How do I know whether my business idea is viable?
How do I know whether my business idea is viable?
The success of your idea will depend on many factors. These include:
- The strength of your idea and how well it fits your temperament.
- Whether you have the necessary entrepreneurial mind set.
- How well you plan for your success.
- What resources you have at hand to develop the idea into a successful business.
In this answer we will restrict ourselves to the evaluation of the idea only. To evaluate your idea we suggest you take the steps below.
Conduct market research
Firstly, consider the following statements:
A good business idea is a solution to a customer’s pain or problem, or it fulfils a customer’s desires.
A profitable startup business emerges from a good business idea if the entrepreneur executes the idea successfully.
Put simply, for your idea to be viable there must be demand for the product or service you have thought of. However, it doesn’t matter if there are hundreds of businesses already doing what you are thinking of doing. What is important is that your new business can capture a reasonable share of the market by doing something better or different.
However, the first thing you must do is to see whether your idea can “fly”. To do this you must undertake market research.
Market research is a large topic and we suggest for more on this you should see FAQ 1.6 https://www.freeforumofideas.com/faq/6-how-do-i-carry-out-market-research-on-my-business-idea/.
Identify your idea’s unique selling point (USP)
If you offer something new or different you will persuade customers to buy your particular goods and services. This is your unique selling point or USP.
The question is do you have an effective USP? Do you have an idea for something completely new? Or is your idea to do differently something that already exists? Remember you don’t have to be first into the market. Ultimately, being slightly different or better may be good enough.
For more on USP please see FAQ 1.8: https://www.freeforumofideas.com/faq/8-does-my-business-idea-have-to-be-new-or-different-for-it-to-be-successful/
Does the idea suit my skills and personality?
Importantly, the business that evolves from your idea must be something you believe you can do personally. Also, it should be something you want to do. It must suit your personality and it helps if you are passionate about it. However, if you aren’t passionate about the idea itself, it may still be a good idea. Although it might not be a good idea for you, but may be for someone else.
Is the business idea easy to explain and understand?
A good business idea can be explained in less than 25 words. However, if it requires many more (and 20 white board diagrams) it is probably too complicated. Also, you might not be able to executed it. Consequently, I suggest you cut the analysis of the idea to its essentials and describe it in 25 words only. Does this make the idea clearer, or does it reveal a fatal flaw or weakness?
Does the idea have a fatal flaw?
You should now consider whether your idea has some major fatal flaw or weakness. Examples of these are:
- Being easy to copy, or
- Requiring a long and costly phase of research and development.
- Not solving a customer demand or need.
By thinking long and hard about the potential drawbacks of your idea, you put your business opportunity in perspective. If the positives far outweigh the worst-case scenarios, there is a pretty good chance that your idea will succeed.
You are now getting closer to knowing the answer to the question: How do I know whether my business idea is viable? However, there are still a couple of steps to take!
Rethink the business idea
You might after conducting your research believe your idea won’t work because, for example, it has an obvious flaw. You should now consider whether you can make it work by some fine-tuning. After all, there was a good reason you thought of that idea in the first place. Therefore, it should have some merit.
Ideas evolve and improve. Consider how Facebook started and where it is now after many changes. Whereas some ideas seem like duds, they end up being a great success after undergoing a little tweaking.
Can I deliver or execute the business idea?
Ideas have to be executed by the entrepreneurs behind them. However, this requires entrepreneurial ability: see FAQ 2.1 https://www.freeforumofideas.com/faq/1-what-are-the-personal-characteristics-of-a-successful-entrepreneur/.
Execution also requires some basic business skills: see FAQ 3.4 https://www.freeforumofideas.com/faq/4-what-are-the-basic-survival-skills-you-need-to-run-a-business/
Of course, developing a successful business also requires the financial and physical resources necessary to start up and sustain it.
So, have you thought this through and are you convinced you can execute the idea? But, will it make any money?
Will the idea make money?
You should now consider whether your idea will make money.
Once you have analysed your idea and decided that it has a good chance of being a success, you will want to take things to the next stage. This will involve drawing up a business plan, which includes a profit and loss forecast. These forecasts will help you decide whether you are likely to make any money from your idea.
Perhaps now you can be confident that your business idea is viable? It might be worthwhile, however, reinforcing your belief that you can be a successful entrepreneur. To do this I suggest you go to: https://www.freeforumofideas.com/blog/i-have-a-good-business-idea-but-i-havent-got-an-idea-about-business/
Business Idea analysis
You can have your business idea analysed for free on this website by going to: https://www.freeforumofideas.com/free-help/business-analysis-form/
Finally, you can see some good business ideas at: https://www.businessnewsdaily.com/2747-great-business-ideas.html