MBA1105 Q&A Wednesday: How do I validate an idea for a niche subscription box business?

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Hey O welcome to the 100 the $100 NBA Show. Quick practical business tips to build your business every single day whether daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the Hundred Dollar mba, a complete business training and community online and today's episode is a Q and a Wednesday episode. On these episodes I answer a question from one of you, one of our listeners. If you have a question you want to ask just email me@omar00mba.net I would love to answer your question right here on the show. Today's question is from Dave and Dave asks how do I validate an idea for a niche subscription box business? Dave is a very niche product idea, fly tying, which is the process of producing an artificial tie for fly fishing. He wrote to me asking how can I validate that this subscription box business for fly tying is something that the market actually wants and needs. I got to make sure that before I launch this business, invest my time and money and effort that there's actually customers needing what I have to offer. First of all, this is a fantastic question because it means that Dave's head is in the right place. He understands that he needs to make sure that there's a market that there's customers out there that actually want what his idea is in his head. He's practical. He understands that just because it's a good idea to him, it doesn't make for a great business idea automatically. He's got to make sure that there's enough people out there that want to buy what he has to offer so he can make a business out of it. So in today's Q and A Wednesday episode, I'm gonna go into detail into Dave's question, his situation, and how he can validate his business idea. Now, even if your business idea is not very niched like Dave's, this episode is gonna be helpful because you're gonna know how to take the steps forward to make sure that the business idea that you have in your head is one worth implementing. Can't wait to get into this one. So let's get down to business. So on today's Q and A Wednesday's episode, Dave wrote in and said, I've been listening to your podcast for the last month and been getting a lot of great tips. Thanks for that. Well, thank you, Dave. I'm trying to validate an idea for a fly tying online course that comes with a subscription box. But people in the niche, fly fishing, keep telling me that there's not enough money or not much money to be made in fly fishing. How do I validate my idea to make sure there's enough people interested to make a good profit? I also have a podcast, the Wet Fly Swing Fly Fishing show. And I love podcasting Dave. And if you want to check out his work, it's at wetfly swing. Com and his podcast is@wetfly swing.com show. All right, Dave, you have a niche idea. Now, I'm not totally sure who you're talking to, who you're speaking to, who are telling you that there is no money in the niche. There's no money in fly fishing. I'm not sure if these people are actually business owners in the fly fishing niche or people that love fly fishing themselves. So. So, just to start off, I want to tell you that you got to do your own research. You can't take word of mouth. One of the best selling products in 2017 was the Fidget widget, which to me is a piece of junk. It's just a piece of plastic that allows people to fidget with their hands. I would not think offhand, being outside the market without any research, that this would be a bestseller, but it is. So information is your best friend. So I did a quick search on Google how much the fly fishing market is worth. And in the US alone, it's $850 million a year. That's a lot of money and that's a big pie. And that's just the US and this research was done in 2015, so it could be hitting a billion by now. So that's for starters. Now, I didn't do extensive research, but you can do it yourself and find out some more information. So right off the back I tell you there is money to be made. Number two, whenever you deal with a niche business, something that's kind of obscure, unknown, but there are fanat people about something like fly fishing, they love it. This has huge potential. Why? Because the cost of advertising and marketing for these types of niche businesses are quite low because you're not really competing with a lot of people. For example, if you run a software business for businesses that's a huge market and you got huge competitors with huge budgets, you're competing with Google and Apple and Slack and all these huge companies with huge budgets. So when you try to advertise, let's say on a Facebook ad, and you're trying to target that market, you're competing with all these other competitors for ad space. Therefore your cost per ad click or acquisition is going to be really high. Now if you have a niche business like fly fishing, there may not be that much competition. There may not be these multiple huge companies advertising via social media, via like a Facebook ad, for example, and you can get a really low cost per acquisition, meaning a low cost cost per marketing to a customer and making a sale. So this is a huge advantage and you're going to use that advantage when you're validating this business idea. So you talked about creating an online course along with a subscription box business, meaning that they can learn about fly fishing, but at the same time they can get a certain product or supplies or something like that that has to do with fly fishing delivered to them every month, every week, whatever it is, as a part of their subscription. Now, I suggest that you stagger this. You break this up into steps or parts so you can validate the idea in isolation. This is what I mean. First, I think you should consider launching a minimal viable fly fishing course. This is going to allow you to keep your costs down. Creating an online course is quite, quite inexpensive and it's going to allow you to validate an idea quickly. You can create an online course, a beginner course like Fly Fishing 101, and sell it for a reasonable price. It doesn't have to be super expensive. It could be $97. And it doesn't have to be super long. In fact, the shorter, the more concise, the better because it allows them to get started and not feel overwhelmed. So even if your course is about 10 or 12 videos, with videos being about five or six minutes a piece, this is great. Along with maybe some supplemental material like workbooks or some sort of cheat sheets or guides, this is going to be a great value if you get people to learn enough to get started with fly fishing. We have lots of episodes here on the Hundred MBA show on how to shoot an online course, how to create one, and all that. So check that out in the archives. So I would start with the course to see if there's actually a need for it. So you might be saying, how do I get people to actually show interest and validate this idea? Well, you want to be able to give something for free to build your email list to validate how many people actually interested in in this course in fly fishing. So you can create a mini small course that's free, like three videos, that kind of is a precursor to that starter course that you're going to sell. Or if you'd like, you can actually give away the first module or two for free as an opt in, as a way to collect email addresses in exchange, as an opt in, as a way to get their email address in exchange for those free modules. And then once you have your email address, you can market the full course to them and sell that to them via email automation. Again, got plenty episodes on email automation on the show, what tools to use, all that kind of stuff. Now remember I talked about the Facebook ads and your cost per acquisition is going to be quite low given the fact you're going to be targeting people that are interested in fly fishing. And it could be even lower. Now that you're only selling an online course, you don't have to worry about delivery. So you can sell this course around the world. So what you need to do is you need to cost out how much money you're willing to spend to test out how many people are actually interested in this product. So you should have a goal for the first month. You should say, in the first month, I'm looking to get, let's say, 20 new customers, 20 new people to buy my course for $97. Now, let's say, for example, you want to make 100% profit as a minimum. So you don't want to spend more than $1,000 to get those sales. So you can budget yourself with Your Facebook ads to only spend $1,000 to acquire these 20 customers. And these 20 customers obviously are going to go through a funnel or a system, meaning that you're going to create some ads to get them to the free course, the one that you're actually offering. And once they're on your email address, you're going to send them some emails via email automation to encourage them to buy your course. So in a span of a week or two after they've gone through the automation, they have gotten a chance to buy your course. And about two to three weeks, you'll know if those ads have paid off and became customers of those people that have clicked on those ads and you know, try that free course. Did they eventually become customers? If you really can hone in and dial into your Facebook ads, you can get your cost per lead very low. Meaning that cost per how many people sign up for your free course. Let's say you get it down to $4 a lead. That means with $4 per lead, you can get about 250 new signups to your free course. With a thousand dollar ad budget, you know, a thousand dollars spent on Facebook. So from those 250 people that sign up for the free course, can you get 20 of them to buy your course? That's very doable. That means you're making 100% profit on that course. If you are able to pull that off, this is going to be the validation process. If you're able to do that, then you know, you have an idea on your hands, then you're just upping the ante. You're going to spend a little bit more on ads. Let's double the ad spend. Maybe you can grow your list by creating some content or some videos on YouTube or you know, obviously marketing it to your listeners. On the podcast you mentioned the podcast you run now, if you're intimidated by Facebook ads, do not be. There's a great tool called Ad Espresso. They're not a sponsor, they're nothing. We use them. They're fantastic and makes it super easy for you to create ads on Facebook and create several ads that will split test for you and get you the lowest cost per acquisition possible. This is a great way and a low cost way to validate your business idea. But it's going to cost some money for you to do that. But it could be well worth it because hey, you're going to be growing a community and a list anyway that you can then, you know, offer them other ideas. Now once you have your course Validated. People actually want to buy this course. You're making money off this course. You have customers. You can then email your customers, your existing customers of the course and find out if they're interested in this subscription box business. Give them some sort of offer and see if they're interested. Say for example, you say, would you like me to send you X amount of equipment every month for this price? And if you sign up today, you're going to get your first month free, that type of thing, or get free shipping or whatever it is, incentivize them to sign up and see if they're willing to do that. Even if you don't have your subscription box business in place, let them know you can pre order your subscription and we're going to start sending things out, you know, four months from now, six months from now, whatever it is. But what you're doing here is you're validating the idea with existing customers, people that have already gotten value from you. You've built trust with them. That's so much easier than just starting off with nothing. And before you start spending some money on physical products and shipping them out, you can validate and see if there's enough people that are interested in that. And as you get new customers for the course, you can automate the system and send them an automated email, you know, selling them this portion of the subscription, sort of like a plus version of your subscription. They also get physical products sent to their house, not just the course.

