Test a business idea before making large expenditures: describe the offer, show it to a selected audience, and find out whether people are ready to pay. Collect feedback and refine the product based on the test results.
For comparison, consider a service based on a skill you already have, pre-orders, a small product range, or a digital product. These are options to test. For each one, calculate expenses and estimate the need for working capital.
Four formats for testing a business idea
A service based on a skill you already have
You sell your time and expertise using tools you already have. Write down what service you can provide, which tools you already own, and what direct costs are associated with the work.
Pre-orders for a product
Pre-orders can help assess demand before a product is released. If fulfillment is delayed, notify customers: failing to notify them about a delay may lead to order cancellations and refund requests.
A small product range
Before placing a larger order, make a small trial purchase from a supplier. Check product quality and delivery speed. Decide the order size for your own test; there is no fixed quantity that suits every business.
A digital product
A digital file you create can be sold repeatedly. Prepare a clear description of what the customer receives and why it is worth buying. Show the product to a selected audience and make changes based on feedback.
Compare formats against your own resources
For each idea, prepare a short working sheet. Fill it in according to your own circumstances:
- What exactly are you offering the customer?
- What skills, time, and tools do you have to fulfill an order?
- What direct costs are associated with the product or service?
- What ongoing expenses do you need to account for?
- When will you need to spend money, and when do you expect payment?
Test your offer and initial orders
Describe the product so the customer understands what is being offered and why it is worth buying. Show the offer to a selected audience, collect feedback, and refine it.
The key question when testing demand is whether people are ready to pay. For your own test, record feedback and orders received separately. Compare these records when deciding what to change in the offer.
Separate direct and ongoing expenses
Separate direct costs for the product or service from indirect and overhead expenses. For a product-based model, calculate gross margin:
Gross margin, % = (net revenue − cost of goods sold) ÷ net revenue × 100.
This is a partial calculation of the business economics. Separately account for ongoing expenses relevant to your model: marketing, delivery, storage, software subscriptions, and labor costs. These are included in the operating margin calculation.
Estimate your working capital needs
Profitability does not guarantee that you will have money available to operate. Funds may remain tied up in unsold goods or overdue customer payments.
In your working sheet, compare the timing of purchases and other expenses with the timing of expected payments. Separately note funds tied up in unsold goods and payments you have not yet received. Review these records before your next purchase.
Track your entire product range in one way
You can use a spreadsheet, notebook, or app for simple inventory management. Choose one method and use it to track all products. Avoid selective record-keeping that leaves some of the range unrecorded.
Tracking a test product range in Torgsoft: “Goods Movement” mode
If you use Torgsoft, you can review the transaction history for products in your test range in “Goods Movement” mode.
For a selected product, the mode displays its movement across the entire retail network from the start of record-keeping. The ability to view transaction history is described on the Torgsoft inventory management page.
Check legal requirements before launch
Before launching, check the legal requirements for your specific activity using official sources. On the Diia portal, you can register as an individual entrepreneur and choose the general or simplified tax system.
What to check before your next expenses
- Is the offer clearly described?
- What feedback and orders did you receive during the test?
- Have you checked product quality and delivery speed?
- Have you separated direct costs from indirect and overhead expenses?
- Have you accounted for ongoing business expenses?
- How much money remains tied up in unsold goods and unreceived payments?
- Is the entire product range tracked using one method?
Official source on individual entrepreneur registration
Diia — automatic individual entrepreneur registration.
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