Everyone has business ideas. Maybe you think you have a great business idea...and hey! you might be right. Your idea may be indeed great, but that doesn't mean the world is ready for it. That's why you should validate your idea first. Validating a business idea doesn't only tell you if there's demand for it, but can also tell you if the demand is big enough to start a business. Depending on your validation results, you'll know how to approach the market and tailor your offering.
There are 3 possible outcomes when you are trying to validate your business idea:
1- Nobody is looking for a similar product or service and no other company offers it.
This scenario will take much more effort and capital to promote than a product or service that already has demand, because you have to educate the public on this new offering and why it could be valuable. It also carries higher risk. However, if the idea is exciting, it has a higher potential of becoming viral.
2- Your business idea has a decent to low demand with high competition.
This may be the case of new technology or innovative offerings. People are not completely aware of this solution, but many companies have caught up with the trend. In this case, you want to evaluate 2 things: if you can offer something better than the competition, or/and, if you have enough capital to compete. If your competitors are in the million dollar capital range, and you have a limited investment, this idea may not be feasible.
3- The ideal case scenario: your idea has good search volume and low competition.
Congratulations! You may be on to something. Your business idea has low risk because it has high demand and low competition. Start by analyzing your competitors and checking if you can offer something better. Determine your unique selling proposition and define your target market. Niches are a great way to hone into a very narrow audience that can be more susceptible to your offering.
Ways to Evaluate Your Business Idea
There are many ways you can evaluate your business idea. Start by using the Keyword tool in Google Adwords and measuring traffic related to the keywords you'd like to rank for. You can also use Google Insights and Google Trends.
Other valuable channels are forums like Quora or Reddit. See what others are inquiring about and discover how you can solve their problem. Selling platforms like Amazon can also give you a good idea if your product idea exists or how good is selling. Finally, you can ask friends and colleagues for feedback.
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