Launching a new product is always a challenge. It can be stressful, energizing, exciting and anxiety-producing all at the same time. There is always the possibility that it will fail but it may just be a huge success. Both results can be overwhelming. Entrepreneurs need to ask some serious questions before they decide to bring an idea to the market.
Is there a financially viable opportunity in the market?
This first question is the most important one. Oil companies don’t start drilling wells in certain places because they have a gut instinct that there’s enough oil down there to justify the expense. In the same way, you need to take a scientific approach and do some research before you spend any money. Is there a real market for what you intend to offer?
Who will buy your product?
There is nothing worse than spending time, effort and money on a product only to discover that nobody wants to buy it. It is important to ask potential customers if and in what way your product would improve their lives. You need to innovate and solve problems they don’t even know they have.
As a new entrepreneur, you may feel that shooting for a very broad group of customers offers more chances of making sales. In fact, it doesn’t often work this way and targeting a narrow segment makes the people you target more likely to buy, and allows you to do more specific market research.
Who are your ideal customers and what are their buying behaviors? Where are they to be found and how will you reach them? Will they buy your product seasonally or on a monthly basis? What quantity and quality are they looking for? This kind of information will help to determine so many important factors, such as your brand name, price structure, marketing and distribution plans.
Who are your competitors?
It is vital to know your marketplace and your competition. You need to understand what companies and products will compete with you. List all your competitors and figure out how what you want to offer will compare.
What are your competitive advantages and disadvantages? New products usually need good marketing campaigns to establish themselves in the market.
How will you make your product?
After doing all your research and determining that your product has a chance to succeed, you need to know how you will make it. It is common to gloss over the messy particulars in the euphoria of brainstorming.
You have to focus on the process of creating new products. What materials and types of skills are required to make your idea a reality? Will you have to invest in certain machinery or processes? What about patenting your product and developing a prototype?
How long will it take for my idea to be profitable?
Finding the answer to this question can be very difficult but it is something investors will be interested in. You need to start by determining your startup and operating expenses. By comparing this with your estimated sales figures, you will be able to calculate your breakeven point, after which you should start making a profit.
Your final step is to be able to evaluate whether you will be able to hang in there until you start seeing profits. Going through this exercise helps you to understand what kind of timeline you’re dealing with.
Considering the above questions can help you to find out whether your idea solves a problem, can thrive in a competitive market, and will produce the kind of profits that reward your investment.