One of the most pertinent questions to ask once you have a new business idea is also quite simple:
Has someone else already tried it?
If they have tried it already, what happened?
Often, it is tempting to believe that any new business idea you have will be an overnight success. However, if the idea is a really good one, it is highly probable that other people have already tried it. It is worth checking first, to see what the results were for these early adopters, and if they failed, what the causes were behind their failure(s). If the causes included poor execution of a great idea, then perhaps the idea is still worth exploring further. Nevertheless, superb execution of a poor business idea can still lead to failure or only minor successes, so it is important to understand the historical background of your business idea first.
If they have not tried it already, is it worth being the first?
If your business idea has not been tried before, then other questions will (and probably should) be asked. Do you have the broad business experience, or access to others with that experience, to make the new venture succeed? What assumptions is the success of your business idea predicated on? Do you have alternate plans when some of these assumptions turn out to be mistaken? Are you prepared to sell potential investors on your new idea, when there is no history of success by others in the same field? How will you handle competitors who reduce the amount of your sales, revenues, or market share? Why should customers favor your product or service, and what steps will you take to ensure that they continue to do so? Being the first to have a new idea is important, but the business environment will probably change quickly. What preparations have you made to handle these changes?
If they tried it and are successful, why should anyone choose your business instead?
If the business idea has already been adopted successfully by others, that is great– there is proof that it can be a viable enterprise. Still, this creates other concerns. Does your plan involve luring away other customers from existing firms? What are likely to be their responses– and can your business survive them? If you are targeting completely different market segments, how can you be certain that these customers will find your offer attractive enough to accept?
In other words, while a new business idea can be exciting, you should strongly consider what the historical results have been for similar firms with similar ideas. Then, if you can not find a way to achieve better results, it may be worth going in a different direction, instead of backing a losing effort.
Copyright 2010, by Marc Mays