How do you test a business idea?
You don’t want to invest time and money on a business idea unless you’re sure that it’ll get traction.
You’d be able to throw everything into it if you knew that it’d be successful when you launched, but it's very hard to feel committed while you’ve still got nagging doubts that it might not work.
In his book the 4-Hour Workweek, Tim Ferriss shows how to test a business idea using Google Ads...
You build a website that talks about your idea as if it already existed. The website provides a way for people to buy the product or service you’re evaluating. It's got headlines, text, pictures etc.
- If you’re selling a product either downloadable or for physical delivery, you’d have an order from with card details and a buy now button.
- If your idea is for a SAAS, you’d have a pricing grid and a signup form for a 30 day trial.
- If the business is offline you’d have an enquiry form.
Then you use Google Ads to send potential customers to the website.
When they hit the buy now button you don’t actually charge their card. Instead you show them a page that says you’re not able to complete their transaction and reassure them that you’ve not charged their card.
It’s more or less the same if they’re signing up for an account or filling in an enquiry form.
You track how many test purchases, signups or enquiries you get and use that to decide if it’s worth going ahead.
I recently did this for a client of mine.
He’s been an immigration adviser for decades. He’d come up with a brand new approach to pricing and delivering his services. He had to know it was a safe bet before changing everything.
I built a website with an enquiry form and an Goole Ads campaign. The campaign sent people who Googled for things about immigrating to New Zealand to the site.
78 people filled in the enquiry form during the test. He did something a little different. Instead of showing the enquirer a "sorry can’t help" message he called them. He talked about what they wanted and how the service would work.
The number of enquiries and the conversations he’d had made him comfortable that the idea had legs.
I paused the campaign for the moment. We’ll reactivate it when he’s ready to launch and he’ll have an almost instant supply of clients for the new business.
The test must give trustworthy results.
A false positive will trick you into wasting time and money on something that’s never going to get traction. A false negative will kill what could have been a fantastic business.
Poor execution is the main cause of false negatives. Think "The way we did the test didn’t work." Rather than “The business idea won’t work."
It is true that many people build their own Google Ads campaigns, but this isn’t the moment to starting learning. Evaluating the idea you might spend the next few years on is too important to risk by messing about with your first DIY efforts. This is the time to ask for help.
Stopping the test too soon can give false negative or false positive answers.
You need to send enough people through the website and conversion process to get a solid answer.
If 10 people visited the site and 2 signed up you’d have a 20% conversion rate. 10 people is too small a sample to make this a reliable test.
If 10 000 people visited the site and 2 000 signed up you’d have the same 20% conversion rate. The test is much more reliable because the sample size (10 000) is bigger.
Extrapolating across traffic sources can lead to false positives.
Assume you test by advertising on Google search like my client did. We showed his ads when people searched for “new zealand immigration advisor”, “new zealand immigration requirements” etc.
The searcher starts the process. The words they use suggest they might be considering immigration.
His future plan might be to advertise on the Google display network, Facebook or Instagram. Those ads are passive. You’re doing something else and there are ads interrupting you. You might click if you’re curious.
Curious visitors behave differently to active visitors. My experience has been that the conversion rate (number of sales/signups/enquiries) from curious visitors is much lower.
There is no way you can safely say - I’m getting 5% signups from Google search so I’ll get the same from all traffic to my site.
This is not a problem if there are enough people using Google to look for what you sell, but if you need more than what’s available there you should consider a second test to look at the conversion rates from other advertising.
I offer 1-to-1 mentoring and consulting. You’ll get help, advice, support and answers without having to commit to a long-term contract. Details here.
Related articles
Most Google Ads advice is wrong for small businesses A small account needs a different setup and different management. You see, something that improves a $50 000 a month account might tank a $500 a month account.
Why you might want to pay Google to show an ad when someone searches for your business. It can sometimes be useful to pay Google to show your advert when someone searches for your business by name. Here's why and how...
Why we lost sales. Losing potential sales always hurts. But, if you know why you lost the sale you can make changes that'll help you win more sales down the line.
"Forget about reducing the CPC" In money terms my client paid Google about $1 400 per client he contracted with. He could live with spending $500 per new client. Here's how we're going to hit that target.
What to do if leads don't answer when you call. Last month a client got 4 150 leads but their sales team was unable to contact 1 277. Here's how we're going to reduce the number of non-contacted leads and help the client make more sales.
An easier way to sell services. Bigger value projects take a lot of work to sell. You have to have the discovery calls, meeting notes, customised proposals and quotes. And, you often need several follow-up meetings. There is another way.
Why I don't just delete fake leads from my inbox If the only thing you do with fake leads from Google Ads is delete the lead delivery email you risk getting swamped by fake leads. Here's why and what to do to improve lead quality.
