The scariest question for every person starting a business is “Will it work?” I tried a lot of different businesses before I started to succeed, burning tons of time, money, and energy in the pursuit of success. Here are some useful guidelines to know whether or not it’s worth trying.
Before you start a business make sure to check these five things. If all are a green light, feel confident giving it a go.
1. Is the niche growing?
Growth happens at multiple levels. An industry might be growing, but a sector inside it may not be. A sector may be growing, but not where you are.
When you are looking at diving into an industry, check ALL the levels of growth:
- Is it growing nationally?
- Is it growing locally?
- Is the sub-sector I’m looking at particularly hot right now?
- Is my sub-sector a good fit for me and my skills?
Understand where that growth is happening and the context in the industry.
2. What drives the growth?
While growth is awesome, make sure to check out what drives that growth. Is it a new market? Regulations? A fad? Just pure population growth?
Understanding the growth driver is critical for the positioning of your business. A growing industry doesn’t just provide direct opportunities but also growth options for suppliers, consultants, and a host of related businesses that all profit from the boom.
While many people seek glory in the most high-visibility part of an industry, some of the best and easiest options come in these secondary and tertiary markets. Understanding what is driving growth will help you know where to look.
3. Who is succeeding?
The best evidence for a good niche is competition… that sucks. Take a good long look at who is succeeding. What is their background? What did they do before? What do they offer and how do they deliver it?
A lot of business success doesn’t come from being innovative about product or offerings, but rather better ways of selling, advertising, and delivering those products and services. The people who succeed likely have backgrounds that inform smart choices along those lines. See what you can learn from them.
Moreover, if your budding business plan doesn’t involve direct competition — reach out. See if you can get them to meet for coffee.
Understanding the people behind the success is critical. Almost all good businesses come down to the people driving them and the insights they bring to the market.
4. How do they communicate?
Even if your competition is unimpressive they have to be doing something right if they have sales (make sure you check). Don’t just look at a webpage — call them up. Send a few emails. Inquire like a customer and see how they respond.
In short, learn as much as you can about the experience most customers go through before they buy. Every piece of this process and any friction you encounter is room for improvement and an opportunity to succeed where they fail.
5. Can you Launch Cheap?
Even with the best plan in the best niche, it’s possible to make mistakes. Once you know what you are getting to the next step is to figure out the Minimum Saleable Product.
The MSP isn’t the same as an MVP, it’s much much smaller. The MSP is the smallest thing you can sell — it doesn’t necessarily even need to be built yet. You can sell the product with full disclosure that it’s not built, as long as they know this and trust that you can make it happen.
Go out, make it happen, and then go live like this: