This is it. After months spent brainstorming, you’ve finally got THE business idea. Your mind is buzzing with excitement. You’re ready to start your business and start earning profit. Before you push ahead with this business opportunity, stop and think carefully. Could this idea make or break you? Answer these four questions to find out.
Is the business plan profitable?
Good business ideas generate healthy profits but keep expenses low. There’s no point in generating massive profits if outgoings wipe it out. Remember, no one expects a small business to generate corporate-style profits overnight. A reasonable business plan shows steady growth at a sustainable rate. A bad plan shows heavy losses, meaning you won’t qualify for a business loan or even a business grant.
Is the product or service viable?
“Why didn’t someone think of this sooner?” you ask. Because it doesn’t work. To make sure your service actually works, find a focus group. Signing a non-disclosure agreement means they can’t share your business ideas, so don’t show or say anything until the contracts are signed. Listen to their feedback and take everything onboard. They might say your product doesn’t work or isn’t necessary, so prepare yourself for some tough criticism.
Cost is another important factor. People won’t buy if they can’t afford it. Balance cost with frequency of use. They’ll accept a higher price if they don’t have to buy it often. Scope is another aspect to assess. Focusing on selling only one service is a great way to show your expertise, but it’s risky. Your service could be badly affected by demand, legislation, even seasonal changes. Cover yourself by making sure your business ideas have room for expansion. Then you’ll be in demand all year no matter what happens.
Can you handle the competition?
Assess the competition from top to bottom. See what makes the big boys big and pinpoint what keeps small businesses small. Be realistic. There’s no reason not to aim high, but first pass the little guy. Then you can build your brand from there. If competition is too intense, consider finding a niche the others have missed. There must be a target market out there they’ve overlooked.
Can you name your target market?
Naming your target market includes factors like background, age, gender, and income. You’ve got several business ideas, but who are you aiming for? No product or service in the world pleases everyone, which is why you should focus on a small group, for example, a baker might specialise in cakes instead of all baking products.
Why else should you target a niche? For financial and marketing reasons. Advertising is expensive, so targeting a large group would quickly wipe out your profit. Identify who will buy your product and focus solely on them. The jack-of-all trades attempt doesn’t work, especially not in the business world.
If you answered, “Yes” to all four questions then you’re ready to start writing a detailed business plan. Clearly your research and product testing paid off! There’s a market for what you offer and healthy profits are coming your way…If you answered, “No” to any of these questions, don’t worry. Do the necessary tweaking and try the test again. A good business idea should fulfil these four points, so if yours completely fails then go back to the drawing board. There’s more work to be done.