5 Secret Ingredients of a Winning Business Idea
If your idea doesn't have the following five ingredients, you may want to assess how much you're willing to put on the line to see it succeed.
1. A substantial market.
If your product doesn't appeal to a large enough market, you may never recoup the cost of bringing your idea to life. Simply put, you're wasting your time. Don't wonder if there's enough demand to support the cost of manufacturing, distributing and marketing your idea – do the math and use the Internet to find out the market size. Who do you think is going to buy your product? Where?
Years ago, I read an article about the need for more space on product labels from medicine bottles to beverages. The opportunity struck me immediately. Everyone buys medicine and at least the occasional bottled water or soda. I used the Internet to research how large the packaging industry actually was and the market was undeniably huge. This lead me to develop a rotating label product that offered more space on product labels.
A good indicator of a substantial market is the existence of other products that aim to solve the same problem yours does. If your idea is so revolutionary that not a single other product like it exists, that presents a new set of challenges. That's not to say your idea isn't good or shouldn't be pursued. But it's going to be much more difficult to execute.
Related: How to Outwit Your Competition
2. Existing manufacturing technology.
I cannot underestimate the importance of this. Many entrepreneurs ignore the realities of manufacturing until far too late. Products that require the creation of new manufacturing equipment are incredibly cost-prohibitive. Contact contract manufacturers to determine how your product idea can be made. Contract manufacturers can be easily identified online or through trade associations. Show them a sketch of your idea, ideally with CAD drawings, and ask what it would cost to produce 100,000 or 200,000 units.
Always make sure to have anyone you work with sign a non-disclosure agreement. Before showing your idea to anyone, make sure to have filed a provisional patent application. These are very inexpensive and protect your idea for up to one year without having to file for a patent.
3. An acceptable retail price point.
How much will it cost to manufacture your idea? Get a quote from a contract manufacturer. If your product is significantly more expensive than other similar, existing products, that's cause for reflection. Retailers won't be willing to stock a product that doesn't fit into an effective price point. The general rule of thumb is that products retail for five times the cost of manufacturing.
Related: How to Build a Lean and Efficient Business Plan
4. A benefit that's summarized in a single sentence.
Many entrepreneurs fail to understand they're actually selling benefits, not ideas. Benefits are what motivate consumers to buy products. Likewise, you'll be selling the benefit of your idea to everyone you work with along the way, including investors, distributors and retailers. Is your benefit unique? Is it significant? For example, the one-line benefit statement I used for my rotating label technology was: "This new label adds 75 percent more space to your package." If you can't come up with a succinct easy-to-describe description, that's a good indicator the benefit of your idea isn't very strong -- or maybe that it doesn't have one.
5. A user-friendly interface.
In addition to having a one-sentence pitch, you want it to be easy for customers to figure out how to use your product on their own. For example, when developing my label technology, I put a picture of a hand turning the label on my prototype to show people what they needed to do to use it.
If your idea is so new or complex that consumers need to be taught how it works, let alone be convinced they actually need it, this will cost you. Most companies aren't willing to invest in such a radical idea. Creating a sound marketing strategy is difficult enough; having to describe your idea in addition to selling it is often too great a task. Make your product as intuitive as you can and it will be much more marketable.
Related: A Young Entrepreneur's Quick Path to Profitability
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Stephen Key is an inventor, author, speaker and co-founder of InventRight, LLC., a Glenbrook, Nev.-based company that educates entrepreneurs in how to bring ideas to market.