Whether this will be your first step into the business world or you’ve got a new venture on the cards, it’s important to assess any business idea in terms of risk and opportunity. Before you start pumping time and money into it, you need to have some idea whether the idea will work.
Here are some questions to ask yourself to test your idea out:
Does it meet genuine needs?
Sometimes entrepreneurs lose sight of this. You may want to be an entrepreneur but does anyone need or want what you’re offering? Businesses are essentially a response to a need, not just a route for you to make money.
The thing you’re providing may be cool and inventive but unless there’s a genuine need there will be no money to be made or at least not much of it.
Do you have a mentor?
Having a mentor is especially important for those new to the business world. So many people think they’ve got everything figured out and try to go it alone. However, the reality of running a business is not as simple or glamourous as some think. Having a mentor can help with advice and support.
They will also be able to ground you and keep your ambitions in check. Too many entrepreneurs want to do everything on day one. This is simply not realistic and rarely ends up working. Mentors can steer you in the right way so your decisions will do justice to your new idea.
Have you done market research?
In order to meet needs you need to find out what they are. What do potential customers want from a business like yours? What do they want full stop? Market research should be the number one thing informing your choices, not just in the beginning but throughout the business’ life.
Has this idea been done before?
The chances are that yes, it has been done before. That’s okay. Not every business needs to have a new invention like the stuff on Dragon’s Den. Sometimes the best way to meet a need is to go into an existing industry where you know the needs are already.
The obvious downside is that you’ll have competition. That’s why you need to study them carefully and find out what you can offer that they can’t.
What is your unique selling point?
Beating the competition is hard, for any business big or small. So you’ll need to decide on and market your unique selling point (USP). What can you offer when potential customers ask themselves: why go with this brand (yours) when I could go with (a well-established brand)?
What are the upfront costs?
One of the ways to assess business risks is to take a look at start-up costs associated with your idea. Start-up costs will determine how long it takes to make a profit, how much you may have to lend if you require financing and also the potential loss if the business should fail.
While you have to spend money to make money as the saying goes, it’s best to keep the start-up costs as low as possible.
For example, many people try to make a break into the business world by opening a hotel or a restaurant. These are both huge money drains with high failure rates that can end up being a very expensive attempt at starting a business.
Can you patent your business?
If you can get a patent for your products this will stop people from simply copying your ideas. Bigger businesses do this all the time, using their well-known platform to swallow small businesses whole by taking most of the customers.
The more protection you can get for your business from the competition the better chance you have at keeping ahead of the competition.
What stage are you at with your business idea? Have you asked yourself the above questions? Let us know your thoughts.