Business Basics

Is your small business idea viable?

- June 21, 2017 3 MIN READ

Small business is continually referred to as the backbone of the Australian economy by politicians. But as this is not entirely truthful. Although businesses with 20 or less staff employ 45 percent of the private sector workforce, they are responsible for less than five percent of jobs growth.

It’s not possible to completely insure your small business from becoming a statistic. Your business will generally be dependent on a range of factors that are not completely under your control.  But there are things you can do to give your small business the best chance of succeeding, whether you are launching a small business from scratch or re-investing to launch a new product or service through your business.

Do your market research
It’s easy to get carried away by an idea and skip the research phase, especially in a digital age where many subscribe to the ‘just go live’ theory. When it comes to small business, particularly if you have an already successful business, this is not something that should be entertained.

It’s extremely important to do your market research. Figure out if there is really a space in the market for your solution. Understand your competitors and how they market their product or service. Be realistic about the amount of money it will take to launch the new product or service (or completely new small business) and give it the best shot of working. Even if just one red flag pops up, do your due diligence, don’t just dismiss it. This is the foundation of your idea.

Talk to your customers
This is market research, but it’s such a big part of it you should consider it on its own. It’s important to know who your customers are and understand them before you spend time and money executing. Who will be buying your product and service? Why? Is your solution one which addresses the needs of your customers completely? If you’re launching something unique or doing something a different way, are your customers ready for it and will they understand it?

When you consider what to ask your customers, be broad with your questions and avoid bias. It’s easy to frame questions in a way that assures you some sort of success. Don’t. When they respond, listen carefully and make note of body language. Bear in mind that participants will be experts in what they need, but will likely be open to how that need is addressed.

Dave Koch and Val Quin discuss setting up your small business with the right tech

Focus on solving a problem
Having done your research and spoken to your potential customers, you can now focus on solving a problem. Too many people jump straight into solution mode when they are starting a small business or adding an additional product or service to their business before they truly understand what the pain points are. Be sure to consider all your information when developing a product or service and address all the major pain points. Without this, your solution isn’t solution.

The end result has to end with a transaction—people need to pay hard earned money to you. Even if you have a product or service which is a solution to their problem, they will be hesitant to use your solution if it doesn’t obviously address their pain points. Your solution may be a good one, but if they don’t understand it and feel comfortable with it, they won’t use it.

Test your numbers
By this stage you should be relatively confident in your product or service. You’ve done your research, you’ve spoken to your customers and you have adequately solved their problems. It’s time to crunch the numbers and make sure that it’s financially viable.

It is extremely important that you are realistic at this stage. Pricing that is too high could kill your business, no matter how good the solution is. Prices that are too low will have you run off your feet without financial gain.

All you have left to do now is launch. While this may seem like a lot of work to do for an idea you already think is brilliant, it is essential that you spend the timing crossing every ‘t’ and dotting every ‘i’ to make sure your small business stays strong and doesn’t become a statistic.

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