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‍8 Ways to Tell if Your Business Idea is Profitable According to Experts.

Entrepreneurship

According to CBInsights, 35% of startups fail due to lack of market demand.  

Don’t make the mistake of spending all your time, money, and effort creating a product or service no one wants.

As your trusted digital marketing agency in Miami, we are going to share tips that will help you determine if your business idea will blossom into a successful venture.

How to Tell If You Have a Profitable Business Idea

Just because an idea is good doesn’t mean it’s going to be profitable. That’s why it’s crucial to be critical of your business ideas and ask for feedback from as many people as possible. Here are some tips from experts to help you determine if you have an effective business idea.

1. It solves a real problem.

According to Dropbox co-founder Drew Houston, the most successful people he knows don’t just love what they do; they’re obsessed with solving real problems that matter to them.

As long as people have problems, entrepreneurs like you will never run out of business ideas. Why? Because the best business ideas solve real problems!

So, whenever you have a product idea in mind, the first thing you should ask yourself is if it solves a problem that many people are facing.  

If nobody has the problem you’re trying to solve, no one is going to come to look for your product or service.  

2. People are willing to pay for it.

customer using credit card to pay for a product.

According to Lewis Fogel, there are four reasons why people buy a product or service:

  • They’re currently experiencing a problem they would like to solve.
  • They’re anticipating a problem in the future, and they want to start preparing for it now.  
  • They want to invest to reap the benefits later.  
  • They want to satisfy an immediate need or desire.

Do your products or services belong under one of these categories? This is how you determine if your product idea has a great chance for success.  

3. It’s set at the right price point.

According to Dr. Rainer Meckes, businesses that get their pricing right will thrive. But those that get it wrong risk damaging their business permanently.  

A great business idea is set at an optimal price. Excellent pricing isn't about being the cheapest, but about how your customers quantify the value your business delivers.  

Once you’ve confirmed that you’re solving an actual problem in a scalable way, the next step is to determine the value of your business idea to your intended audience.

Your price point should be both attractive for your ideal customers and also produce the maximum possible profit for your small business.  

The right pricing approach is crucial to staying competitive in today's market.  

Here are some tips on how to set the right price point:

  • Do some low-level market research to determine the value your ideal customers get from your business. This will give you a rough estimate of the price you should sell it for.  
  • Identify your minimal viable pricing, then determine how much extra you can add to make a profit without putting off your customers.  
  • Test your proposed price point to see if it works. Adjust according to the reaction of your target audience.  

4. It has a considerable niche market for it.

Market size is a major factor influencing how much your business idea is worth.

It tells you the number of potential buyers your business idea could possibly have within a given market, and the total income these sales may generate.  

As a trusted digital marketing agency in Miami that has worked with countless small business owners, we suggest that you choose a business idea with enough potential. That said, your market doesn’t need to be massive.

According to Michelle Phan, founder and owner of multimillion-dollar cosmetics line EM Cosmetics, there’s a niche market for everything in this digital era. This presents a fantastic opportunity for you to focus and build a sustainable and viable business.

5. You are passionate about it.

Entrepreneurs working together for a passion project.

According to Michael Cullinan, director of Rapid Finance, if you’re passionate about your business and dedicated to making it work, then no matter how hard the process may be, you’re going to succeed.  

When you start a business, it’s expected that running it will consume most of your time, money, and energy. So, it’s crucial that you build a business that stems from your passion.  

When you’re passionate about your business idea, you can confidently explain what you do and why it’s important. This helps resolve any doubts you experience.

You’ll know that your business idea will succeed if it’s something that you truly care about, not just something you’ve started because it could be profitable.  

6. You’ve tested your idea.

According to Nancy A. Shenker, president of ONswitch LLC, entrepreneurs can sometimes lose objectivity because they’re so passionate about their business idea. This causes them to head straight to execution without taking the time to validate their idea.  

Before you spend any money promoting your product or service, it’s essential that you test your business idea with strangers who are representative of your ideal customers – not just people you know who are too polite to tell you the truth.  

You're ready to test a business idea on strangers if it:

  • Solves a problem.
  • Serves a sizeable market.
  • Can turn a profit.
  • Speaks to your passions.

As the best digital marketing agency in Miami, we suggest that you gather feedback and remain open to suggestions. This will give you insights on how to change or improve your product or service so that you can develop something your customers will actually love.  

7. You know how to reach your customers and promote your business.

digital marketing agency Miami using Ads manager to promote business.

"The manufacturer who dedicates his advertising to building the most sharply defined personality for his brand will get the largest share of the market at the highest profit." — David Ogilvy  

Aside from thinking about the problems your business idea will solve, you should also figure out how you’re going to market it to your intended customers.  

Today, there are many ways you can promote your business effectively. Just make sure to do the groundwork first to ensure that you’re targeting the right people, sending the right message, and positioning your brand correctly.  

8. Your idea is realistic.

According to Mark Suster, realism is important in startups.  

It's normal to feel biased toward your own ideas, but romanticizing it will only stop you from truly identifying if your idea will be a big hit or not.  

You need to understand that on paper, the details you provide might seem like your business idea will really work. But this doesn’t always translate to real life.  

So, before you start implementing a business idea, ask yourself the following questions:

  • What’s the real reason you want to start this business?
  • What are your short-term and long-term business goals?
  • Who are your target customers?
  • What problems are you trying to solve and how can your business idea resolve them?
  • Who are your competitors?
  • What are your competitors’ offerings and how do you differ from them?
  • Do you have the resources, skills, and knowledge to launch this business?

Is Your Business Idea Profitable?

Once you have a profitable business idea, the next step is to find the right financing so you can start building the business of your dreams!

If you’re concerned about marketing and promotion, we can handle that.  

Digital Resource is the best digital marketing agency in Miami. Our team of digital marketing experts will work with you to develop a custom marketing plan that will boost the visibility of your business online and put you ahead of the competition.  

Contact us today to kickstart your business!

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