Most business ideas are tested the wrong way round: someone picks a price that feels right, imagines the customers, and only later finds out what it all costs. Testing an idea well starts with the costs and works forward to the price, the sales it takes and the cash you need. You can do it in an afternoon, before you spend any real money.
1. Say exactly what you sell and how you’re paid
“Cleaning” or “candles” isn’t specific enough. Write down what one sale is: a job, a session, an hour, a monthly client, an item, an order. Everything else is counted in that unit, so it’s worth getting right. If you’ll sell more than one thing — a service plus products, or one-off jobs plus monthly plans — list each one and how it’s charged.
2. Cost it out before you price it
Put every cost into one of three groups:
- Costs of each sale: materials, supplies, travel, helper pay, packaging, platform and card fees.
- Monthly costs you pay however much you sell: insurance, software, phone, vehicle, rent, marketing, loan payments.
- Startup costs paid once: equipment, first stock, licenses, website.
Use real quotes where you can. A guess is fine to start, but mark it as one — the guesses are where a plan usually goes wrong.
3. Work out the price that pays you
A price that covers costs isn’t enough if the business is meant to be your income. Add the pay you need, before tax, to your monthly costs, share that across the sales you expect, and add the cost of each sale. That’s the minimum price that pays you. The break-even guide explains the arithmetic step by step.
4. Check the sales against your hours
Divide your monthly costs and pay by what each sale leaves after its own costs. That’s how many sales a month you need. Now check it against your week: selling, quoting, admin and travel take time too. If the sales you need don’t fit in the hours you have, the price, the time per sale or the plan has to change — or you’ll need help, which adds cost.
5. Count the cash to get through the start
The cash you need is more than the startup costs. Add:
- the months while sales build up and don’t yet cover your costs and pay;
- money waiting in unpaid invoices if customers pay you weeks after the work;
- stock you buy before it sells;
- a cushion for a slow month or a broken tool.
6. Test demand with real money
Friends saying “I’d buy that” isn’t evidence. Sell a small first batch, a few first jobs or a paid trial at your real price, to people who match your customer. Decide your pass mark before you start, so the result can’t be argued away.
7. Decide: go, adjust or stop
If the price that pays you is in line with your area, the sales fit your hours and you have the cash, you have a case to go ahead — with checkpoints for the first 90 days. If not, change one thing at a time and test again. Stopping before you spend is a good outcome too.
Not sure which business to test yet? Explore business types. Weighing up a franchise? Evaluate a franchise against going independent.
This guide is general information, not financial, tax or legal advice. See our disclaimer.