One of our bank directors, Tim Keane, is a serial entrepreneur who, among other endeavors, has started, bought, and sold several companies and is the head of the Golden Angels Network. Consequently, he has looked at a lot of new ideas from fledgling companies. He is also a master of the metaphor.
He has a saying that I really like: "But will the dog eat the dog food?" By this he means, is there a market that will buy this new product? You can have the most nutritious or lowest-priced dog food, but if the dog won’t eat it, it really doesn’t matter.
The reason this is on my mind is I recently met with someone who had an idea for a new business venture. She had articles and data demonstrating the need. Due to a family situation, I personally know there is a lack of providers to meet that need. So the issue isn’t about whether there is a need, it is about market acceptance. Her service is not delivered directly to the end consumer, so the dilemma is who would pay for her service.
Another group of folks I have been talking to lately are working on a brand-new financial product. It could potentially be revolutionary in its offering. Their product makes logical sense, there is nothing like it, and it would be something very useful to their target market. But because it’s so new and innovative, and because it’s financial in nature, there is a significant issue of establishing understanding and credibility in order to gain market confidence and consumer acceptance.
In both of these cases there is a product or service that addresses a market void, but there is still the question of whether someone will buy the product. Besides going by gut feel, there are several ways to try to answer this question. Basically, you need to “ask.” You can do this yourself, or even better you can hire market research professionals who do this for a living. The most common tools are surveys, interviews, or focus groups.
At First Business Bank, we are currently working on a new project. A group of us have worked rigorously to develop this new and different concept with the understanding of the dog food dilemma. We have tried to overcome that in several ways. First, we received input from our team of client-facing business development officers regarding what our clients would want in this offering. Next, we tested it several times with our board members (who are outside local entrepreneurs). We have also engaged a market research expert, and as a final step, will test this with clients before we roll it out.
New ideas and innovation are critical to success in today’s business world, particularly when starting a new business or rolling out a new product or service. Just because a new idea meets a market void doesn’t mean it will succeed. The market needs to not only understand and want the product or service, but also be willing to pay for it. If you are making a big bet on something truly new, you need to be careful to test the market to ensure that in the end, the dog will in fact eat the dog food.