2 Questions That Determine If Your New Business or Product Idea Is Viable

Last year I started Guiding Metrics, a company that builds executive dashboards for small businesses. I started it out of need: I needed a dashboard to better manage my other businesses.

This reminded me of the old Hair Club for Men commercials. Those commercials showed the company’s president, who had a full head of hair. At the end, he showed a picture of himself when he was bald. Then he said, “Remember, I’m not only the Hair Club president, but I’m also a client.”

Both my business and Hair Club for Men were formed because the founder wanted to solve a personal need. Which is a worthy reason for launching a business, as long as there are enough other people who also have that need.

In the case of Hair Club for Men, there are millions of bald people, and many of them are interested in regaining their hair. In the case of Guiding Metrics, all businesses need an executive dashboard to better understand their business’ performance and to make better decisions.

In both cases the market was big enough, which bodes well for future success. Another key question to answer, however, is how much market education is needed to market your offering. In many businesses, such as a bakery, no market education is required. That is, you generally don’t have to educate customers as to why they should stop by your bakery and pick up a cake.

However, in many other businesses, education is required. For example, most business owners don’t know why they need an executive dashboard. They haven’t seen the research showing that companies with dashboards experience three times the sales growth and two times the profit growth of those who don’t. They don’t know that dashboards dramatically improve employee productivity and performance since employees can finally see real-time results of their actions. And so on.

So, when considering a new venture or product line, think through the amount of customer education required. Think about the cost of educating customers. And consider how you will educate them. Will you create videos, reports, or will you write a book? Each method has advantages and disadvantages. For example, writing a book can gain you great exposure and credibility. But it will take an enormous amount of time to complete.

In summary, if a new product or service will benefit you, answer two questions before launching it: 1) do a lot of others share this need? and 2) how much education will be required to convince others they need your offering, and how will you accomplish this?

If you feel good about your answers to both questions, you just might have a winning idea on your hands!