Ways To Test Your Home Business Idea

by WorkFromHome on November 8, 2011

One of the common mistakes many people make when starting a home business is not testing their idea before fully investing their time and money. This can be a mistake because testing an idea is important for fully understanding how successful a product or services may be. That is why major corporations spend millions of dollars per year testing new products before fully launching them to market. You may think that you have the greatest idea ever, but the marketplace may think otherwise. Here are some ways to effectively test you home business idea before you invest a lot of time and money.

Identify Your Market

You cannot effectively test your idea with people until you have identified the market for your product or service. There are several questions you need to clarify to understand how and where your business will fit into the larger picture. How big, in terms of dollars, is the current market for what you are offering? Are you in a new or mature market category? How many others offering the same product or service are already in the market? What is your competition selling and at what price? By clearly answering these questions you will have a better understanding of where you fit in, what you can reasonably charge and how stiff your competition will be. This will provide you the opportunity to see if your original assumptions about your business idea will hold true once you enter the marketplace.

Identify Your Customer

Not all products or services are designed for all age groups. Knowing which customers will best respond to your business idea is crucial in being able to build your business in the most effective way. Taking a shotgun approach to offering your product or service to all customer groups is an ineffective and costly way of building a customer base. By asking some very basic questions you will have a better idea of how to effectively market your idea. Will your business appeal to young people, the elderly, single moms or other businesses? Will your product or service be most attractive to singles or those who are married? What is the annual income of your prospective customer base? All of these questions will also help you shape your business idea into something that better suites the needs of your future customers. Once you have identified your customers, take some time to causally explain your business idea to both the people you know and strangers you meet and then evaluate their feedback. You may be surprised at what you learn.

Test Demand

Before investing everything you have into your business idea, test the demand for your product or service on a small scale. While the customer base you have identified may be large enough to support your idea, the demand may not be enough for you to realize a profit. Customers can be very fickle about why and when they will spend their money. That is why successful corporations spend a great deal of money on product testing and focus groups. You can easily and inexpensively test your product or service at local farmers markets, festivals, through consignment shops, at trade shows and expos and through local trade associations. Find the best way to get yourself in front of your potential customers and see if the demand is truly there. This is much better than not doing so and ending up with inventory that you cannot move or offering a service that is currently in low demand.

Test Your Contact And Supply Lines

At some point in building your business idea into workable structure you will have identified contacts or suppliers that will be vital to keeping your business running smoothly. The earlier you build a rapport with these people the better. Bounce your business idea off of them and gauge their feedback. Also gauge their ability to provide what you will need once your home business is ramped up to full operating mode. There is nothing worse than thinking you have the necessary contacts and suppliers in place only to discover that they cannot follow through once the demand hits. More importantly, these people will also have a larger network of people who may want or need your product or service. As with most businesses, your contact base will probably become your most valuable asset because these people can offer you the most honest feedback on your business idea and operations.

There is no absolute way to guarantee the success of any business, but by testing your idea first you will narrow your chances for failure. It is the wisest path for truly understanding how best to shape your idea into something your potential customers will really want.

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