Entrepreneurs can fall into the trap of ‘build it and the customers will come’.
How many times have you had an idea and thought “wow that’s a great idea. People will love it!” only for your best friend to say “no one is going to buy that”? We love to see the positives in the things we believe are good ideas. In fact, a psychological tendency called confirmation bias will often also appear where we will start to notice signs that the idea is a good one. We totally ignore all the indicators that point to the contrary.
As entrepreneurs and guides for future entrepreneurs, we need to check our own biased views and opinions about ideas before we move forward in bringing them to life. This is called ‘testing the market’ and should be a major step in your market research and production process.
So many businesses fail because the owner moved forward with an idea, dumped hundreds of hours of time and thousands of dollars into it, brought it to the public with lots of promotion and noise… only to get crickets in return. The market didn’t want it.
When I first started out in my Teachers Pay Teachers business, [this is an online marketplace where teachers can sell resources to each other] I made things that I thought people would want, but I never actually checked to see if that was the case. I personally wanted to use it, so I assumed everyone else would too. This strategy CAN work sometimes since you are technically solving a problem for yourself, but there is no guarantee that everyone else has the same problem. What happened in my store was disappointing sales numbers. I’d make the most detailed and helpful resource I could think of, with great graphics, digital and in-person options, rubrics, instructions, the works! - but almost no one was looking at it and even fewer were buying. The main reason was I didn’t check to see if this was something that people actually wanted first.
Now there are times where I just make a resource anyway because I want it, and I stick it up on my store to see if anyone else is willing to pay for it. It does work from time to time, and sometimes the most basic things that I didn’t think anyone would want actually sell great. It’s a hit or miss approach.
What I have transitioned to since then is testing the market first before I make something. Here’s a few ways you can do that:
- Send out a market research survey. Tell people what you are thinking of making and ask them if they think it’s a good idea or if they would be interested in buying it when it’s available.
- Ask people what they want. Take the guess work out of it and actually ask your customers what they are looking for and then make a business that fulfils that need.
- Look for complaints. I am always on the lookout in my teacher Facebook groups to see what kinds of resources people are looking for. What are they complaining about or wishing they had? If I can make it happen, I do it. Then I post an advertisement saying “oh by the way I can solve that problem for you and anyone else who is having the same problem.
- Make a prototype and then ask for pre-orders. If your business idea requires mass production of items such as key chains or cookies, make a single item or batch first to show customers. Then ask them for orders and get their money from them right then and there. If someone is willing to take out their wallet and pay you on the spot for something that isn’t built yet, you are onto a winner! Your prototype can also be sketches or 3-d designs.
- Find a cheaper, low-risk way to start. The best example I have of this is a t-shirt company. You think you have some great designs that people are going to want to buy. Rather than getting 100 of each printed and sent out to you, start with a print on demand site such as Printify, Printful, or Redbubble. The profits will be less, but it's an almost no-risk business for you since you are not keeping tons of stock. You can always move to a higher profit model if you can prove that customers want your designs.
The Simple StartUp philosophy is to start for little to no money, and build businesses that actually solve problems for customers. If you stick to both of those principles, you will have an excellent chance of starting a successful business, and if not, there was almost no risk anyway so shutting it down and trying something else is very easy to do. Testing your market first to make sure there is a demand and you are in fact solving a problem is an easy step to take that will save you a lot of time and money.