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Making sure a demand really exists

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One common mistake people make when starting a new business is that they’re overly optimistic about the demand or interest in their product or services. A sunhat with a solar-powered fan on top may seem a good idea, but is anyone going to be seen dead wearing such a thing? In the ideal world, find a way to test the demand for your business idea before you invest too much capital or time in its development.

A friend of mine had an idea to start a business selling handmade timber beds. He decided to test this idea by running a stall once a month at the local markets. The response seemed good at first, but he soon found that people were reluctant to pay the extra dollars for his products, with people comparing his prices against the mass-manufactured timber beds made from poor-quality pine and available from large discount furniture chains. His profits were also lower than expected, and the time required to liaise with customers about their individual orders was higher. The result was that he decided not to pursue this business idea, but to explore other ways of making money instead.

Small Business for Dummies

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