So, you want to become an entrepreneur. You have a great idea for a business, and you’re really excited, because you’ve researched it, too! There seems to be a gap in the market, and you’re ready to roll.
Wait just one second.
Before you hang your shingle, I want to cover a few pointers – research methods, actually – to help you determine whether your business idea is viable.
Let’s get started.
First, research and see if you can find other examples of businesses similar to the one you’re thinking of. See if you can find people paying for the service or product you want to sell. If you can’t find examples, don’t get too excited. In fact, this might actually set off some alarm bells. It may mean other people have considered (or even tried launching) similar businesses, and failed. It may also mean it’s not something the market really wants. So find some evidence, somewhere, that people are already buying what you plan to offer.
Second, calculate your start up costs – and your long-term costs. How much will it cost you to provide your product or service? Can you make a profit on it? The value equation for determining whether your business is viable goes like this: You must be able to provide the product or service at a cost that is LESS than what your customer is willing to pay for it. If you can’t make that work, you should probably move on.
Finally – and this is the ultimate test – can you get someone to pay you for the product or service NOW before you invest a whole heap of time in setting up operations, a website, and business development? This is where it gets tricky. What people say they are willing to pay for may be different from what they are actually willing to pay for. Does this business idea have potential? Can you roll it out in scale?
Now, I’d love to continue this conversation below. Share your experiences around determining whether a business idea is viable – how did you decide? What research did you do?
Post your comments below!