So you’ve had that a-ha moment, and you’ve got a business idea you’d like to put into action. Now, you want to know whether it’s a good concept to pursue or not. There are a few main points to consider when evaluating your business idea.
1. The Who, What, Why and How of your idea
Every business has a why. Why did this idea come to you? Perhaps you were experiencing a certain problem, and this idea was the solution to it. Or maybe you’ve had several friends mention a difficulty they face, and your idea addresses that. Sometimes, it’s just passion that sparks a business idea – and that’s valid too! Whatever it is, there must be a why. Stemming from this, you must outline the what, how and who. What is your business idea? How will you execute this idea? Who is your target customer? An idea that doesn’t address any of these questions is unlikely to come to fruition. Really take the time to map out the purpose of your business, your target audience, how you aim to achieve your objectives and why you would like to pursue this. Document these findings and add to them as you continue to brainstorm.
2. Talk the Talk
Now that you’ve documented your framework, it’s time to talk to your “who”. You should have an idea of who it is that your business idea will target and what problem you are addressing for them. Have discussions with as many people as you can that fit into your target audience, or that may experience the issue you are tackling. If your business idea is a pet-sitting service, talk to everybody you know that has pets. Do they need a pet-setting service? Would they use one? How much would they pay? Have they tried existing pet-sitters? What did they like or dislike about them? Go into as much detail as possible and really hone in on their experiences, attitudes, behaviours and beliefs. This will help you develop a product or service that people actually want and need, based on real conversations and real research.
3. Put it to the Test
Develop a prototype or rough model of your idea and how it will work. If your idea is a product, try to make your prototype as high quality as possible, or as close to your ideal “end result” as you can. If your idea is a service, recruit some test subjects to provide your service to, with as much professionalism as possible, as if they were paying clients. Afterwards, ask them for as much feedback as possible. Delve into what they did or didn’t like about your product or service, and why. Welcome and encourage constructive feedback – you don’t want to surround yourself with “yes” people at this stage – you want people to give their real, honest feedback so that you can grow and learn. Think about what you felt went well or poorly, and any improvements or changes required. Then implement those changes.
4. Money Talks
Businesses aim to make money. For your business idea to be a good one, it should at some point make you money. It’s important to price your product/service profitably – at a price point that people will be willing to pay, and that covers your costs and a profit margin. If there are any similar businesses in existence, have a look at their pricing structure and how yours measures up. Think about all the costs that will be involved with running your business, how many sales you’ll require to cover these costs, and whether the entire project is financially viable. Setting pricing with profit in mind from the outset is crucial to business survival. If you have done your research and find that the market’s price expectation is lower than what you need to charge to make a profit, then go back and look at your supply chain. Can you change the material? Negotiate a better deal with your supplier? Bring your freight costs down? Streamline your administration so that your service delivery time is reduced? Taking your time to make your costings as streamlined as possible now, will help to position your business to thrive in the future. Don’t rush this part, and don’t launch until you know that your product/service will be profitable.
Once you’ve explored the four points above, you should have a reasonable analysis of whether or not your business idea is a viable one. Working through the points above is likely to have given you a sound framework for your project, and exposed areas for you to concentrate on to make your business a success.
Remember, you don’t have to be the first to market, or the cheapest to have a successful business. Your quality of service, brand story, product features etc can help differentiate you from your competitors and make you stand out. Get in the habit of constantly seeking feedback from your ideal customers – tweak your processes to make it easy for them to buy from you and design a customer experience that will make your customers love your brand and want to rave about it to others.
Now the fun begins! Put your plans into action and turn that dream into a reality!