How Will I Know if my Idea will be Profitable?
It is a great question, and one that many people starting companies forget to ask. After all, it doesnâ€™t do you any good to sell a lot of units, or provide a wonderful service, if you lose money every time you do. That approach is, as they say, â€œnot a sustainable business model.â€
Having asked the question, the short answer is this: You canâ€™t know with absolute certainty, before you begin.
The longer answer is while there is no guarantee, you certainly can take two steps to minimize your risks.
How?Â By acting as the most successful entrepreneurs do.
If all you did was read the popular press, you would think that serial entrepreneurs, that is those people who have started two or more successful companies, love risk.Â They swing for the fences at all times.
Nothing can be further from the truth. They are extremely risk adverse.
So, to make sure they donâ€™t over-extend themselves, invariably:
1. They take small steps in the direction they want to go. They donâ€™t make huge leaps.Â (And after they take that small step, they always pause to review what they have learned to make sure the next small step they take is a smart one.
2. They always bring along like-minded potential partners. Not only does this allow them to move faster, it spreads the risk.
Neither of these moves, of course, guarantees success. (Nothing can.) But should things not go as planned, you have minimized your risk which will allow you to try again.
This guest post was written by Len Schlesinger is President of Babson College, and formerly served as Chief Operating Officer for Limited Brands. With his new book, Action Trumps Everything, you can learn more about how to act like an entrepreneur, as well as how to use a new entrepreneurial formula called CreAction to work for your goals. Please visit www.actiontrumpseverything.com for a free copy of the book.
Wait... before you leave, consider these top resources:
12 Replies to “How Will I Know if my Idea will be Profitable?”
I agree Len those are two great ways to minimize the risk. You could also do little things such as creating polls and surveys online and offline to see what your customers will like and if your great idea is even worth spending time and money.
You need to survey your market to see if there is a need for what you currently wish on offering them. Also, you need to buy some traffic and see how many people are willing to purchase the product.
Exactly. Everyone wants to rush in and just get their project live before they do any research. Surveys are a great way to get important and priceless feedback, especially if you can grab a wide variety of surveyors.
Another way is to be up to date with industry news particularly because of changing regulations and laws. Not knowing the law in your niche could get you in really big trouble. Bad business.
Thanks for posting this article and the link to Len's book.
As a potential member of a new technology start-up this week, the timing of this post is EPIC!
Nicholas Chase http://www.twitter.com
Awesome, glad to hear things are going well Chase.
My recent post SEO Tips and Search Ranking Questions Answered
I will definitely have to agree that surveying the market to see what they are interested in would be the first step before creating a product and hoping people will want what you have to offer. I don't enjoy taking huge risks either so those are two really great ideas you gave. Appreciate the post.
Hey Zac – As you say, the only way to know for sure is to actually launch your idea and see what happens. But, you definitely want to take the appropriate steps to minimize the chance that your idea will fall flat and be a waste of your time and money. Surveys and polls are good options. Depending on your idea, focus groups can also be a big help. It can also make sense to start with a small test to see what reaction you get from your audience – if it is something you can do on a small scale.
Hey Tom, thanks for contributing. If you are lucky enough to be working in a niche where they have a few forums, it makes the job of surveying and polling people a lot easier! Be sure to look around for what's already established.
You have mentioned 2 great points to minimize the business risk. You should always put your customer's preference at first place.
From personal experience, I know this all too well. Great advice for entrepreneurs.
Implementing an idea is never a 100% guarantee of success. Just take the risk but plan your actions carefully.
My recent post Netflix expands outside US & CANADA – ready for Europe UK- Latin America and Asia
Comments are closed.