Dina Belenko Photography—Getty Images
By Elaine Pofeldt
July 1, 2015

When entrepreneur Everett Dickson made plans to take lessons in racing open-wheel cars at a school in Arizona, he ran into an awkward problem. As a user of smokeless tobacco—aka chewing tobacco—he needed a portable spittoon that he could take with him into the car. He could only find one model when he searched the internet, and it didn’t appeal to him. “It literally would open in your pocket,” he says.

That led to the idea for his Atlanta-based company FLASR, which makes its own portable four-ounce spittoon. Launching the business in 2012, Dickson—an engineer by training—sketched the original concept drawings himself, then hires pros to convert them into 3D designs and enlisted a prototype company to build working models. Then he negotiated the opportunity to test his wares in 400 retail outlets, such as convenience stores. His beta test lasted from December 2013 to May 2014. FLASR sold 25,000 units in 4 months—a sign to him that it was worthwhile to proceed.

After making some tweaks, such as enlarging the opening diameter and changing his point of sale displays, he did a gradual rollout in 2015. FLASR, which makes several models with different looks, is off to a strong start. In the first quarter of 2015, the startup generated $20,000 in sales. Dickson is the only employee at his company, which relies on contracted help in areas such as sales.

As Dickson, a veteran entrepreneur, has found, determining if there is a market for your idea is essential before you roll it out. Otherwise, it’s easy to waste a lot of time and money on a product or service that no one wants.

Here’s how to figure out if the world wants to buy what you have to sell.

Do your market research. Before working on a prototype for his product, Dickson pored over market research reports on the smokeless tobacco industry from Euromonitor International, to make sure there were enough potential buyers. He found that the size of the U.S. marketplace was expected to grow from $4.8 billion in 2010 to $9 billion in 2015. “We assume much of it is being driven by widespread implementation of smoking restrictions in public and private buildings,” Dickson says. He also saw that big corporations in the tobacco industry such as RJR were acquiring makers of smokeless tobacco. “The industry seems to be recognizing this,” he says. The homework he did gave him confidence that there was potential to create a scalable business in the market.

The same type of research is important if you sell a service. At LiveStreamingFitness.com in Tulsa, Oklahoma, CEO and serial entrepreneur Keith Kochner concluded there was an untapped need in the marketplace for his service—which streams fitness videos around the clock—after reviewing market research showing that only a small percentage of the American population has a health club membership.

Once Kochner set up his website, he enlisted several hundred beta testers to see how they reacted to the service. In response to their feedback, he fixed glitches on the site and made tweaks such as adding music to their videos. “I found all kinds of things weren’t working,” he says. Then he did his official launch, which took place January 1. Charging $9.90 a month for a 30-day membership, he says he is on track to hit at least $3 million in revenues in the next 12 months.

Turn to your clients. If you have even a tiny handful of customers, they may be your best source of candid feedback on whether your product or service idea is appealing. RevTrax in New York City offers technology that makes it possible for retail clients to measure how their digital promotions are affecting in-store sales. After winning early clients such as Jackson Hewitt and Walgreens, chief operating officer Seth Sarelson and his co-founders paid close attention to cues from such customers to assess the market for their technology. “Sometimes clients can help you see the largest business opportunities,” he says. In response to feedback from one client, RevTrax expanded from providing data only on the results of affiliate marketing to many forms of digital marketing, such as email marketing. The company, founded in 2008, now has grown to more than 60 employees.

Anisa Telwar Kaicker is CEO and founder of Anisa International, a maker of private label cosmetic brushes and applicators in Atlanta that serves clients such as Estee Lauder and Laura Mercier. She will often ask such customers what they think of a new brush before rolling it out. “Even if I went into a client and said this is not fully vetted yet, but I’d like your insight, they were always honored to have a first look,” she says. “They would be the ones buying the product.” To protect her ideas, she routinely files for provisional patents and will mention in conversations, “This is patent pending.” Her firm, founded more than 20 years ago, now generates $40 million in annual revenue, she says.

Ask an expert. At Guardian Pharmacy in Atlanta, which serves institutional clients such as long-term care facilities, CEO Fred Burke and his cofounders turned to Burke’s mentor when trying to figure out where there would be a market for the high-service model they wanted to offer.

His mentor, Bill Bindley, had previously launched Bindley Western, a major drug distributor acquired by Cardinal Health. “You need to look at long-term care facilities,” he told Burke. Burke paid attention and moved into that niche, quickly finding customers. Today, Guardian Pharmacy has grown to a chain with $325 million in annual revenue, and Bindley is an investor and board member. “He is an industry veteran,” says Burke. “I listen very carefully to what he has to say.”

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