Do you think you have an amazing idea for a business? Maybe you want to turn your hobby or passion into a money maker? Or perhaps you’ve thought of the next big thing to take the tech start-up world by storm?
Just because you have a great idea and heaps of passion, that doesn’t necessarily mean your business is going to succeed.
The reality is that 90% of new businesses fail – but don’t panic, this article outlines some of the main reasons why businesses fail, and gives you some tips on working out whether your idea really can be turned into a viable business.
This is the first rule of determining whether your idea really has legs. Will your product or service solve a problem, frustration or pain point (or solve it better than other businesses out there)? If the answer is no, you may struggle to find and keep customers. 42% of start-ups fail because they didn’t solve a market need. You can spend all the time and money in the world creating a feature-packed business and a brilliant marketing plan – but if no one actually needs it, or it doesn’t solve a problem effectively, chances are you’ll be destined to fail.
So how do you find out if you are creating something of value?
Market research is crucial for any new business idea for several reasons. Firstly, it helps you find out what your potential customers want. Secondly, it shows you what your competitors are doing and how you can do it better.
Look out for our upcoming article on how to conduct market research.
One start-up buzzword you may have heard flying around is MVP. This means Minimum Viable Product and is the simplest version of your product that can be used to test whether your concept works.
This is exactly what Amazon founder, Jeff Bezos, did. In 1994 he realised that the internet was about to take off in a big way and wanted to start selling products online. He started off by writing a list of 20 products he thought would sell, and decided to test his idea by selling just books, which he did from his parents’ garage. In 1998 Amazon was selling music and DVDS, quickly followed by video games, consumer electronics, home-improvement items, software, games, and toys and more. Today Amazon is the biggest online retailer in the world.
Creating a Minimum Viable Product then testing it before you scale up is one of the best ways to find out if people are interested in your product and if there are any improvements you can make before you start investing time and money in taking it further.
In the rest of this series we’ll go into more detail about the things outlined above and sign-post some of the tools to help you start your own business.
How to conduct market research
How to identify and test your MVP