Have a great idea? Check. Have some spare cash to fund your idea? Check. Convinced you have the best idea in the whole wide world? Check. Well, you probably think you do. Before you match that idea with your savings, conduct some due diligence to make sure that this potential business will be successful.
Let me introduce you to what I call the “Entrepreneurs Fallacy.” The fallacy occurs when an entrepreneur, experienced or not, launches a business predicated on the idea that the concept is the best in the world and will be wildly successful upon implementation (Read: best idea without researching if there is a market or if a customer base will engage).
When asked for advice about turning ideas into reality, I recommend that friends, family and colleagues do their due diligence before jumping any further into their business model. This involves asking questions. Is there a market for the product or service? Is the idea both scalable and profitable? Does the idea fit the needs of a target market? If the answer is “no” or there is any hesitation, it’s time to step back and do some market research.
Market research is a scary phrase. It requires defining the target market and formulating questions that will gauge the market’s interest. While daunting and time consuming, a little patience and legwork can boost success.
Great ideas abound and some may be more profitable than others. However, some ideas aren’t cut out for scaling up into a full time business or product offering. The process of starting a business or adding a product or service to an existing operation is expensive and time consuming. Entrepreneurial personalities take quantifiable risks. Entrepreneurs are creative and habitually think about the “next best thing” or improvement. These personality traits accompany tunnel vision. Past success can create a false sense of confidence and bravado which inhibits a businessperson from seeking the counsel of others for feedback. Even when these creative minds do ask for outside opinions, sometimes they fail to listen. They respond to criticism with phrases like “I like it”, “I think it’s a great idea”, or “It’s going to work because I…”
Take a minute to consider what those three phrases above have in common. The person uses the term “I” rather than “we” or the “customers”. Today, running a business is predominantly customer focused. Just because a chef will only cook a steak medium rare, doesn’t mean the customer will be happy with that offering.
If the customer won’t use your product or engage with your brand, what are the chances of success? A successful business is predicated on maintaining a near cult following with a strong demand for the product or service. Entrepreneurs and business leaders must understand that there is more to running a business than personal preferences. A successful business model involves a deep understanding of the market and identifying with that target market.
Here’s a quick example of what I mean: Let’s say that you love peanut butter and jelly sandwiches. You believe that if you love these sandwiches, everyone else will, too. Five months after opening your peanut butter and jelly stand, business is slow. You ask your neighbor why she thinks business is slow. She tells you that the town has deep roots in the ham and cheese industry and favors that flavor combo. By failing to spend time determining if the product would be profitable in a particular market or if there was any market demand to begin with, you set your business up for failure. Saying, “I like this idea” will not drive demand for your product or lead to success. There must be a determination that there is a demand in your target market at the outset.
Garrett Meccariello is an aspiring brand manager based out of NYC. In his free time he can be found building the next great brand, exploring the city, and eating a lot of cured meat and cheese.