Small businesses can fail for numerous reasons, including the lack of necessary
funding to sustain a company’s
stability, poor leadership of a management team, and an inadequate business plan.
Another major reason behind a company’s lack of success can be accounted for by
commercial failure, the state at which a company’s product experiences poor sales.
Most commercial failures can clearly be avoided if only entrepreneurs took the time
out to test market their products prior to the launch of their new business.
Often times, entrepreneurs may lack adequate preparation when launching their company.
The excitement of starting a new business coupled with the lure of profit can be
quite overwhelming to handle, and as a result, small business owners may not be
prepared for the different challenges of entrepreneurship, including the possibility
of product failure. Poor timing of launch, supply and distribution-related problems,
and defective merchandise are additional reasons that can eventually lead to a product’s
lack of success. In addition, entrepreneurs may have the tendency to assume that
customers will want their products, and instead of investing their money in test
marketing their business ideas,
they end up spending an exorbitant amount in advertising campaigns. This common
mistake is extremely risky and can eventually lead to bankruptcy.
Create a prototype for potential consumers
Consumers play a key role in determining the viability of a product and its prospective
future sales (feasibility study). Prior to spending money in launching a business,
the entrepreneur is encouraged to design a trial product, so that they can show
and demonstrate their ideas to potential groups of customers (focus groups). By
resorting to this type of informal research testing, small business owners will
be able to determine their product’s feasibility based on customer feedback and
suggestion, learn about buyer demographics, and acknowledge any major competitors.
A customer’s opinion during the prototype phase can also inspire the entrepreneur
to address a product’s flaws and to further refine their ideas for consumption.
Other ways to test market an idea
The internet is a fast and effective way to test market a product or service. Entrepreneurs
can create a website that describes or displays their ideas, and they can receive
valuable feedback, based on questionnaires, from consumers. Business owners can
also opt to send out advertisements and opinion polls to potential customers by
direct mail. In addition, entrepreneurs can take their prototype or finished product
to inventor exhibitions and trade fairs. By presenting their products and services
at these showcases, small business owners can gain recognition for their ideas,
secure a prospective customer base, and obtain valuable feedback from audience members.
Product and market testing can be an expensive and time-consuming process; however,
it is a small, effective investment when compared to the overall risk of possibly
losing one’s entire lifesavings from product failure. Entrepreneurs should always
test market their ideas to the general public before taking the risk of starting
their business in order to ensure their product and company’s success.