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Swift Six: The six steps of testing a business idea

By Nick Leech - July 18, 2014

Have you got a business idea that you think could form the basis of a successful company? In this video I’ll take you through the basic steps of testing your idea to see if you should pursue it. There are links to all the resources and tools I mention in the video transcript.

Hello and welcome back to the 123-reg Swift 6! This week I am going to be talking about the six steps you can take to test your business idea.So you’ve got an idea for business, I expect the first thing that you will have done is to speak to your friends and family about it and run it past them. See if it sounds as good to them as it does to you. But really the first proper step you are going to make – because those people won’t be impartial – is to test it on a group of strangers or individual strangers. So try to get your friends to introduce you to people that will be impartial and all the better if those people are in the target market, they are in the type of groups who might buy your product or your service.Now a really good way to find this group, actually, is to attend an industry event – an exhibition, a conference, something like this. You will find lots of people who are – yes – selling products into that market, but you will also find the buyers as well. And I recommend – get in there and speak to as many people as you can and really run your idea, and see if you can get some feedback, get some traction on it. And work out if you think it’s a good one.The second thing to think about, after you have done your one-on-one qualitative research like that, is to conduct some wider, quantitative research. And there are some really good tools that can help you do that. So I’ve talked before about Google Consumers Surveys, it’s a really easy-to-use tool that will enable you to ask questions of populations – UK populations, U.S. populations – ask them a question for ten cents, and have the results presented back to you in a really easy-to-digest manner. So I really urge you to give that a go, you get statistically reliable data. Another tool to try is SurveyMonkey. Now lots of businesses use SurveyMonkey to run surveys on their own customer base, but through SurveyMonkey you can actually access a much wider population of consumers and businesses and ask key questions of your particular target market about how they might interact with your service, about whether or not they might be interested.And that really takes me on to the third step which is to make sure that you are asking the right questions. Now, it’s useful – yes – and it’s good to make you feel good about your idea if people think it’s a good idea, but it doesn’t actually give you some detail about how you can deliver your idea, your product or your service. So really, you want to be asking more detailed questions, such as ‘How much would people be willing to pay for it?’, ‘Would they trust you to deliver that service?’, ‘Do they actually just want to buy it from a big provider?’, ‘Are they willing to travel for that service?’ You need to ask these detailed questions in order to see whether your product or service is going to be viable. So, assuming you’ve got so far, then another good tool that is out there that will enable you to work out if your product or service is in demand is Google Trends. So if you go to Google Trends and then start doing the types of searches that you think that people will do when they’re looking for your new product or service, you will get an idea of whether demand is growing for that product or service and also how competitive it is.It will also give you good ideas about if there are particular niches within that area that are hot, that are newly emerging. So go and take a look at Google Trends.

Number four is to think about other people that are already in your market and what they’re doing. So, unless your idea is really one in a million, the chances are that there will be competitors out there doing something similar. Now, it might be that they have a key point of difference, but you need to think about – from your business – what are you going to do that’s different to other people out there? Is it that you’re going to offer your service in a particular geographical area? Are you going to be cheaper? Are you going to offer better levels of service? Think about how you can make what you do a little bit different from what they do.

And the fifth one is to refine your idea. Listen to the feedback you get from your friends and family, listen to the feedback you that get from your strangers. Understand and analyse the data that you get in your surveys, look at Google Trends, take all this feedback and change your idea. Modify it, make it better and adapt it.

And finally, if you can’t change your idea into something that is going to work and then passes all of these earlier tests, it’s time to drop it. Don’t treat your idea like a sacred cow, entrepreneurs have several ideas before they finally find one that works. So, sometimes it’s time to just drop an idea.
And that was the 123-reg Swift Six, I’ll see you next time!

Further reading:

If you’re thinking about taking the plunge and starting up on your own, you can read Barry Adams’ story on how he made the decision to start his own business here.