How to Determine if Your Product Idea is Business Worthy
Every new product or business starts with an idea. Hopefully, this idea will be the seed for success and given the proper care and maintenance to bloom. But how do entrepreneurs determine if their idea is worth taking to the next level? Coming up with a unique idea is one thing, but transforming that idea into a successful and long-term product is quite another.
Aspiring entrepreneurs need to consider many factors before they can decide whether their idea has staying power or should be sent to the cutting room floor.
When we work with budding startups, we always take time upfront to evaluate the potential of an idea to become the next million-dollar brand. Many entrepreneurs are tempted to harness their passion and excitement about their idea into a “full steam ahead” approach, but it’s important to do your homework before pushing the gas pedal.
There are three key areas entrepreneurs should carefully consider when evaluating the staying power of their idea:
Related: 8 Highly Successful Entrepreneurs Share Their Best Advice for Getting Customers to Buy Your Product (No Matter What it Costs)
Market and competitive landscape
Whenever you’re thinking about launching a new product, taking a look at the market you’re entering and your potential competition should be high on your priority list.
Be honest about whether an opportunity to innovate truly exists and whether you can actually compete in the marketplace. If you can’t make the impact you want, that’s a major red flag. Of course, you also need to evaluate whether your idea can make money. Looking closely at revenue-building opportunities and exploring different pricing models will help you determine if you should take the next step to converting your idea into a product.
Branding and acquisition channel analysis
As your idea begins to take a more solid shape, focusing on branding and customer acquisition is key. When it comes to branding, ask yourself questions like, “Can we out-brand competitors?” and “Can we launch a full product portfolio with a unique brand narrative?”
If you feel confident that the answer is “yes,” it’s then important to fully analyze the ways in which you can build support for your product. Customer acquisition has so many layers and possibilities that it needs to be executed properly. Given that Amazon represents over 50 percent of U.S. e-commerce, it’s a useful starting point to get a sense of demand by looking at search volume of related products and reading competitors’ reviews.
Ask yourself the following questions:
- How easy will it be to build community support?
- How effective can you make your communications to potential customers, whether through email or other channels?Is paid advertising feasible?
These are all critical areas to analyze before you take your idea any further.
Product, operations and supply chain analysis
The devil is in the details, and this is especially true when it comes time to develop a plan on how to scale operations. Exploring things like sales potential and margins will give you a better sense of how profitable you can expect your unit economics to become and in what timeframe.
If your product requires manufacturing, now would be a good time to look at possible partners (think breadth of production capabilities, availability for payment terms and lead time on orders).
If you’re planning on creating a portfolio of products (or at least considering it as a long-term goal), thinking about the R&D requirements and opportunities to differentiate is a critical step in the process. Any legal and/or regulatory concerns should be fully vetted at this time, as well. You don’t want to leave any stone unturned through this phase of analysis.
After exploring all of these areas, you will be in a much better position to decide whether your idea has what it takes to become a legitimate and successful product. If you’re not feeling confident, it’s time to go back to the drawing board. But, if after doing your homework you give your idea the green light, remember that it’s just the beginning. Getting that seed of an idea to bloom to its full potential will require constant nurturing, tending to and commitment.
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Source: Startup Nation
Author: Alex Song