Testing business ideas

One of the best ways to avoid starting a new business that's doomed to failure is to test your business idea rigorously before you launch.

Just because you're good at something, enjoy doing it or dream of becoming a successful entrepreneur doesn't mean you have a sound business idea.

If your new business is to succeed, there must be sufficient demand for your products or services at the prices you intend to charge. It doesn't matter how much knowledge, personality and drive you bring to your new business. If people don't want what you're offering at the price you charge your new business will fail.

The key to success can be to spot a gap in the market and tailor your business to fill that 'niche', so you become the number one supplier within that market. Even if you're a 'me-too' business or if you plan to sell something that's already proved popular, you should still carry out some market research to seek honest feedback from potential customers.

Pre-start market research for most new businesses need not be sophisticated or expensive, you simply need to know who your customers are and what they think about your products or services.

Speak to potential customers you don't know. Find out their opinions about what you plan to offer. Do some real-life product testing. Crucially ask whether they'd buy your product/service at the price you're asking. If the answer's no, you need to reconsider.

For small businesses that sell to few customers (possibly other businesses), market research will involve meeting potential buyers to discuss products/services and prices. For those aiming for mass-market appeal, the answer might well involve asking questions to people on the high street, where free samples always come in handy. You might do some door-to-door market research. Write down all responses and learn from them.