How to Evaluate a New Business Idea
As with many entrepreneurs who are great ideas people, an idea starts on paper but cannot always become a successful money-making business without proper consideration and without first taking the necessary steps to make sure that it is not just another pie in the sky flop.
Start-ups and small businesses need to make sure that, before they commit to heavy marketing plans and paying out money on websites and other such expenses, they assess whether there is a market for their idea and whether they are capable of pulling it off. The desire to be successful is great but it does not guarantee that your business will take off.
Good management and marketing skills are essential and so it is wise to see what help is on offer to those of you who have no experience in these fields. Planning is paramount and some small businesses fail because they have just not thought ahead and planned properly for all eventualities.
Let’s consider some things that Tom and his mate down the pub need to discuss:
o is there a market for their product/service? They should carry out extensive research into this.
o what kind of competition are they up against? Every business has competition and they need to be aware of who is doing what and whether they are doing it better and more cost effectively.
o will the product maintain its appeal when fads and fashions change and, if so, are they ready to diversify if need be?
o how useful is their product or service? Will anyone really want to buy it if it’s quirky but of no use whatsoever?
o is their product or service unique? How can they offer something over and above their competitors and what is going to be their unique selling point (USP)?
o will a sale generate repeat or further sales? Building a client base of repeat customers is a sure way to build a business. These loyal customers will not only buy more but could also help to grow the business through referral marketing.
o is the product safe enough to be on the market? If it’s a manufactured product then it must comply with regulations and these must be adhered to.
o have they got a plan B if it fails? Plan Bs often work better than As and it’s important not to put all their eggs into one basket.
Lots of great business ideas are not actually completely original so if you can take a tried and tested product or idea that has worked well and adapt it in your own way to put a new spin on it, then this can work brilliantly.
No it’s not cheating! Tom and Dave really do need to sit down and get some business advice before they rush headlong into anything and this can be obtained through many local organisations and funds. Research it, plan it and then research it some more.