Is Your Product Idea a Good One?
So you have an idea for a new product, process or service, but is it a good idea for a business? How can you tell if it’s viable? Do you think you are ready to throw the dart and are you really expecting to hit the bull’s-eye?
How unique is your idea? What will make your idea stand out in the crowd? What problem are you trying to solve? How do you differ from the competition? The most successful business ideas usually have a strong, unique new concept and will show the customer a clear identity they quickly relate to or have a clear picture of how your product adds value to them. Make sure you take time to define and refine your idea. You must add value!
How expensive is it design and build your product, create your service, refine a process or to simply start up your business around your new idea? These costs need to be known before you go too far. If you have to build it all yourself, how long will it take you. Keep in mind your lost opportunity costs of you creating your product and business instead of working and pulling in a paycheck. That lost opportunity is also an expense. Will you need to invest cash in equipment, inventory, molds or prototypes before you make any sales? How much and what about design changes?
Is it a good economic time to launch your idea into the public? Is your target customer spending in the area your product is focused? Is that spending increasing or decreasing? Who is your target customer? How is the industry your product is classified in doing as a whole? Is it increasing or decreasing? Will new technology soon change or replace products in your industry or change the buying habits of your target customer? Consider the seasonality of your new venture, when is the best time to launch your product or business idea?
There are many questions to ask and get answers to before you spend cash from your “I worked hard for these dollar$” war-chest. Make sure your idea has been tested and the market sees it as something they want and will pay for.
Testing your Idea?
One way to determine the viability of your product or service is with a feasibility study. A feasibility study can be completed many different ways and can help you discover some crucial information such as:
- The level of risk involved with your idea
- Is there really a market for your idea
- Whether the product or business is viable
- What return on investment you might expect
- Any legal issues you might need to address
- The amount of money the product development requires to be established
- The working capital you may need from developing the product to collecting on your first sale
- When the business will reach break even
- What business skills will be critical to success
- Any lack in your own skills and how they can be addressed
- Strengths and weaknesses of your idea
- The impact on your target customer
What makes up a Feasibility Study?
Some main ingredients to a good product feasibility study are:
- SWOT Analysis (Strength, Weaknesses, Opportunities & Threats)
- Market Trends Analysis
- Customers Analysis
- Competition Analysis
- Suppliers Analysis
- Financial Analysis (Costs to develop product, ROI)
- Go / No Go decision if above analysis proves to be too risky
- Concept development and testing (which is different than test marketing)
- Metrics, forecasting and Benchmarks of expected product launch results
- Beta test product or service & track results, both good and bad
- Distribution Channels (explore all options)
- Growth and Scalability
I love the saying “necessity is the mother of invention”…it always makes me think of improvements, change and adding more value to something. Will your product, service or business add more value to the customer? If so, good luck and I wish you much success!!
Gary J. Kiecker