Identify Your Target Market
The first step is to identify your target market. Who needs your product or your service? The answer to this question will help you answer the question, "To whom are you going to sell your product or service?"
If you can't find an answer to these questions, you should abandon your business idea for a better one.
Conduct a Saleability Study
You can save tons of money if you take the time to do a study on the saleability of your product before you actually mass-produce and distribute it.
A simple survey asking people who belong to your target market (a random sample would be ideal) the question would you be interested in buying this product or availing of this service in case it becomes available? could save you from a very expensive mistake.
Conduct a Profitability Study
Your target market may be interested in your product or service, but are they interested enough to purchase or avail of it at your asking price? Thus, you have to analyse how much money and resources you'll need for producing and distributing your product or for offering and delivering your service.
Basically, you want to determine if your product or service can be produced or offered at a cost that will let you sell it for a large margin of profit.
Conduct a Competitive Study
Even if you can produce your products or offer your service at a rate that your target market can afford, this won't be enough if your price is not competitive. Even if your target clients are willing to pay $1,000 for a full online marketing service package, they are not likely to do this if they can get a comparable service for a lower price.
Starting a business requires deliberation and planning. Isn't it much more reassuring to know that you're headed for success before you take the first step? Thus, before you begin your new business venture, let a professional evaluate the profit potential of your business idea.