Evaluating a New Business Idea – 10 Ways
Business is something anybody with enough funds and ideas can open. But knowing if this idea is worth is a major step one should take before establishing it which otherwise might even result in losing the fund and being affected with a major loss.
So, the strength of the idea you are establishing as a business is the center of the success and what would help you determine the same. It is not the size of your idea or the investment involved in the same which would determine the success or failure of the same but the strength of that idea when put into reality with the market and the consumers that you are focusing on.
Thus, let’s simply say that it is important that you analyze the business and business idea prior to the establishment of the same or bring it into reality by investing in it, not just fund but also in your time, effort, and energy. The major point of discussion in this article is to provide an upcoming or aspiring entrepreneur with a new idea to evaluate his or her idea prior to making it a reality.
The idea is something that I really aspire to do?
When we look around and take successful business entrepreneurs, we can see that they were doing what they loved and wanted to do. Most of them have turned their passion into a business idea. And this helped them stay intact with their idea and work for this with great interest and passion. They not only believed in the products and services they catered to their consumers but also worked hard to make it big and quality assured.
So, before turning your business idea into a reality, think if you like it or if your heart is in this idea or with this idea. And what is the extent to which you are able to spend or invest your time in the same?
If you have a positive heart on this then take it forward else you have to give a second thought on this and work again on this and brainstorm some new ideas or even ask yourself what you would love to do.
Am I Capable to do this?
An idea for setting business is only an aspiration or inspiration, but to make it a success you need perseverance and the ability to stick with it. Think about this and how much you can stand with it and sweat yourself for achieving what you want for getting the slightest detail of it and do the required hard work for making it a success and big.
For this, you should not just have the desire but also the skill sets, resources, network and connections, experience, and also the perseverance. And to what extent you are ready to go for acquiring all the skills and maybe the team who can help you with balancing the skill sets required for establishing, running, and even growing the business.
Does this idea equate to my personal strengths?
Now, this is another question you have to ask yourself. When you are coming up with a business idea, it should be having the strength and potential to leverage your strength and brush your weakness such that it can be turned into your strength. So, verify if there is anything matching your personal traits and also ensure if you will have to utilize those skill sets which are weak in.
In short, you should try and match your strength and weakness with the business idea. Say you are in the desire to start a recruitment agency. For this, you should ensure if you are good with people and hold the capacity to speak and take in people to the same.
How short can I describe my business strength?
This is one major question that an entrepreneur can ask and also try answering for. A person with an idea for a business, regardless of how complicated the business idea is. If the person is able to explain or quote the business idea in less than or to a maximum of 25 words, then it would increase the shine and effectiveness of such a business idea.
Say taking in the example of the recruitment business idea, I would describe the same as, “to work with companies meet their hiring and human resource placements aligning with the job description.”
The existing business in the marketplace which is closest to your idea
Answering this would help you find one vertical or existing business which you can look up to for solutions and prospects of your business idea. So, it is vital you find the answer to this.
Does your idea cater to solving a business problem?
This again helps the entrepreneur ensure that the consumer will be ready to pay for the product or service sold by him. It will be possible only if a consumer sees the prospecting eh product of solving any of his or her problems. This can also be desired, need, or want.
Creating a desire or need in the mind of consumers is not as easy as giving them a solution for a problem they are facing currently for which you came up as an individual solving the problem.
Is your idea holding the ability to take advantage or benefit of a new business opportunity present in the market?
This is a million-dollar question. Amazon, eBay, Weight Watchers all were successful because they saw the opportunity in advance ad took hold of the same before anybody else could. And this was the new opportunity in the market and desired by the consumers due to which they ran towards the company and took up their services helping not just them but also the company to increase their sales, customer base. This helped them grow in short term and grab on to the consumers establishing their brand name within.
So, analyze if your business holds the capacity to catch up with the upcoming wave or trend in the market.
Drawback held by your business idea
Like any other idea, the business ideas will also be having certain limitations and drawbacks associated with them. Identifying this is not easy but is very important and vital. So, this step focuses on identifying the limitations attached to your business idea and ensuring if the same can be resolved or mitigated.
This will help in brushing up your idea and putting perspective on your business opportunity and understanding the chances of the same succeeding or growing with the market and future.
The ease and fastness with which your business idea would help you earn revenue and profit?
This question and answer are very important as the ability of the business to generate a return are vital to ensure that your product will be accepted by the consumers and this would help you not just earn the return for what you have invested but meet the expenditure for running the business but also would assist you in growing and expanding the business taking it to the next level.
Along with this the waiting period you can afford maximum, understanding your focused and targeted consumers and the profit that might likely be earned by the entity when the revenue pitch in should also be analyzed and learned.
Analyse your willingness to mortgage or pledge your assets to acquire funds and invest in this idea.
This does not mean to mortgage or pledge your assets but to ensure the strength and compassion or belief you hold in yourself and the business idea. If you have a higher level of confidence in what you can do and make the business a success you would be ready to give up anything closer to you. But if your belief is low then the manner in which you will be ready to invest would also be below.
So, there is a risk associated with this, and if you are not ready to take this risk then this means you are not ready to start or set a business. This is because it is only with the high risk that high or any returns would come.
It is not easy to set a business because it is a lot of effort, thinking, planning, and analysis that involves which should be done before taking any decision. But the above questions would provide you with at least basic assistance to understand you as an entrepreneur and also the effect your business idea.