Ryan McLean : Slightly Unconventional

MicroTesting – How To Test a Business Idea for $200 or Less

The other day, after a semi-frustrating joint venture meeting, I was forced to completely rethink my product. I am a property investor and previously my product was a joint venture on positive cashflow property.

They say when starting a business you should find the market first, and then create a product for the market. Well I have discovered that the market does not want a joint venture on smaller positive cashflow properties. For the business person joint venture is difficult because people tend to fall into 2 categories

  1. They know nothing about property and investing and don’t want to learn anything. They lack the knowledge and therefore are afraid to invest.
  2. People who know about property investing. These people want to know everything about their investment and want to have a say in everything. This micro-management makes closing a deal painful.

So I have come up with a business idea that is created specifically for the market. I am not trying to create a product and find a market, instead I am reading the market and trying to deliver exactly what they are asking for.

With the ability to outsource most of my work, the potential for creating an automated business is huge. The only problem I have is capital to start with. To get my business up and running it would cost me around $500 and ongoing costs of around $200/month. That is money I can’t really afford to lose. I don’t even know if my business model will work yet.

But there is a great way around the problem and it is called microtesting. I got this idea from the 4 hour work week.

Basically is works like this. Create the front end of your business. This is the sales page that sells your product for you. For me I need to create a website to explain my product. I can create this website for $15, the cost of the domain, and about a week’s work. So you create the front end and the sales systems but no product…yet

Second step is you begin to market your product without making it publicly known. You can do this through Google Adwords PPC (Pay Per Click) Marketing. The goal is two fold.

  1. To test whether you can make more money in sales than you pay in advertising
  2. To test different ads and to see which ads work the best

To do this you set up ads that point to your sales page. For me I am creating a sales page that has a complete form to collect all their information. In order to create this form I am using Aweber, which is the best in the business for email marketing.

People will be directed to my sales page and if they want to purchase my product they will fill out the required information and click buy. They will then be redirected to a page saying that the product is out of stock, or is currently on back order. I will tell them I have collected their information and will email them when it becomes available. There will also be a link they can click if they choose to not receive information.

Note: It is illegal to charge people for something that is not yet being manufactured. So I do not charge them. I believe it is also illegal to keep people’s credit card information if they cannot purchase, so I get around this by keeping their details but NOT their credit card info.

Each person that fills out the form and clicks ‘buy’ counts as a sale in my test. So I can effectively work out if my product is profitable or not. If I spend $200 on advertising and make one sale worth $100, then chances are my product won’t be profitable (unless I can lower my marketing costs). This is a great way to test whether or not there is a market for my product and whether or not I think I can make a profit. All I had to do was create a sales page and some PPC campaigns. I didn’t have to spend months of work and money creating the product.

Microtesting also gives you the ability to test different variables in your ads. Look at the two ads below (examples taken from The 4-Hour Work Week):

SAILOR SHIRTS FROM FRANCE                  REAL FRENCH SAILOR SHIRTS
French Quality, Shipped From US                   French Quality, Shipped From US
Lifetime Guarantee!                                              Lifetime Guarantee!
www.shirtsfromfrance.com –                             www.shirtsfromfrance.com

By changing only one thing, you can test which works best. As long as you disable the feature that serves only the best serving ad. Create different ad campaigns changing just one section to see which works best. In the end you can combine the best aspects to make an effective ad campaign.

Microtesting allows you to test the profitability of a business without needing to put money and time into creating the product. If your business is a dud then cut your losses and move onto the next one. If your business model works then take it to the next step and create your product and start selling it.

The best thing about using Aweber in all of this is that those fake ‘sales’ you made in the testing phase can be turned into real sales. Instead of the person clicking the buy button and then disappearing because you are unable to sell them anything, their details are collected and stored in your Aweber service. When your product is finally up and running you can email these people and turn that fake sale into a real sale. So you $200 of testing might actually make you money in the end anyway.

This idea of microtesting is genius. Just make sure you don’t break any laws by not actually charging people or storing their credit card data and you should be fine. This is the ultimate way to test a business idea without outlaying a lot of time or money on product creation.

I have created many ebooks to sell before and never microtested them. I didn’t lose a lot of money (usually I would lose about $80 and a week to a month of my life), but by microtesting I could have saved a lot of time and saved the feeling of failure a few times over. So why not think about microtesting your idea.



3 responses to “MicroTesting – How To Test a Business Idea for $200 or Less”

  1. Tom says:

    That is a great method Ryan! I am glad you mentioned about not charge, I was wondering about that. Looking forward to hearing more about your micro test!

  2. Rick Hoffman says:

    Great incite Ryan. I have used Tim Ferriss micro testing method with Google Adwords for about two years, ever since I read the 4 hour workweek. I have used it to test and market everything from services to affiliate programs and I can attest it has worked for me. It is nothing short of brilliant!
    All the best to you, I look forward to hearing more.

  3. Jim says:

    Very good article. I’ve been trying to observe what makes products/businesses successful and I think that microtesting plays an important role.

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