If you are an entrepreneur, then you have likely come across the question in the title more than once when you presented your idea to someone. The question is valid, but, unfortunately, often difficult to answer. I was reading today in the National Post about how due diligence on the show Dragons’ Den failed to reveal in two particular cases that the products under investigation were not, in fact, original. While I will not discuss here the issues in the products mentioned in that article, I will talk about the question that should have been raised.
Has your idea been done, or tried, before?
Often, when you think of an idea that could be turned into a business venture, the first step is forgotten, or given minimal attention. Before you go diving into the work and becoming emotionally attached to the idea, do your own due diligence. Try to locate your nearest competition, and find the pros and cons of their product or service. What advantage do you hold over them? If you cannot answer that question, then your entire idea may be flawed, or based off of out-of-date information.
A common response, though, is: “There is no competition! My idea is so unique and innovative that no one has ever tried it before!”
The answer to that, of course, is that you haven’t looked hard enough. If your idea has never been tried before, then what makes you think it is viable as a business. The competition may be distant, or impractical. It may be expensive beyond the cost of the problem it is supposed to solve.
But it exists.
To start yourself looking for the competition, think about the problem your idea solves. Then look at what other people faced with the same problem do. Do they ignore it? Do they use some roundabout way of solving it? Is their current solution expensive? What are pros and cons of the solutions that are already out there? How does your idea compare?
To make this a little simpler, suppose you had a potential client sitting in front of you. They will give you $100K contract on the spot if you can convince them that your solution is really the best. Of course, you can talk about the problem your idea solves. You can talk about your price versus the price of the competition. But what you absolutely must talk about is how is your product better than the alternatives. That means you need to know your competition in great detail, because if you don’t, you will lose the sale. If your potential client knows more than you about your competition, then they will ask you questions you don’t know the answer to, and then you lose the client.