-determined budget and in line with the available financial resources.
Being extravagant will not necessarily produce better results than keeping things simple and low-budget. If the idea proves ‘bankable’, the small business owner needs to be in a position to make it a reality, hence it would be prudent to prioritize and spend money wisely.