MBA980 Q&A Wednesday: How do I know my business idea is a good one?

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If you have a question you want to ask, just email me over@omar00mba.net. Today's question comes from Patty. And Patty asks, how do I know my business idea is a good one and a common question, yet so important? If what you're offering your customers, your marketplace, is not something they want, you're in big trouble. You want to make sure you nail this. You want to make sure that you actually have something people want before you start investing time and money into your business. And that's what we're going to be talking about in today's episode, how to validate your business idea to make sure it's a good one. So let's get into it. Let's get down to business. Patty asks, how do I know if my business idea is a good one? She wants to make sure that what she's about to launch is something that people want. First of all, I gotta commend Patty for asking this question because too many people launch businesses without thinking about this and they learn the hard way that this is so important. They think their idea is brilliant. But you're not enough. You need other people to think it's brilliant. Those are called your customers. You can't be the only customer. So you really need to start presenting your idea to your marketplace to validate the idea. Now, full transparency. We have a full course inside the $100 MBA called the Five Steps of Idea Validation. But you can get this, just this course alone for free if you just go to 1-000- MBA-NET right now. It's a seven part course with a workbook that goes along and it goes into greater detail than what I can cover in just today's lesson. Alright, so what can I offer Patty in terms of advice when it comes to validating her business idea to make sure it's a good one? Now, the fastest way to do this is to just put together a landing page. A landing page is just a one page website, no need for navigation, nothing at all. You can create a landing page in literally an hour. You can use tools like Weebly or lead pages, something like that. But the point of the landing page is that you want to introduce to the world your offering, your business idea and you want to find out how much interest there is for this. Now obviously people are just not going to stumble upon this landing page, this website. You're going to need to drive traffic to it, but we'll get to it. The validation part to find out if it's a good idea is how many people actually see the page, sign up or show interest. So let's talk about this in a little bit of detail. This should be a very simple page that describes what you're offering. Now this still can be done whether you're building an online business or thinking about starting a offline business, a physical business, a cafe, for example. The point here is that you want to describe to people what you'll be offering, why you're unique, what's your unique selling proposition, and get them to take action on the page to show that they're interested. Very simple example, let's say you want to open up a new cafe in your local area. You can create a landing page talking about what your cafe is going to offer, why it's special, what do you specialize in, maybe a small menu and why you're excited to start this business. Now I know this is early days and you probably haven't even signed a lease or anything like that, but the point here is that you want to see if there is interest in this product, this business existing in the world. So on that page you have to have some sort of call to action. You want to get somebody to do something when they visit that page. So even if it's like get a free coffee when you visit us the first time, just drop your email and we'll let you know when we open our doors and give you that coupon code. So this is just an email opt in form. Hey, give me your name and email address. I'm going to send you an email confirming I got your email and I will update you when the cafe's open as well as send you that coupon for the grand opening. Free coffee. Now, this offer can be anything. It could be 50% off, it could be a free croissant, whatever. The point here is that you want to make it attractive. The second point is that you want to get them to take action. Why is this so important? Because we're going to find out once we know how many people have visited the website. Let's say, for example, a hundred people have visited the website. How many people actually opted in, how many people actually put in their email. Was it 3? Was it 40? This is going to allow you to understand how much interest there is for what you're opening for, what your business is. Now, in my opinion, if you get a 10% conversion, that means that 10% of the people actually give their email address. Let's give another example. Let's say 1,000 people visit the website, 100 people give their email address. That's 10% conversion. That's pretty strong conversion. That's pretty good. You should feel pretty okay about that. Anything higher than that, 15, 20% conversion, you know, you got a slam dunk idea. This is just from my own experience. Now, if you get less than 10%, but it's, you know, 8, 9, you know, it's not horrible, but I feel a lot more confident before I invest any money or any time in a business, if I get at least 10% conversion. Now, how to get people to that website. Now, you can do this easily by just running some ads. Now, again, the whole point of this exercise is just to see if you have a good business idea, right? It's not really to market the business. You just need to get traffic there, targeted traffic. People that would be interested in this business, in this idea. One of the fastest and easy ways to do this is with Google. Now you can do this on Facebook too. Facebook ads where you can target people based on all these different criteria. If you have a local business like a cafe, you can target people in that local area, in that city. And the same thing you could do with Google AdWords, you can target people within the same zip code, postal code, right? If you have an online business, you can target people Based on search words, what they're searching for. If you sell toothbrushes online, then online toothbrush store could be a keyword, right? And if they search that keyword, your ad will show up. Now you need enough traffic to your website to see some sort of conversion, some sort of result. You can't just send like 20 or 30 people to your website. That's just not enough in my opinion. You need two to 300, at least two to 300 visitors to get a good, you know, sample size to get that conversion rate. More is even greater. That's great. But 2 to 300 is a minimum. So this means if you're going to be running ads, it's going to cost you some money, depending on how much it's going to cost per click. So less expensive with Facebook ads than Google AdWords. AdWords have become very expensive, but it can get pretty affordable if you have a very niche business or a local business. So it might cost you three to four dollars per click, maybe even more depending on your niche. It all depends. So you're looking at, if you are trying to get 200 visitors, you're looking between 6 and $800 to invest in this project. Now you're going to kind of have to fork up that money. If you have zero audience, if you have nobody whatsoever, you, you don't have an email list, you don't have a blog, you don't have any kind of presence online offline, you don't have a Rolodex. You gotta start somewhere. And the easiest way is to run ads. So it's a pretty cheap investment, in my opinion, to validate a business idea. Paying 600 bucks to validate a business idea is chump change compared to what you can waste on a business. That is not a good idea. We're talking about hundreds of thousands, if not millions of dollars can be spent. So you don't want to do that. It's better for you to validate two or three businesses at the cost of, you know, 1200, $1800, then spend hundreds of thousands of dollars on businesses that just fail from the get go. So that's the fastest, kind of, most concise, simplest way to validate a business idea to make sure you have a good one. Now, asking your friends and family, and I mentioned this in the course, a lot of people do this. They like to ask their friends and family, hey, what do you think of this business idea? And you know, that's not such a horrible idea, but I just don't recommend it, especially if your Friends and family are not your target market. If I'm selling weightlifting belts and nobody in my family is a serious weightlifter, then why am I asking them? They have no reference. They don't know if this is a good idea or if it's needed in that niche. Really not helping yourself here. In fact, you can hurt yourself because some of your family members might give you advice based on other factors. They might just want to encourage you and say, that's a great idea. You're wonderful, and lead you down this idea of, wow, this is a great idea business. I should launch it without validating it or think that you just validated it by asking your friends and family. Or it could go the other way where they are overprotective and they don't want to see you lose, they don't want to see you fail. They don't want you to see you leave your job, your security of your job and say, you know what? That's risky. I don't think it's a good idea. Don't do it. So it's just really hard to ask friends and family, especially if they are not your target market. And most of the time there's just not going to be. Most of us are not opening up McDonald's. We're opening up something very specific.

