Here are a few questions to ask yourself when you brainstorm ideas for your business and tips on how to go about it.
Question #1: Is there a large market with regards to your product or service?
Do you personally know people who’d buy your product or service? Do you know that lots of people might use it? For example, in the case of www.passyourtheory.org.uk, it was obvious that there was a big potential market since lots of people take their driving test every year. Other “good ideas” don’t pass this test: indeed, for every ten ideas, you proceed to analyse only one of them.
Tip: Reject all ideas that you’re not confident will make money – even if you love them
Question #2: How much is each customer worth?
Think about how the pricing of your product or service is likely to work. How much income can you expect from each customer per annum? If at all possible, pick a product or service that means you an establish a long-term relationship with your customers than to find new ones.
As a general rule of thumb, you should be looking for an income of between E25 and E100 per customer per year. Why? Because it’s almost always a mistake to try to occupy the low end of any market and compete on price alone. Remember, the income you’re looking for is spread over a whole year, and knowing that your typical customer is worth, say, E100 per year means that your marketing budget can be set with this in mind. Of your typical sale is only E10, you may baulk the idea of spending E10 in AdWords to attract that customer, but if you anticipate that the customer will then go on to spend another E90 in the first year, that E10 investment looks a bargain.
How do you know how much a customer will be worth? The simplest way is to look at any existing services: pick a value in the mid-range to get the level of a single sale.
Tip: Reject all ideas that won’t generate at least E25 per annum per customer. Be very wary of any idea that involves a single sale with no follow-ons
Question #3: Can you sum it up in a sentence?
The famous “elevator pitch” is a great way of establishing if you have a focused, sellable business idea. Unless you can summarise your idea in one sentence, you should be wary. First, you must communicate your business and what it offers in the limited space available in Google AdWords. Second, your website will get just a few seconds to grab a vistor’s interest before they go elsewhere: it’s rare that a potential customer who doesn’t immediately “get it” hangs around long enough to buy.
Tip: Reject any idea that can’t be summed up in a single sentence