Will Your Online Business Idea Work? – Beat the Credit Crunch Part 2
Is your business idea worthwhile?
Ok, so you’ve shortlisted a number of possibilities for an online business. Now you have to determine whether your idea or ideas will turn out to be a money-maker or not.
If you’re from the UK, you might have seen a TV programme called “Dragons Den”, or in the USA, one called “American Inventor”. You’ll have seen some really crazy ideas that nobody is prepared to invest in, and quite rightly. The inventors have spent thousands of pounds or dollars on the developmentof their product, but have lost sight of the fact that nobody would ever buy it. They will never recover the costs of developing their idea.
Similarly, you could spend a lot of time, effort and money developing and promoting a website to sell something that has such a limited market that you will only make a loss. Therefore, it is extremely important to ensure that there is a market for your product.
So, you need to do some research about whether people will buy your product or not, how much competition you have and at what level. Some markets speak for themselves – you know how popular they are – but what sort of competition are you up against? Can you obtain your products cheaper than the national or international vendors who have huge buying power? It’s unlikely in most cases.
Are you producing your own products? If so, is there a demand for that type of product, and does your version have a USP (Unique Selling Point?).
How can you find out what people are buying and selling? One obvious starting point is the search engines. Google and Yahoo tell you how many sites contain the keywords you search on. Examine a number of sites that are competing in your proposed field. See what they are selling, and how they compare with your own products.
Another great source of information is eBay. Search for items in your field. Don’t just take note of the items being sold, but check out the vendors, too. Look at their Feedback scores. A vendor with a Feedback of 42,763 is obviously making a lot of sales. Read through their feedback listings to see what they have sold, and how often. The amount that items sell for can also be a useful reference for pricing your own products. For example, if a particular item is regularly selling for around £70, and you know you can obtain those products for £55, you know you could be making a reasonable profit.
Visit your local shops and stores. See what’s on sale and watch what people are buying at the checkouts.
If you are trying to sell a completely new invention, then market research is a lot more difficult. You need to ask a lot of people (not just your family and friends) whether they think your idea is viable, and more to the point, whether they would buy such a product. Unfortunately, carrying out such research could result in your idea being given away to other people who are in a better position to market it.
Don’t underestimate the need for market research. It could save you a lot of time and money.
In the next article, we’ll cover sourcing your products.
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