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To wrap up today's Q and A Wednesday, how do I Know my Business Idea is a Good One? By Patti thanks for that question, Patty. You got to go through this process of idea validation. You have to make sure you. You put your idea out there and you show it to a target market and see if people are interested by the way they act by that call to action, by taking action on that page. Doing it online makes it a Whole lot easier, simpler, and trackable. You can also do this offline, one on one with people. Yes, people in your target market. And that's explained in our free course over@100mba.net, that idea validation course I mentioned earlier. All right, Patty, I hope that answers your question. If you have a question that you want me to answer, just email me over@omar omar mba.net I'd love to answer your question here on Q and A Wednesdays. I want to talk to you about a serious topic that we're going to be covering in tomorrow's episode, something that I've been putting off for some time, but I really feel it needs to be addressed, and that's fighting depression in entrepreneurship. This is a topic and not a lot of people are talking about, but I think it needs to be addressed. Entrepreneurship is not easy in a lot of ways. It's a humongous struggle. You're changing your whole life, and many of us will go through depression. How do you fight that? How do you combat that? If you're in that state right now, know that I'm going to try everything I can in tomorrow's episode to get you out of that state. And if you're not in that state, you need to know what to do if you ever get close to it or get into that depression, make sure you hit subscribe so you don't miss that episode tomorrow. All right, before I go, I want to leave you with this. When it comes to idea validation, it's not just your business idea. You can validate all kinds of ideas. The tagline to your actual business, your headlines, your pricing, your sales page. You can just validate pretty much anything in your business. New products, you're releasing, new features. Validation allows you to save time and money. So you only invest the time and money in the things that matter, that make a difference, that move the needle. All right, I'll check you in tomorrow's episode. I'll see you then. Take care.

At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the courseroom to the workplace. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.