By Dave Lavinsky
“Wouldn’t it be great if”…” When I hear these words, as I do so often, I know there’s an entrepreneur in my midst. Because all great new companies or products/services start with an entrepreneur dreaming “Wouldn’t it be great if”…” with regards to improving a product or service, or creating something totally new.
In fact, virtually everyone I’ve ever met has had an idea for a new product or service. It’s just that the vast majority never act on their ideas, and thus never become the entrepreneurs they could have been.
Likewise, most small business owners have ideas for new products or services to grow their companies. But most don’t act on them.
So why don’t individuals and business owners act on their ideas? While there are many reasons, most of them fall into the category of fear. Fear that the new idea will flop and they will look foolish. Or fear they will lose their money and then face financial difficulties.
Most of these fears stem from the fact that the individual doesn’t know whether or not their idea is worth pursuing. Hence, the more conviction you have that an idea will work, the more willing you are to take risks and face your fears.
So, how should you determine whether your new ideas are worth pursuing? Here is my checklist:
1. Big Market Size. The first key to determining the viability of your idea is to confirm that a big market exists for it. Conversely, the big flaw many entrepreneurs make is thinking that if they would buy something, that everyone else would too. A quick way to determine market size is to assess the number of people who might be willing to buy your product or service and multiply that by the price they would pay per year. Then informally survey a sample of your prospective buyers to confirm they would in fact be interested in your product or service at that price point.
2. Competitive Gaps. The next thing to consider are competitive gaps. An idea for a product or service that will be 10 percent better than your competitors will generally not be nearly as successful as creating a product or service that your competitors don’t offer at all. So look to fill competitive gaps rather than simply making modest improvements. Also consider how quickly and/or easily competitors might be able to copy your product or service once you introduce it.
3. Solving a Real Pain. Most successful products and services solve a real customer pain or need. For example, if you were creating a new pillow like my friends at Pillo1, your pillow needs to solve a pain, such as giving you a better night’s sleep, improving blood circulation, reducing neck pain, etc. Conversely, a new pillow who’s core benefit is that it’s smaller and takes up less room wouldn’t solve a big pain and thus wouldn’t be well received in the marketplace.
4. Ability to Target Customers. The final criteria to consider when assessing your new product or service idea is your ability to target customers. If, for example, your product appeals to men, aged 30-50 living in urban areas, it will be very easy to target them with media ranging from television ads to direct mail to online advertising. Conversely, if your target is men, aged 30-50 living in urban areas who are married, do their family’s grocery shopping and are interested in having whiter teeth, it will be harder, and thus more expensive, to target them.
The benefits of entrepreneurship are massive. Entrepreneurship fuels our economy with job creation and product/service sales that provide tax revenues that allow for public services. However, entrepreneurship requires individuals to take that first big step — to overcome their fears and pursue their new product or service idea. Using the checklist above, you can confirm whether your idea is worth pursing. If it is, go out there and make it happen!
About Dave Lavinsky
Dave Lavinsky is a serial entrepreneur having founded companies in multiple areas — from consumer products to services to internet websites and technologies. Since 1999, Dave has run Growthink, a consulting and information products firm that helps entrepreneurs and business owners to start, grow and sell their businesses, with a focus on business planning and capital raising.
Photo by Steven | Alan