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.
Choosing an Online Business – Beat the Credit Crunch Part 1.
At the time of writing, the financial situation all over the world is not good. Credit is hard to find, and companies and individuals alike are beginning to find things difficult.
As companies struggle to continue operating, they are laying off more and more people. This is turn results in more people with severely reduced income, which means they have much less buying power. If the people aren’t buying, then the companies are not making any money, so their situation gets worse. This downward spiral continues untile the companies cease trading completely.
This won’t affect everybody of course; there are many companies who remain largely unaffected by this situation, at least for the time being.
But who knows when your company or your employer will be affected?
Don’t wait until it’s too late! Start thinking about alternative and supplementary incomes now. There are many opportunities available to you in the form of home-based businesses which you can run part-time, requiring maybe one or two hours a day. If that business is Internet based, you have the best of both worlds – a worldwide marketplace, low startup costs, low running costs, and relatively low investment of time and effort.
That’s not to say that it’s going to be an easy ride. There really is no instant cash system, no get-rich-quick scheme, or set-and-forget business. Any kind of business needs some thought and effort to get going, and continual input and further effort to maintain and expand it.
This series of articles, Beating the Credit Crunch, will take you step-by step through a logical and organised approach to starting an online business. Don’t worry if you don’t have a clue about computers, websites etc. Everything you need to know will become clear, and as your confidence grows you’ll wonder why you ever worried about it.
The first thing you need to do is decide what sort of business you want to run. Unless you always dreamed of running a particular type of business, that isn’t always as easy as it first appears. Throw away any predjudices or fears that you might have about running any kind of business, and don’t think that anything is going to be too difficult. If you start small, you’ll stay in control, and you’ll be able to expand at a controlled rate.
The whole point of setting up an online business is to make money. You offer one or more products or services, and people pay you money for them.
Now I know what you’re thinking – “If I sell xyz product, where on earth am I going to store my stock?”. That needn’t be a problem and ways around it will be covered later in this series.
So, sit down with a notepad and pencil and scribble down any ideas that you have. Go for subjects that interest you – you don’t really want to run a business that you have no interest in.
Talk it through with your partner if you have one, but also try to come up with ideas independently of eachother. Don’t be shy about it. Any idea could turn out to be a huge money-maker.
Once you have your list of ideas, whittle it down to a short-list of the strongest ideas.
As a computer programmer, my obvious choice for products to sell is software. It’s the business I know, and if I write my own software, all the profits made on that software are mine. Having said that, I have other hobbies which are totally unrelated to computers, and I could just as easily set up online businesses in any of those fields.
In the next article in this series, we’ll be covering the next step – determining whether your business ideas are going to be viable.
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