Guide to Your Profitable Business Part 2

Today, I want to continue my sneak peek of what is to come. I’m sharing Part 2 of what will be a FREE guide to “Finding Your Profitable Business Idea.” I plan on sharing the third and final part next week.

Can I ask you to do me one favor? Would you read through it and take a minute to comment with your feedback or send me any questions you have? Your feedback would be so helpful as I continue to finalize the guide and ensure that it is a tool that truly helps aspiring entrepreneurs identify a profitable business idea.

Testing The Need

Once you have discovered your passion, honed in on your skills, and identified a need for your product or service, it is time to take the next step on your journey to freedom. We need to find out if your potential customers will pay you to meet their need. To do this, we are going to identify your ideal customer and seek them out.

Your Ideal Customer

People call the process of finding your ideal customer a a variety of things, but the process generally looks the same. A curriculum I instruct uses the term customer portraits. Darren Rowse at ProBlogger uses the term customer avatar. Others may use the term customer profile. They all get you to the same place, understanding who your customer is.

You first need to figure out the demographics of your customer. While you may serve multiple customers, pick one customer to focus on. This will ideally be the type of customer who will make up the majority of your customer base.

Take a few minutes to write down some basic characteristics about your ideal customer below.
Gender:
Age:
Location:
Income:
Education Level:

Then you want to dig a little deeper and find those things that are a little more difficult to see about your customer. What are your customers interests, passions, beliefs, values, goals, and dreams? For example, they could be a pet lover with the desire to provide the best possible experience for their dog or cat. Or they could be a diehard sports fan who wants to display their love for their team.

Take a few minutes to get inside the hearts of your customers. Some of these questions should help you get there.
What are their interests?
What are they passionate about?
What do they believe about the world, what they want, and what the experience should be?
What values do they have?
What goals do they have?
What do they dream of one day being able to accomplish?

Talk to Your Ideal Customer

Now that you have a picture of your ideal customer, you need to go find them. Ask yourself if you know anyone like your ideal customer. If you can’t think of anyone, ask friends and family for help to find someone who meets this criteria.

If you can’t find anyone who meets this description, this is not a good sign. How do you expect to find future customers, if you can’t find current ones? You might need to go back and rethink who your ideal customer needs to be.

Once you find your ideal customer, you need to spend some time talking with them. This is going to let you test the need. While you assume this is a need for this customer, you want to come away knowing it truly is a need for them. And you want to know they are willing to pay for you to meet this need.

As you have conversations with your ideal customers, here are some tips to make the most of the conversation.

Listen

You should be listening more than you are talking in these conversations. The purpose for these conversations is not to sell them on your potential idea. The purpose is to gather information to compare with your assumptions.

This is most effective if you can do it face-to-face. Seeing their body language when they say e can sometimes tell you more than the words themselves. If you can’t meet with them in person, video chat is a good second option.

Capture Their Stories

Focus on capturing stories to gather the information you need to test your assumptions. Ask them questions that will draw out the information you need. This may include questions like, “Have you ever experienced (insert problem/need)?” If yes, ask them to tell you more about it. Asking the right questions will help you determine if your perceived need is really a need.

If the stories they tell align with your assumptions, that is a good start, but you need to dig deeper to find out if they have taken steps to try and solve this problem. As you continue to probe, if you see they they have tried multiple solutions that failed or seem overwhelmed by the whole process, you will know that the need you have identified is a need felt by your potential customers

Be Open to Criticism and Change

As you bring up your ideas and assumptions, they may make some negative comments. Don’t take these personally, but use them to improve your idea. Remember that you are approaching them for help in testing your idea.

While you don’t have to implement everything they suggest, take some time afterward to reflect on their comments and determine what was helpful. Then make adjustments based on what you learned.

Prototype Your Idea

Now that you have refined your idea based on customer feedback, it is time to get an actual product or service into the hands of your customers.

Small, Fast, & Cheap

Allowing your customers to try out your product or service will provide incredible feedback. It will let you know if you have something people are willing to pay for, help you determine if you need to refine the idea, or scrap it altogether.

Start by deciding how small you can start while still communicating value and offering a solution to your customer’s problem. By starting small, you should be able to move quickly by putting something together without wasting too much time.

While reducing your time, you should also focus on keeping your cost low. You want to limit the amount of money your pour into this first iteration of your product or service. This is important for two reasons. It should allow you to go back and quickly make adjustments. Or, in a worst case scenario, if there ends up not being a market for your product, you haven’t wasted much time or money.

MVP

Some refer to this as a MVP or a minimum viable product. Wikipedia defines a MVP as a product with just enough features to satisfy early customers, and to provide feedback for future product development.

For a product, build a working prototype that people can test out. By doing so, you can get real time feedback from customers using your product. While this may cost a little more per item than producing them on a larger scale, you don’t have the risk of manufacturing 100 items you may not be able to sell. You can always produce a higher volume after you test your product, especially if your customers want to buy your product after testing it.

If you are selling online, you can set up a one page website or landing page that allows customers to pre-order your product. This will allow you to set a specific goal for a set time period. If you reach your pre-order goal, you can move forward with producing your product. If you don’t reach your goal, write the customers back letting them know there wasn’t enough demand and return their money.

Examples of a product MVP:

Rather than start a full scale bakery, rent a space at a local event or farmers market for a month to test demand and get customer feedback
Instead of creating a whole line of furniture, design and hand-make a few pieces for customers to try out and offer opinions

If you are offering a service, this process should be much easier. You can offer a reduced version of your full offering for free or at a reduced rate in exchange for feedback and a testimonial about the quality and value of your service.

Examples of a service MVP:

Instead of offering a full consulting package, offer a one-day or half-day session for a potential customer.
Rather than buying the equipment you need to start a pressure washing business, borrow or rent the equipment and offer a special discount to a few select customers in your target market.

Do what it takes to get your product or service into the hands of your customer. Start as small as you can, while still providing value and meeting their need. This will reduce your financial and time commitment and increase your chance for success by allowing you to create the next iteration or quickly scrap it and move on to your next profitable idea. As you move toward success, each step will take you closer to achieving the flexibility, financial freedom, and impact you desire.

Thank you for reading Part 2 of “Finding Your Profitable Business Idea.” Be sure to send me your feedback and be on the lookout for Part 3 in the next couple of weeks.