How To Test Your Business Ideas

How To Test Your Business Ideas

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Taking deliberate diversions on the road to achieving success can help you avoid the kind of catastrophic failures that can result in financial and personal ruin. Slowing down and altering your course rather than bulldozing your way towards a goal, a process of zigging and zagging, not only helps achieve business success but ensures if the idea fails, it fails ‘efficiently’.

Here are four tips to zigzag your way to success.

1. Think profitability first

New ventures begin by driving towards profitability. Think about the fastest way to get to profitability, even if it’s a slight diversion from your overall goal.

When deciding a set amount of resources you’re willing to risk towards the venture, whether it’s a new business or trying out a new idea within your company, devote 65 of that capital towards the drive to profitability, 25 towards resources including staff and 10 towards scale.

2. Make failure efficient

If profitability isn’t achieved within the determined time frame, which is typically three months, the business idea becomes a failure, although an ‘efficient’ failure. Every business’s time frame will be different depending on how much you’re willing to invest in the venture.

What you don’t want to do is spend a year, five years, or even ten years chasing an idea, then give up and have wasted all that time and resources. If you don’t get to profitability right away, at least you haven’t spent a ton of money and years of dedication.

 

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3. Set your focus on goals

After achieving profitability (the first zig), take your business venture on its first zag. Allocate 65 of resources to staffing, structures and procedures, 25 to scale (expansion or franchising) and 10 to profitability. Zigging and zagging continues using this 65/25/10 resource allocation model, rotating through profitability, resources and scale, throughout the life of the business.

4. Slow down

While following the zig zag principle might mean you’ll take longer to achieve your end goal, by setting clear goals on the amount of capital, time and people devoted to the venture, businesses are provided with greater stability and the slower speed may even reveal pleasant surprises.

You might even find hidden nuggets of gold along the way that turn into better business ideas than what you would have found if you’d simply charged toward the goal.

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Lisa Evans
Lisa Evans is a health and lifestyle freelance journalist from Toronto.