A business idea is merely a thought or concept that has not yet materialized. They are a dime a dozen, and almost everyone has conceived a product or service idea. Your idea only has merit if it adds value or solves a problem for the intended consumer without too many limitations or disadvantages. The window of opportunity has to be right by providing something beneficial that is currently not offered by direct and indirect competitors. And you must also be willing to modify it if necessary.
The Purpose of Idea Merit Test
Before your begin developing a business plan for your new idea, conduct a brief idea merit test survey. Describe your business concept on a piece of paper to show to potential consumers, and then ask them to complete a simple one-page survey to determine their interest in the product and gain additional feedback. This can help you determine if your idea has merit, and you can use the feedback to strengthen your original product or service idea.
The Idea Merit Test Questions
After you describe your product of service idea on a sheet of paper, ask 10-15 people in your potential target market to complete a short survey. The survey contains ten questions. The first seven components use an easy-to-use Likert scale as follows:
0 = Non-existent
1 = Minor degree
2 = Moderate degree, but somewhat vague
3 = Moderate degree, but quite clear
4 = Major degree
5 = Extreme degree
To what degree does this business idea:
___ 1. add value or help solve a problem for me?
___ 2. provide immediate benefits to me?
___ 3. provide delayed benefits to me?
___ 4. have limitations?
___ 5. have disadvantages?
___ 6. appear to be alterable or modifiable?
___ 7. offer me something I would consider buying today?
The last three questions allow for feedback to help you improve on the idea:
8. Would you purchase this product?
If ‘yes’ or ‘maybe’, how much would you pay? ___________
9. What do you like most about this business idea?
10. If you could make improvements to the idea, what would they be?
Further Information on Each Survey Question
1) Value: People do not purchase products and services. They buy solutions to their problems and things that add value to their lives. So, if they do not see the value in your idea, it will be apparent in the cumulation of your responses.
2) Immediate Benefits: Most people want to realize instant benefits upon a new purchase. People tend to place more value on immediate consequences than on delayed consequences.
3) Delayed Benefits: Some products or services may not provide immediate benefits to the user; however, the value created or problem solved is realized weeks, months, or even further down the line, such as financial investments.
4) Limitations: Limitations are the positive things your product or service cannot perform or that others can do better, and no product or service is without limitations.
5) Disadvantages: Limitations are positive things your product or service is unable to perform. Disadvantages are negative things that occur as a result of using your product or service. Disadvantages do not necessarily kill the idea, however, the benefits must clearly outweigh the costs.
6) Modifications: Based upon the limitations and disadvantages, your respondents may have ideas for modifications. This will become more apparent in question #10.
7) Window of Opportunity: Are people in the right mindset and is this the right timing for your idea now? The ATM machine and its counterpart the ATM card gained popularity in the mid-1990s. What few people know is that the ATM was invented in 1939. However, in 1939, people were simply not ready to allow a machine to handle their money instead of a person. The window of opportunity for this idea was several decades away.
8. Willingness to Buy: This taps more into question #7 by asking them directly if they would buy it or not, and also how much they would be willing to pay. This information is key before developing a business plan.
9: What They Like Most: This simply offers you insight into the best part(s) of your idea. Hopefully, people will leave good comments in this section for you to build upon.
10. Improvements: This provides feedback on what they do not like about the idea or what they would like to see changed. Do not view this as negative feedback. Instead, use their suggestions to make your idea better and stronger.
Many nascent entrepreneurs believe the first step to launching a new venture is writing the business plan. A business plan is a blueprint for execution. You should not spend any time, energy, or other resources writing the plan until you are sure your idea has merit. A quick and easy idea merit survey is a good tool to use.