You’ve got a business idea but aren’t sure if it’s feasible. What you need to do is test the concept to see how it stands up to a series of rigorous questions.
- What is my customer profile?
Maybe your product or service idea seems like just the right solution for you, but can you identify a clear customer base beyond yourself? Ask what your customer’s biggest pains are and how your product might help resolve them.
- What am I replacing?
Whatever your idea is, someone out there is buying something else in its place. Ask yourself what makes your product compelling enough to replace what’s already in the marketplace. You could also look at your target customers’ spending habits and consider how you could get them to buy your product instead of something else.
- How do I demonstrate this idea to others?
Make your business idea as tangible as possible. That might mean developing drawings or a working prototype. By figuring out how you can easily represent your idea to others, you’ll start to see how much footing it has.
- Who will I need on my team?
Figure out who you can turn to for honest and informed advice about your ideas. Then think about whose brainpower you want on your side — whether in product development, marketing, IT or another function. Find a way to approach such people to gauge their interest in getting involved.
- What resources do I need?
Make a list of all the key assets you’ll need and figure out whether you can obtain them before you invest a lot of time and money in testing and product development.
- How long will my purchasing cycle be?
Know the purchase cycle for your product or service so you can estimate your upfront cash needs. With a longer purchasing cycle, you’ll need more money at the front end before you start bringing in revenue.
- What’s a reasonable sales forecast?
Analyse the actual operation of the business to come up with a solid sales forecast. For example, if you want to open a restaurant, consider the size and seating capacity of your proposed restaurant, the expected average customer bill, and the hours of operation.
- How much growth potential does my idea offer?
Think about how big you want your business to be and figure out if your idea can meet your expectations. For example, if you are writing software, building simulations or making something by hand, you should realise that you may not grow as fast as if you’re making something that can be mass produced. Are you selling your time, which is finite, or are you selling a product, which you can sell a million of?
- Do I possess the necessary skills?
Be honest in assessing whether you’re qualified to turn your idea into a business. Does it require highly technical skills or business experience that you lack? If so, find someone who can fill those gaps.
- Can I see myself doing this for the next two years?
Do you have support from family, friends and mentors, and are you willing to make the necessary sacrifices? Look at opportunity cost and realise that any new opportunity is going to take a tremendous amount of time and energy.