Should you buy a business or “test” drive it ?

I spoke to a friend recently who was considering buying a business – a neighborhood coffee shop.  He envisioned re-opening the space with events like spoken word, poetry slams and other artistic types of events.  As his first business, he was engrossed in the creative aspects of the planning and wanted to get my advice for what he should consider first – buying or renting the space?

I told him he was asking the wrong question.

The better question was how could he test this idea by spending as little as possible to ensure there would be a market interested.  The question isn’t if he should do it – the better question is why should he do it and would be people be interested?  Who would represent his following? Why would they come out to his event?  As an illustration, I referenced a party promoter that we both love – one that if the party was 200 miles from home…well we’d just have to fire up the engines and leave early to get there!   That’s the type of fan base I want my friend to have and it’s going to take some testing to ensure the idea works.

So we spoke briefly about hosting some “test” parties.  Borrowing a space in the area.  Marketing through a few niche groups he is connected with.  And hosting the “event” to determine the interest – and potential revenue.

I think he is going to test drive it first and see if it’s viable.

This concept of “testing” is important to anyone who is thinking about starting a business or launching a new product/service line within an existing business.  Before you put pen to paper to start the business plan, TEST the idea.  You need to know what works, what you need to refine and customer feedback.  It will provide some context for the financials and will develop your market base of customers in the interim.

Let me know if any of you have taken a “test drive” of your businesses?  What did you do and how well did it work with your original idea?

Any of you not test your ideas?  Do you wish in hindsight that you had?

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