I don't know about you but I am quite risk-averse, usually broke and almost never ready to invest 10,000 $ in my next business idea.
To make sure that a new venture has at least some market value and potential I found a quick and easy way to test this. Obviously, it's not perfect, but it beats the hell out of your friends' (and likely even the forum's) opinion on the matter.
I am writing this post to share what I have learnt in the past few months and to get feedback from more experienced people on this approach. Also as I am going further down my journey I will try to keep this up-to-date with new insights.
Experienced entrepreneurs will likely be familiar with this approach. I don't take any credit for it since its an amalgam of ideas I have taken from various people, this forum included. Also, this is if your business is web-based, otherwise it might be of limited benefit to you.
It will be very useful to calculate profitability if your business will rely on constant advertising and not organic traffic. But, even if you utilize organic traffic, it can be an excellent way to gauge customer interest and engagement.
The reason behind all this hard work is getting real market validation. If I remember correctly, Tim Ferriss said first "Don't ask people if they would buy your product, but ask them to buy it". Meaning that when someone gives you his hard-earned money in exchange for whatever you are selling, you are on to something real. Compare that to someone saying "Oh yeah that sounds like a good idea".
In an effort to make the guide more comprehensive, I am going to list specific websites that will help you in the process. I don't have any affiliate links and derive no benefit from it, I am just mentioning the ones that have worked for me as a starting point.
What we'll need to start:
www.hostgator.com
They are fairly cheap for a year and you can test unlimited websites.
Steps:
1- Buy a domain name (either from a service such as namecheap.com or directly through your hosting provider)
2- Install WordPress through the one-click install in your new account's dashboard
3- Connect your website to Google Analytics that will keep track of your visitors
4- Choose an easy to use (and customize) WordPress theme
5- Focus on creating only a decent homepage, where all your customers are going to land in
6- Fill it with sales copy or description of your business idea
7- Install some sort of easily identifiable and measurable action to your homepage. Examples - A buy button, a form to be filled, a number to be called etc. Most likely you expect your customers to go out of their way and give you their time or money. So we need to install something that can quantify that. Very important - Set up a new conversion goal through google analytics with the URL of your action button. This way, every time a visitor performs the desired action, Analytics will count it.
8- Install inspectlet which will show you exactly what your visitors do when landing on your page. The more people stick around, the better. You will be surprised to see that some people will have engaged with your page but not gone all the way through. Hence, you would have missed their interest by calculating only the conversions.
9- Buy traffic, minimum 100 clicks to begin with and direct them to the landing page. The more money you can afford to spend the better quality data you will get. This is because you can afford to do split testing in several variations of your ad and your landing page.
Where to buy traffic from:
The conversion is the number of people that acted on the action button that you offered them divided by the number of people that landed on your page.
If even during this rudimentary test phase you managed to make a profit, congratulations. You are on to a winner business idea. All you need to is fine-tune the details and scale.
If you get 0% conversion, in my opinion it doesn't necessarily mean that there is a fault with your idea. Rather, it could be your execution (website design, poor sales copy etc). It's always a great idea to test several variations of ads and landing pages if you can afford it.
But then I am not a millionaire yet (quite far from it) so take my opinion with a grain of salt...
Lastly, during the process you should collect e-mails from the people that reached conversion. Make sure to engage with the people who signed up. Ask them what they liked about the product, how it helped them, what you can improve etc.
Business models that can be tested this way:
If you don't want to use WordPress, the exact same approach can be used with Landing page creation software such as
www.unbounce.com
www.clickfunnels.com
or an e-commerce platform
www.shopify.com
www.woocommerce.com
Physical products can be very easily tested through an e-commerce platform such as Shopify. Just list pictures and comprehensive descriptions of your products. Structure the website as if you are selling something that already exists. People will put your product in the shopping cart and upon checkout, they will receive a message that the product is "unfortunately not available at the moment and that they haven't been charged for anything". A great advantage with this is that the website is almost made for you. You can skip steps 2-8 from above and dive straight to traffic and conversion.
A few hours/days and a couple hundred $ later, you have a decent clue whether your idea is valuable to other people or profitable. I know that I didn't go into a lot of technical details as I wanted to keep the post manageable so if you guys are interested in the how-to of setting up a basic website, I will make a part 2 of this post using a typical WordPress theme as an example of what to do.
To make sure that a new venture has at least some market value and potential I found a quick and easy way to test this. Obviously, it's not perfect, but it beats the hell out of your friends' (and likely even the forum's) opinion on the matter.
