As an entrepreneur, failure is part of the process. Not every business concept or product design will be a winner.
The key is to spot the duds quickly, so you can focus your time and money on the ideas that have the most potential.
But even though we’ve all heard the advice to “fail fast,” it’s hard to find actionable strategies for actually doing it.
How can you determine if there’s demand for your product or service, beforeinvesting the time and money to create it?
After starting five businesses, I’ve discovered three simple tests you can use to get started.
1. Look for search traffic.
A quick, easy way to see if there’s demand for your idea is to find out whether people are searching for it on Google.
Obviously, they won’t be searching for your exact brand name, but are they looking for a similar solution?
You can find out with tools like SEMrush (which offers a free trial) or Ahrefs(which I used to pull the numbers below).
For example, maybe you’re a foodie who’s passionate about animal welfare, and you want to start mass-producing your vegan cheese recipe.
Sure enough, the keywords “vegan cheese” reportedly get searched 34,000 times per month.
Or maybe you’re a software developer interested in creating an easy-to-use alternative to Photoshop.
It appears that 3,700 people per month are searching for “photoshop alternative.”
3,000 more are searching for “alternative to photoshop.” And 2,700 people are searching for “best photoshop alternative.”
Are these numbers good or bad? It will be up to you to interpret the data for your specific idea and business model.
Either way, this strategy is a chance to peer into the collective mind of the market, so you can see what people are looking for and what words they use to describe it.
2. Look for competitors.
While amateurs often view existing competitors as a bad omen, more experienced entrepreneurs are happy not to be the first mover.
Why? Successful competitors are proof that demand exists.
These early entrants have already done the risky work of validating the idea. Now all you have to do is compete.
You can offer the product in a new location, market it to a new group of people, or differentiate based on features or price to carve out market share.
The food delivery service space is a perfect example.
After watching early movers like Seamless and Grubhub succeed, established companies confidently followed with their own food delivery apps.
Leveraging its foodie customer base, Yelp purchased Eat24.
Uber applied it’s successful driver model to meals and launched UberFRESH (which was later renamed UberEats).
And payment platform Square acquired Caviar, giving restaurants a simple way to accept payments and deliver meals.
Why did so many big companies venture into a space that already had established competitors?
Demand was proven. So they looked for ways to differentiate and compete.
3. Test your marketing copy on targeted prospects.
While this point might seem obvious, it’s also nuanced.
Here’s a quick breakdown.
Your goal is not to see whether people think your idea is neat. Your goal is to learn whether they would be willing to pay for the product or service you’re offering.
“your marketing copy”
When most entrepreneurs want feedback on a new idea, they get on the phone or meet a friend for coffee and have a conversation.
Although this is fine for a first step, you won’t normally be selling to such a patient audience.
In order for a product to generate demand, it’s best if the value is quickly obvious to customers.
Try to communicate your idea in 30 seconds or less. Or consider writing it down.
Then, after your prospect has experienced the offer, gauge their interest and answer questions.
“on targeted prospects”
Your mom may love your idea, but is she your target customer?
Try to get feedback from unbiased people who you think could benefit from your product or service.
The good news is, if your product or service truly solves a deeply felt problem, your target customers will be the people most excited to hear about it.
Doing your due diligence can help you succeed faster.
Due diligence is crucial in entrepreneurship because it helps you avoid losing time, money, relationship capital, and confidence on a bad idea.
The three tests I’ve shared are quick, simple ways to help you jumpstart that process. Obviously, there are more tests you can run. And it’s certainly possible for an idea that fails one of these checks to ultimately succeed.
These evaluations don’t guarantee success or eliminate risk, but they give you more data, empowering you to invest your time and money more intelligently.
And that puts you in a position to reach your goals faster.
Source: Entrepreneur’s Handbook