Testing a Business Idea: Three Methods To Determine If Yours Is Worth Pursuing
Most entrepreneurs have one thing in common: they are creative. New ideas for making money are constantly popping into their heads, and nearly every conversation or piece of reading becomes a seed for a new entrepreneurial pursuit. But success comes from doing, not dreaming. That’s why you can’t leave out the process of testing a business idea.
Through testing our business ideas, we give focus to our dreams. From the near endless list of sparks that come from our brains, we decide which ones have the potential to ignite. But what does testing a business idea look like? How do we use it to choose profitable freelancing opportunities?
That’s what we’re going to look at in this post. Three simple methods of testing a business idea to see if it’s worth pursuing.
Before You Start, Narrow Your List
So, we’re going to assume you’ve got a specific idea for a service or product you want to test. If you’ve got dozens of them and don’t know where to get started, try this. Write down ALL of your ideas (even the ones that seem pointless). Next, cross out any that don’t seem viable right now or that really don’t interest you very much.
Finally, from what remains, circle your top three. Use your gut to make decisions at this point. We’ll get more quantitative in the stages that follow. Right now, you want to choose your top business ideas by asking questions like these:
– What feels profitable to you?
– Which ideas are you really excited about?
– Which ones could you deliver on within a week or two if you got your first customer today?
Research Your Market
Now that you’ve got a few projects in mind, we can start talking about the process of testing a business idea. For starters, we are going to do some market research.
Any business idea falls into one of two categories: it’s either already being offered by someone or …drumroll… it’s not. Researching both markets is a little different.
If you plan to offer services that plenty of other people are already offering, your challenge is going to be finding a way to stand out from the competition. If you want to get into the infographic design business, for example, you might take a look at what other infographic designers on Legiit are doing. If you can find holes in what they offer, you can more easily carve out a space in the niche.
The key is to try to find what marketers refer to as a blue ocean business idea. While very saturated niches run red with competition, a blue ocean is the calm water that has plenty of buyers but not as many sellers. You can create your own blue ocean by adding value that your competitors are not.
If you’re testing a business idea that no one else is offering, on the other hand, the challenge of your market research is to make sure you will actually have customers. Generally speaking, every product or service is trying to solve some type of problem. Your goal is to make sure that people are actually having this problem.
Scour the internet for discussion forums, Facebook groups, and other places where your ideal customers are hanging out. Lurk around and verify that people are bothered by the problem that you are aiming to solve. (Warning! This process may lead to dozens of new business ideas you’ll be tempted to pursue.)
Do The Landing Page Test
Once you’ve confirmed that your idea has market potential, one common strategy for further testing a business idea is to experiment with a simple landing page.
Put relatively simply, the process looks like this:
1. Create a landing page describing your service.
2. Run a small ad campaign to get targeted visitors.
3. Determine if the return on investment is worth it.
Create a landing page
If you don’t have any experience with building landing pages, you can find someone to do it for you on Legiit at an affordable rate. It doesn’t have to be a full-blown website. Just a single page that describes your service in detail and explains how it will solve your customer’s problem.
Most importantly, you’ve got to include a call-to-action to track whether or not your visitors convert into customers. Something as simple as entering an email address to “join the waiting list” works.
Since you aren’t actually offering your services yet, make sure that your landing page includes your target pricing. This way, your conversions will more accurately reflect actual customers.
Once you’ve got your landing page built, you need to direct traffic to it. Google Adwords is an ideal way to do this because they are relatively simple to set up. And you can drive targeted traffic from people who are searching for the types of services you offer.
You don’t need to invest a ton in your ads. This is just meant to be a low-level method of testing a business idea. So run your ad campaign until you’ve gotten enough traffic to make some rough calculations.
Finally, determine if your landing page was profitable.
Let’s say you spend $100 in ads to drive 100 visitors to your landing page. If 2 of them convert into “customers” for a service that costs $49, then you’ve effectively lost two bucks. While this might seem like a failure, if your service is one that customers are likely to purchase again and again, then you’ll actually turn a profit in the end.
If your numbers are significantly worse, though, it could be a sign that there just isn’t enough of a market for what you have to offer. You can try experimenting with different prices and sales copy, but that can get expensive as you spend more and more on each new ad campaign.
If you aren’t looking to invest too much on testing ads, consider this next free approach…
Pitch To Potential Customers
The good news is that you don’t have to spend money on ads to get your services in front of customers. In fact, you can start testing a business idea for free today.
All you have to do is be where your customers are at, and find them in their moment of need. There are plenty of marketplaces and groups out there where you can freely pitch your services. Just look back at the places you visited during your market research.
Take advantages of opportunities like Legiit Monday on our Facebook Group. Every Monday, we invite sellers to shamelessly advertise their services. All you have to do is create a Legiit account, build your service page, and pitch yourself well.
If a few hours of pitching around the web lands you a sale or two, you’ll have gained valuable knowledge from testing your business idea. You’ll know that people are interested and that it’s worth scaling to as large of an audience as possible.
And, if not, you’ll still have learned a lot. Just go back to your big list of ideas and start the process over again. The only way to fail as an entrepreneur is to give up.