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To wrap up today's Q and a Wednesday episode, Dave, you gotta take steps. Don't do everything at once. Validate the market first with your course idea. Have small goals like 20 customers this month and then up the ante and try to make that 40 customers and a hundred customers and a thousand customers. You get the point. And when you have a customer base, let's say for example, you have 300 customers have bought your course. Now you have a pool of people you can ask to pre order this subscription box business idea. The subscription Box service. They love your course and they're really into fly fishing or they're getting into it. They may just want to have all that equipment stuff taken care of and you can do that for them. But you'll only know once you have that customer base. So start with steps. Dave. I hope that helps. And I hope that helped everybody who's listening who want to validate their own business ideas. Minimal viable products are the way to go. Even the big, big companies that we love and admire, like Amazon, for example. Jeff Bezos, the richest man in human history, didn't start with the Everything store. Amazon just did books in the beginning. They just validated the idea of buying product online with just books. Then they started with CDs, then some smaller items, and then some electronics, and before you know it, they're buying whole foods. But you get the point. Start small. Grow. Take it step by step. Thank you so much for listening to the $100 MBA show. Before I go, I want to leave you with this. Starting a business can be exciting. You have all these ideas in your head, but validate them one by one. Don't get overwhelmed. Don't feel like you have to, you know, implement every single idea that crosses your mind. In fact, in a couple of weeks, we have a Q and a Wednesday episode all about just that, how to handle all these ideas in your head. But as a precursor or as a pre tip to that episode, take one idea at a time. All right, I'll check you in tomorrow's episode. I'll see you then. Take care.

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