For start-up companies or established companies looking to launch a new product or service targeted towards businesses, be sure it passes the B2B sales test.  At a high level, this test is basic – it looks at:

  • What are you selling
  • Who will purchase it
  • Why are they going to buy it
  • How much are they willing to pay for it

You need to have solid answers to all four questions in order to pass.  Too often companies go down the road of product commercialization without keeping the end in mind – the “end” being sales.  We have seen in the past a number of firms spend countless hours and dollars developing products that simply don’t meet the needs of the market – they didn’t follow the basic criteria in passing the B2B sales test.  In some cases the product or service could be:

  • Over engineered
  • Too expensive
  • Not a good fit for the target market
  • In a highly competitive landscape with many direct or indirect competitors
  • Service too small a market
  • Be a nascent technology with commoditized pricing

In one example, I saw a firm develop a product they thought could have potential in the digital products market. This was after reading a few articles in the paper and from other online sources as their due diligence.  They then proceeded to spend time building fantastic looking excel models showing market and revenue potential and informed their Board on the opportunity.  On one end, they were right. The product they produced, which is a component used by digital products manufacturers, was clearly a superior product and could be a fit.  The challenge they faced was that although there was a fit, the price the customer would have to pay for the product would inflate the cost to the end consumer and make them less competitive. The improvement in the end product’s final quality was simply not enough to justify a price increase.

Don’t get caught up creating Excel models and building hockey stick curves on paper – working in a startup, you need to identify tangible opportunities that can be easily identified, targeted and solicited. Start with the four basic B2B sales test questions. If you successfully pass the B2B sales test, then you can go further into performing due diligence.

At Venture Accelerator Partners, we use our Sales & Marketing Fast Start Plan as a way to gauge the potential market opportunity for a client and their product/service.  Whether you are client of ours or not, feel free to take a look at our Sales & Marketing Fast Start Plan as a resource.

What does your B2B sales test look like?

If you are in need of some assistance identifying the market opportunity for your product or solution, feel free to contact me.

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