I am writing this post to share what I have learnt in the past few months and to get feedback from more experienced people on this approach. Also as I am going further down my journey I will try to keep this up-to-date with new insights.
Experienced entrepreneurs will likely be familiar with this approach. I don't take any credit for it since its an amalgam of ideas I have taken from various people, this forum included. Also, this is if your business is web-based, otherwise it might be of limited benefit to you.
It will be very useful to calculate profitability if your business will rely on constant advertising and not organic traffic. But, even if you utilize organic traffic, it can be an excellent way to gauge customer interest and engagement.
The reason behind all this hard work is getting real market validation. If I remember correctly, Tim Ferriss said first "Don't ask people if they would buy your product, but ask them to buy it". Meaning that when someone gives you his hard-earned money in exchange for whatever you are selling, you are on to something real. Compare that to someone saying "Oh yeah that sounds like a good idea".
In an effort to make the guide more comprehensive, I am going to list specific websites that will help you in the process. I don't have any affiliate links and derive no benefit from it, I am just mentioning the ones that have worked for me as a starting point.
What we'll need to start:
- A real, valuable business idea (duh...)
- Software - Website hosting such as
www.hostgator.com
They are fairly cheap for a year and you can test unlimited websites.
Steps:
1- Buy a domain name (either from a service such as namecheap.com or directly through your hosting provider)
2- Install WordPress through the one-click install in your new account's dashboard
3- Connect your website to Google Analytics that will keep track of your visitors
4- Choose an easy to use (and customize) WordPress theme
5- Focus on creating only a decent homepage, where all your customers are going to land in
6- Fill it with sales copy or description of your business idea
7- Install some sort of easily identifiable and measurable action to your homepage. Examples - A buy button, a form to be filled, a number to be called etc. Most likely you expect your customers to go out of their way and give you their time or money. So we need to install something that can quantify that. Very important - Set up a new conversion goal through google analytics with the URL of your action button. This way, every time a visitor performs the desired action, Analytics will count it.
8- Install inspectlet which will show you exactly what your visitors do when landing on your page. The more people stick around, the better. You will be surprised to see that some people will have engaged with your page but not gone all the way through. Hence, you would have missed their interest by calculating only the conversions.
9- Buy traffic, minimum 100 clicks to begin with and direct them to the landing page. The more money you can afford to spend the better quality data you will get. This is because you can afford to do split testing in several variations of your ad and your landing page.
Where to buy traffic from:
- If you are selling something that people search for in google, buy clicks through Adwords. For example, if your potential customers look for "how to buy bitcoin with a credit card" or "star wars figures" or "quit your job freelancing" etc.
- If you are selling something that people didn't expect to see but might find interesting and compelling to buy, then buy traffic through Facebook ads. For example, if you are selling funky t-shirts that catch peoples' eye.
The conversion is the number of people that acted on the action button that you offered them divided by the number of people that landed on your page.
If even during this rudimentary test phase you managed to make a profit, congratulations. You are on to a winner business idea. All you need to is fine-tune the details and scale.
If you get 0% conversion, in my opinion it doesn't necessarily mean that there is a fault with your idea. Rather, it could be your execution (website design, poor sales copy etc). It's always a great idea to test several variations of ads and landing pages if you can afford it.
But then I am not a millionaire yet (quite far from it) so take my opinion with a grain of salt...
Lastly, during the process you should collect e-mails from the people that reached conversion. Make sure to engage with the people who signed up. Ask them what they liked about the product, how it helped them, what you can improve etc.
Business models that can be tested this way:
- Information products: (Also easily tested through landing page software).
- Another kind of website: Lead generation / SaaS / Subscription services etc.
If you don't want to use WordPress, the exact same approach can be used with Landing page creation software such as
www.unbounce.com
www.clickfunnels.com
or an e-commerce platform
www.shopify.com
www.woocommerce.com
Physical products can be very easily tested through an e-commerce platform such as Shopify. Just list pictures and comprehensive descriptions of your products. Structure the website as if you are selling something that already exists. People will put your product in the shopping cart and upon checkout, they will receive a message that the product is "unfortunately not available at the moment and that they haven't been charged for anything". A great advantage with this is that the website is almost made for you. You can skip steps 2-8 from above and dive straight to traffic and conversion.
A few hours/days and a couple hundred $ later, you have a decent clue whether your idea is valuable to other people or profitable. I know that I didn't go into a lot of technical details as I wanted to keep the post manageable so if you guys are interested in the how-to of setting up a basic website, I will make a part 2 of this post using a typical WordPress theme as an example of what to do.
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