A guest post by Chris Wise of Customer Rave.
There’s no secret that many new business ideas never get off the drawing board. The risks and initial investments are just too great for the majority of new business ventures. However, I will reveal a few secrets that most people don’t realize they can do at home to determine the viability and potential market of a new business idea.
When researching demand for a new business venture or idea I have, I always start online. There are a number of procedures and tools that you can use to determine demand for a particular product or service—even if no one else is offering it yet and it’s completely unique to the marketplace.
With five simple (and free) steps you can easily determine whether your new business idea is viable.
1.) Use keyword tools to estimate the search volume of the keywords relevant to your business idea. To determine how many people are interested in products or services relating to your new business idea, use search tools to get an estimate on how many people are actually looking for them. For example, at my site, I found out the number of monthly searches for things like: “customer appreciation program,” “customer retention,” “customer thank-you gifts,” etc. That gave me a good idea of how many people were actively interested in a customer-retention program or gifts for customers.
There are a number of free and paid tools you can use that are fairly accurate. Google Keyword Tool is the best free tool. SEO Book Keyword Suggestion Tool, Wordtracker, and Wordstream are also great applications to estimate keyword search volume. By using a few different tools and comparing the results, you can get a very accurate picture of the demand for your product.
2.) Search the terms on Google and analyzed the results found. Find out who else is offering comparable services and ranking for those keywords that you just analyzed. After filtering out the results for relevance, you can use a number of other free tools to identify the estimated traffic for those domains and the top referring keywords for each site. This will help you identify how successful the competition has been and helps give you a clearer picture of what you can hope to accomplish. You can also analyze the backlink profiles of those domains to see what kind of press their comparable products have been receiving—and it can point you in new directions of where to research your ideas further.
3.) Look at the CPC (costs per click) for each keyword in Google Adwords and Microsoft Adcenter. By looking at what the competition is paying for traffic for all your relevant keywords, you can get a clearer picture of what kind of return you should expect for each visitor you can get to traffic your site. A low CPC shows that people searching for that term are not very likely to be qualified buyers. Testing different ad copy and targeting different keywords, then analyzing the results, gives you a better idea of which terms/aspects of your business and marketing message should be reevaluated.
4.) Browse the question and answer sites online for questions relating to your business idea. By searching sites like Yahoo! Answers, Ask, Quora, and a number of other Q&A sites, you can see if others are interested in the new service you are thinking about providing. You can even start looking in forums if you don’t immediately find what you’re looking for.
5.) Crowdsource your friends, family, and business contacts. Besides the obvious ways of calling and face-to-face contact, Twitter, Facebook, LinkedIn, and Google+ are great methods for crowdsourcing opinions from your contacts. Facebook even offers built-in polls that you can use for this very purpose. You could pay to outsource this service as well with things like focus groups and group surveys … but this should always be done last, because after doing the first four steps, you might not even need to!
If your results are still inconclusive, it might be a good idea to plan a small-scale product/service launch. For example, create an informational website about your product. Make it known that the product or service is coming soon and that visitors can join your mailing list to be notified once the product/service is available. (Offer some sort of discount or incentive as well.) Use PPC methods, email marketing, or even SEO to get traffic to the site. Depending on the result, you can determine the interest level of potential customers in your new business idea.
New business ideas are dreamt up every single day. The difference between going broke and becoming a multimillionaire is determining whether your business venture is viable and potentially profitable. Taking these five steps into account, you should be able to save time and money the next time you get a great idea for a new business.
Chris Wise is head of SEM at Customer Rave.