This is a question that it’s constantly on our minds as we embark on the journey of starting our businesses.
Here are three steps that will help you determine if your business has the potential to make money.
1. Determine if your business has good market
You need to identify if your product or service has a good market. Here are some characteristics to keep in mind when identifying a good market for your businesses
- Can your target market be grouped together? They share enough of the same problems and desires that they can be grouped together.
- Is your target market group large enough? Your market must be large enough for it to be worth the resources you’ll spend. It should give you the opportunity to generate sales in a consistent way.
- Do they share the same perspective? For example, you shouldn’t create a product or service that address the whole population – male and female. Choose one group with shared prospective such as – Active female vegans
- Will your business be in demand? Look at current and future trends to see if your business is sustainable. Have other companies done it and are successful at it? Competition is good in this case! It tells you that it’s been tested and proven to make money before you. Consider using Google Trends to learn about the frequency and volume of a particular topic to assess current trends.
2. Talk to your ideal customers
Think about who’s your target market, What do they like to do? Where can you find them?
You want to get in touch with your potential customers and talk to them. Join their social media groups to learn more about them.
Take part in conversations, ask questions, conduct polls, and conduct informational interviews.
You want to establish the motivating factors for your target market to buy your products/services. What would be a barrier to buying your product/service? What challenges does your target have? What are their goals, desires and aspirations?
This will give you valuable insight and information that will help you develop your product/service for your target market. This will also help you with your marketing strategy.
3. Create an MVP
An MVP, a minimum viable product, was introduces by Eric Ries the author of the Lean Start-up. He explains that the most effective way to develop a product is to create a simple yet viable product that can deliver value for your customers.
Creating an advanced product with many features is not effective at this stage. You want your customers to give you feedback before you perfect your product as you are working with only assumptions. As you get feedback from your customers using your product, you can then further develop and enhance.