Starting Your Own Business in Ireland? Test Small First

A recent post on http://www.askaboutmoney.com/showthread.php?t=114094 was from a PAYE worker looking at starting a business.

His post starts by saying “I am considering starting a small business. I have a business idea and i have spotted a premises that would suit.”

When I read or hear something like this then alarm bells start to ring. This sounds very much like putting the cart before the horse. Unfortunately it is all too common that people have an idea then spend a lot of money setting up the infrastructure such as leasing premises and shopfitting before really identifying if there is a demand for a service and what people will actually pay for it and whether it can be sold in enough volume to not only cover costs but also to return a profit.

Over the past 10 years with the booming Irish Economy some people might have been able to take this approach and get away with it. There was so much demand out there in the economy that if you had a half decent idea it could work. However no things have changed considerably.

When considering any business idea the number one consideration should be can I clearly identify my target market and can I reach them cost effectively?

In order to do this you need to carry out a degree of market research. The thought of this research also fills people with dread, you mean I need to stand there in the high street and ask people if they would be interested in this kind of service? Often people don’t like the idea and so decide to ask their family and friends if they think their idea is a “good idea” invariably this is totally meaningless and family and friends will most likely not be impartial and they may not actuially properly into the target audience.

In fact doing Market research in the form of a survey in my experience is of limited value. People often answer differently from what they would actually do. Saying they would hypothetically be interested in something and actually being convinced enough to hand over hard earned cash are not the same thing.

So how can you test a business idea to see if there is real demand without actually losing your shirt? The best way to do this is simulate what you would actually do to sell the product or service. Take out an advert, set up a website and drive traffic to it, take a stall at a market, send a direct mail campaign to the target market. In other words implement the same marketing campaing that you would plan to use once you had everything set up perfectly. From this you will be able to guage response.

If you are not in a position to actually fulfill the product or service in the research phase it doesn’t matter. How about measuring the response and then just telling would be purchasers that you are currently fully booked or sold out and taking their details for when you are ready to go properly.

This approach will give you a much better idea of whether the projections you have in your business plan are realistic. It also makes you think about how you are going to attract paying customers before investing large amounts in infrastrucure and premises. Far better to find out you can’t sell your idea to people before you have invested thousands of Euro getting it to market.