When an investor goes over your business plan, they will look for signs that you have a successful business idea. They want to see evidence that your business will be a success.
Take It to the People
If you have a product-based business, it is important to see how many of your products you can actually sell. Start a pop-up or keep it casual (family and friends) if you have to, but start tracking your results. Document what you brought, how many people were there, and how many products you sold. Use these opportunities to get customer feedback. Gather information about your products so that you can make improvements. Besides the early sales, this information also shows beta testing, even if on a small scale. You can show that you have moved forward beyond just the idea phase and you’re actually executing.
If you have a service-based business, the same concept applies. See who you can get to be your first customers. Sometimes that means doing something at a severe discount or even for free. Those initial people can give you valuable feedback. It can prove that somebody used the service and liked it. It can confirm your audience exists and that the market is there. You can put that information into your business plan.
A Successful Beta Test
The size of your beta test is important. You can start small, but bigger is always better if you can increase it over time. Sometimes you are going to need to do this in pieces where you start with five people here and five people there. Or depending on the scale of your business, 500 people here, 500 people there.
The goal of these beta tests is to simply prove that you do, in fact, have a successful business idea. For example, I had one client with a design business. She was making custom backpacks for children and she wanted to get a small bank loan. At the time, she said to me that she knew it was going to work and be great. While I appreciate the positive attitude, I did challenge her a little bit. I wanted her to understand how hands-on this business would be. Had she considered getting out there and soliciting her products to see what would happen?
I challenged her to see if she could get some early buyers and prove out her concepts. This way she could say, “I’ve brought this product to 30 parents, and 15 parents bought them. There is a market for it, and my price point is spot on.”
After I challenged her with these thoughts, she decided to move ahead with her beta test. As it turned out, her beta test was very successful. By the end of it, she had made so much money that she didn’t need the bank loan anymore. The beta test, in her case, ended up being a double benefit.
The Survey Alternative
Depending on your business, especially if it’s a larger business, you really want to make sure that your ducks are in a row quacking in sync and in tune. But what happens when you have something that is difficult to test? If you are manufacturing or inventing something brand new, a survey is an option to the usual beta test.
You can survey a large sampling of people and get their opinion on many aspects of your product or service. You could include questions such as: “If you had access to this product, would you buy it?” or “If you had the option of purchasing this service, would it be of interest?”
You can compile these responses and the accrued data will show proof of concept. Doing a survey is another way to gather information without having to complete a formal beta test.
Once you have the completed beta test or survey, include it in your business plan. Present it to your audience, whether an investor or a banker. This approach shows that you have more than just an idea — you have something actionable. Investors can see you’ve already taken steps to prove you have a successful business idea. You are ready for greater action with their help if they invest in your business.
For help turning your dream into a successful business idea, reach out and our team would be glad to help!