Leads ghosting you? A business owner complained that his leads were ghosting (ignoring) him after initially showing interest. As we worked together we uncovered a mismatch between lead temperature and his response.
60 leads a week and no sales Their first instinct was to change the adverts. It sort of makes sense. Adverts aren’t producing sales so the adverts must be broken. Fix the adverts and you'll get more sales. But, they could change their ads, spend a load more money and get no sales. This is because the adverts might not be the real problem
About 25% of online leads are lost before they speak to a sales person. Losing 1 in 4 of possible sales before the process even starts is a huge waste. It's also a huge opportunity...
A warning about Google Local Service Ads for doctors, lawyers and other professionals I investigated using Google Local Service Ads for a law firm client. Turns out that there are some privacy issues which were of concern. They may be of concern to you too.
The one number you must know if you're going to use Google Ads to generate leads. How much can you pay for a lead and still be profitable? It is obvious, and it should be advertising 101, but I've lost count of the number of people paying Google who don't know the number.
Ever get to Friday and feel like you’ve accomplished nothing? That's been me for many months. I’ve been busy but not productive. I've felt burned out, tired and bored. This all changed after I implemented time blocking.
How do you get value from "low quality" Google Ads leads? One kind of "low quality" Google Ads lead is a genuine enquiry for something adjacent to what you offer. Here's how I helped one client make sales to them.
Do I really need 7 websites? Two groups of people visit your website: people who know what you sell and strangers who don't know you but want what you sell. One website can't serve both groups effectively.
Does PPC work for accountants? The short answer is “Yes, but only sometimes”. Google suggests that AdWords will work for any business but this is not true in real life.
Google Ads for industries with long sales cycles A client installs billboard size video screens. Here's how we used AdWords to get him in front of the decision makers early enough.
How much is a Facebook like worth? I've just run a quick calculation and can confidently say that a Facebook like is worth $0.007. Let me explain
"I have no idea if his recommendations will increase my conversions..." A friend is trying to hire someone to manage her Google Ads. She's worried that they'll cost more than they bring in. Or, worse, they'll kill the flow of leads her business depends on. Here's how to reduce that risk.
Is AdWords scaleable? There are a finite number of people who want what you sell, can afford what you sell and are in an area you can reach. Some portion of those people will use Google. That number is the upper limit of AdWords scaleability.
Is AdWords worth it? "Is Google Ads really worth it? I have found that through tracking my CPC, I am not having that much success." was asked on Quora. My answer saved below.
Nobody is buying! Can’t you write better ads? Nobody is buying! Can’t you write better ads? That's the last thing you want to hear in a meeting with a new client...
Selling to strangers is different Ask 100 small business owners how they find customers and 99 of us will say "word-of-mouth". What we won't tell you is that our word-of-mouth marketing is not well tuned engine that spits out a steady stream of great prospects. They arrive by luck or magic.
Should I use my competitors' names as keywords in Google Ads? Should I use my competitors' names as keywords in Google Ads? The answer is, it depends. Read on to find out how to make the right decision for your business.
The cost of zero. Every small business owner needs to understand the cost of zero before they next invest in marketing. It does not matter what medium it is: Google Ads, Facebook, LinkedIn, magazines, radio, or anything else. The reason these campaigns fail so often is never as obvious as you might think.
Things you should never advertise on Google. Making money advertising identical branded goods on Google is really hard.
Which are the specifically right targets for a small paper pallet company? This question was asked on Quora. Saving my answer here.
Will Google Ads work? Thinking about advertising on Google? There are thousands of people who've used Google Ads and never made a sale. You don't have to be one of them. Read on to learn how.
Zombie Hunting Wednesday 3pm. You in? We’ve all got zombie leads. These are people we’ve quoted who haven't said yes. They haven’t said no either. Instead they’re ignoring us - our emails go unanswered and they’re always too busy to talk.
I can’t get to the decision maker. "I‘ve got a great product but I can’t get to the decision maker." That’s a problem we smaller business owners face a lot. Can I tell you about how a former client of mine got the decision makers to come to her?
How do I know which of my leads came from Google Ads? Here's the problem... Conversion tracking or analytics can tell you how many leads you got, but not who they are. Read on to see how to fix this.
How to turn leads into sales. Two businesses in the same industry. One converts 5% of website leads into sales. The other converts 60%. Read on to find out why.
Make more sales from PPC leads by understanding why people enquire. Understanding why people buy is key to making more sales. Here's how you can get started right away.
Marketing Lessons from a Chimney Sweep There was nothing special about his customer-finding system. But, his customer-keeping system was the best I've ever seen for a small business.
How we turned no-shows into $185 150 worth of new business every month No-shows cost my client $283 328 a month. Here’s how we turned them into $185 150 worth of new business every month - without spending more on Google Ads.