Is Your Business Idea Viable?

Many small businesses start out as hobbies.  People find what they are passionate about and turn them into a start-up in a flush of enthusiasm.  Enthusiasm, although it is important, isn’t always the best ingredient for business success.  The most important thing when starting up a new venture is to find out first and foremost if there is a demand for the product you’re looking to sell and if it’s at the right price point that people will actually buy it.  Unfortunately, not all fantastic ideas actually become thriving businesses.  Even if you’ve thought of a superb product, you need the right business model in place, funding, marketing and a strong team to put your plan into motion.  So how do you know if your idea is worth pursuing?  Once you’ve gone through the brainstorming stage, it’s time to find out whether your business model is viable or not.

Before you worry about financing and the pitfalls of a new business, make sure your idea is unique.  That doesn’t mean you necessarily have to invent something completely new, it just means that you have to set yourself apart from the competition.  “The most successful businesses have a strong, unique concept and a clear identity.”  Take the time to define yours.

Ask yourself if there is indeed a market for your idea.  The first step to determining whether your business idea has potential is to carry out extensive market research.  You need to establish that your target market is big enough to make a go of your idea.  Many ideas have failed because business owners didn’t do their homework.  “Not only do you need to work out whether there is sufficient demand for your offering, you must also determine what marketing, pricing and business model will work for your target market.”  To do so, you need to find out as much information as possible about your potential clientele.  Who are they?  What are their needs?  Where do they shop?  What are they not finding that they need?  How much disposable income do they have?  Would they be repeat shoppers?

Is your business recession-proof?  Will it still succeed in times of economic hardships and the lack of income your customers might face?  While no business is secure in hard economic times, do your best to ensure that it is.

Does your business add value to the marketplace?  People tend to do business with those that can improve their quality of life – people like to buy products that make things easier for themselves.  Stay away from “get rich quick” schemes and think about ideas that add value in the long-run.

Make sure your business is expandable and can grow with the times.  While there’s nothing wrong with starting out small or even working from home to save costs at the beginning, think of the bigger picture and where you want to be down the line.

Is there a way out if things don’t go according to plan?  Can you scratch your idea and reconstruct it so it’s viable?  Make sure you’re able to sell or successfully close any small business you consider starting.

While there’s always risk in starting up a new venture, make sure your idea isn’t too risky.  “You don’t want to get wiped out emotionally and financially because a business is just too risky.”  A viable business should not “break the bank” from the get go.  Think about your ideas and the risks involved thoroughly before embarking on your journey.

Do you have enough money to last until your business is profitable?  If you think your business will bring in a strong RIO once it’s established, you still need to make sure that you have enough money at the beginning to make a go of your start-up.  Think of working out a cash-flow forecast to see how much money you’ll need to get started.  You might need to rent office space, take up contracts with vendors, employ staff and pay salaries, put money towards marketing and advertising, etc.  “In addition, you’ll need to able to cover your operational costs and your own personal expenses for quite a few months before you break even of turn a profit.  If you’re borrowing money, you will also need to be able to make the interest payments when they fall due.”

Most importantly, remember that timing is crucial.  Are you entering the marketplace at the right time; at the time there is a need for your product?  Is your business seasonal?  You wouldn’t want to open up an ice cream shop in the dead of winter.  Open at the time when there is the strongest need for customer demand.  This will allow you to burst out of the gate with a flood of new customers who will likely come back for more.

Lastly, ask yourself if you have what it takes to turn an idea into a viable business?  You need the right attitude and skill set to make your idea a success.  Setting up a business is an enduring challenge that takes hard work, planning and foresight.  The success of your idea hinges on your ability to see it through both the good and bad times.  “Your idea needs to be something you’re passionate about and you then need the skills, drive and belief to make it work.”

Here are some articles you might want to check out to see if your business idea is indeed viable:

“Is Your Business Idea Feasible?”: http://www.smarta.com/advice/starting-up/business-ideas/is-your-business-idea-feasible

“Is Your Business Idea Viable”: http://www.entreserv.com/blog/2012/02/03/is-your-business-idea-viable/

“Is Your Business Idea Viable”: http://bradfordkickstart.wordpress.com/2012/05/28/is-your-business-idea-viable-2/

“Is My Idea Viable?”: http://blog.score.org/2012/bryan-janeczko/is-my-idea-viable/

Until next time…