Demand is one of the most essential factors of a business start-up model. If you say that you have a good idea, in business terms, it often implies that you believe a lot of people will share that sentiment with you.
Demand is the single most important factor that can make or break a start-up. It is the first thing that an investor will ask you immediately after your one hour-long business pitch. It is the only thing that will impress them.
It’s the only thing they want to hear about. Consequently, it should make up the greater part of your business pitch.
What is Demand
An academic definition of demand is:
“The desire by a customer to possess goods and services at an accepted price”
Don’t worry I am not going to bore you with the academic theory of economics. Basically what that definition means in simple terms is that customers should want something enough to be prepared to pay the price being asked for it.
Well, the only way you can know that is by going out there and meeting your potential customers. Or going to a platform where you will have access to these potential customers` views of your product or idea.
This is the only way you can assess if there is a demand for something or not. But then again you need to do it the right way.
Walking around with your prototype and asking if people think it’s a good idea will give you a misleading demand report. People will tell you what you want to hear out of politeness.
We are after all civil, and hence you are hardly going to find anyone who will tell you to abandon your idea because it sucks, or that you should find something else to do with your time. You probably wouldn’t accept their view anyway.
What you need to do is show people your product/idea and then ask them to pay for it if they think it is valuable. And hey, family and friends don’t count.
If no one is prepared to pay for it then demand may not be there. You are probably not going to sell when you go into full production either.
Business is simple. It is about using a series of fundamental principles that you apply to your particular idea and market context.
How these principles apply will be slightly different for each business and will lead to unique solutions. You need to use your head. In its simplest form though, a business model is such that;
You buy or make a product, and sell it to someone prepared to pay a higher price than it cost you. The difference between the two being profit.
Simple! And it doesn’t get any more complicated than that. Demand is the only key you need. If no one wants to pay for what you are selling, you have no demand, you will have no income, you will have no profit, and YOU HAVE NO BUSINESS.
I don’t care who you are, or how much passion you have about your idea. If there is no demand then it`s not a business.
I don’t care how stupid or crazy your idea is, if many enough people are prepared to pay for it, you have demand, you will have income, you will have profit, and most importantly, you will have a business.
Do you think the idea of selling rocks is a ridiculous one and that it`s not a business? Well, think again. Gary Dahl a former advertising executive sold rocks on a bed of hay for $3.95.
He sold them as, “hassle-free” pets, complete with a pet training manual and a cardboard box fashioned after a pet carrier. The rocks sold like crazy and became an instant hit. The rocks made $15 million in sales within 6 months.
As long as someone is prepared to pay for what you are selling then you have demand and potential business. The nature of the product or idea is irrelevant. It could be something as stupid as stones as pets, it really does not matter. As long as it makes you money, then you are in business.
I hope this has been helpful to your business efforts.