David Letterman Skits and Validating Your Business Idea (4 Video Links)

You may be old enough to remember David Letterman’s Will It Float? skits. Letterman would toss an object into a huge tank of water to see if it would float. There was music, dancers, and other fanfare to make it seem like a big deal- the skit was performed for years. This brings up another question:

 

Will your business idea succeed?

 

Most people dream of owning their own business at some point, and the key to success is finding a good business idea. Unfortunately, this is also the most difficult part. You may think you have an amazing business idea, but how do you know that is actually going to succeed?

Read on to discover the first steps to start a business.

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What Problem Does Your Product Solve?

 

We actually burn calories when we try to understand something.

 

Consumers are bombarded with thousands of messages each day. In order for your business idea to succeed, it must be easy to explain and understand.

The best way to start a business is to explain your business idea in a sentence or two.

If your product or service pitch sounds like a load of complex jargon , you won’t generate customer interest. People buy products and services to solve problems, and your business should clearly explain a solution to a problem.

Here’s a example of a problem and a solution: “Bike riders are frustrated when they get a flat tire on the road. We make bike tire tubes that are more durable, and less likely to go flat during a ride.”

Can You Fulfill The Promise?

 

The promise you make should be realistic.

 

When you sell a product or service, you’re making a promise that your business will solve a problem. Is that promise realistic? If you sell tire tubes for bikes, for example, will your tire tube inflate and fit properly on the bike wheel?

 

Be realistic- it’s one of the key steps to create a business.

 

Perform market research when looking for ways to make money online. Here are four important ideas to consider:

• Does your product solve a problem?
• Are consumers willing to pay for your solution to the problem?
• Will buyers pay enough to allow you to generate a profit on the sale?
• Are there enough buyers to justify starting a business?

You need to make sure there is a market for your idea, and you need to determine how big this market is. This is where the services of an accountant might be useful.

A accountant will be able to help you project the financial aspects of your new business idea. An accountant can determine how much money you need to set up your company, as well as projecting how much you can expect to make in your first few years.

Eventually, you need to be able to monitor your earnings, breakeven analysis, cash flow, sales mix, and inventory management.

If you start the business, an accountant can help you put together a business plan for your business idea.

Assume that there are 2 million people in the US that bike ride at least twice a month for 20 miles or more. Of that group, 150,000 are serious riders who bike every weekend. That’s your target market: 150,000 are serious riders.

Test Drive Your Business Idea

 

Take your business idea for a test drive.

 

Ask family, friends, or co-workers, if they experience the problem you’re trying to solve, and ask them to try out your solution. If they like your solution, ask them out much they would be willing to pay for your product. What’s it worth to them?

This information is vital, because it helps you determine if your new idea is worth the effort.

You attend bike races and riding events, set up a booth, and hand out samples of your bike tire tubes. Ask people to try the tube and email their feedback, in exchange for a free gift. Find out if they really need what you’re selling.

Get Attention and Generate Interest

Can you get attention and generate interest?

 

The whole point of marketing is to gain attention and interest, and you need to consider how you’ll make that happen, and how much it will cost. In addition to building a website, you may create a blog, advertise online, or manage an email marketing campaign.

 

Write a formal marketing plan before your launch your business.

 

And, finally, passion is a must. There are going to bad days and you need to be passionate enough about your idea to see it through.

Let’s assume that your consistent marketing efforts produce 30,000 customers in the first year. Multiply 30,000 customers X $15 tire tube price, and you have your total year one revenue of $450,000.

Can you operate profitably selling the product at $15? How much can you grow the market moving forward? How you manage inventory and forecast costs also impacts your long-term success, and the ability to generate profits year after year.

The answers to these questions help you determine if you have a long-term viable business. Follow these steps to start your own business.

 

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/

(you tube channel) kenboydstl