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4 Ways to Determine if your Business Idea is Viable

19 October 2012 One Comment

So you want to be an entrepreneur, and maybe you’ve already conceptualized the product or service you want to sell. You’ve yet to draw up a business plan because you aren’t sure if your idea can turn into a reality. First of all, it’s important to free yourself of doubt. Of course, your business plan may not be successful, but you won’t find out until you really work out all the details to determine if it has a shot. Here are a few questions to ask yourself to find out whether your business idea “has legs” so to speak.

1.     Is there a demonstrated (and growing) demand for similar products or services?

This question requires you to contemplate the market you are about to enter. Of course, you cannot have a successful business if your product or service is not in high demand. Do some research online to see if similar products and services are popular, and if there’s room for growth in the future. Remember that something that’s wildly popular now may not be in the future, so be sure that you find stats indicating that the market is growing.

2.     Is your product or service different from potential competitors in a vital way?

Especially if you’re entering into a very competitive market, like, say, educational technology, it’s absolutely instrumental that your proposed idea is different from your competitors’ ideas in an important way. For example, let’s take the case of Facebook. Its ostensible competitor was the very similar My Space. While the both served the exact same function, Facebook was different in that it was more exclusive and private, and the interface was simpler and cleaner. This was a vital difference that caused many people to switch over to Facebook eventually.

3.     Have you talked to colleagues, friends, and family about your idea? What was their reaction?

Besides doing market research, ask your social circle what they think about your idea. Many people who have business ideas often are afraid of sharing with others because the feel that their idea will be “stolen.” This is actually a very unlikely scenario, especially if you simply tell your friends about your idea in a general way without going into details. Reactions are important because while you can do all the market research in the world, you need to know how actually people feel about your ideas instead of just gauging potential success using only numbers.

4.     Do you have a specific idea of who your target customer is?

Successful businesses know exactly who their target customer is. They know their average age, their tastes, their economic background, and even their politics. If you haven’t thought about who your customer is, jot down a description right now and add to it as you find out more about your product or service and the market you’ll be competing in.

Once you’ve answered the above questions thoroughly, you’re well on your way to starting up a viable business. The next step?  Drafting a business plan. Here’s how. Good luck!

Guest Author: Karen Smith is a freelance writer and aspiring entrepreneur. She enjoys writing about all things related to business, including finance, accounting, marketing, and the best way to go about getting an online business degree. Share your questions and comments with Karen below!

 

One Comment »

  • Click Here said:

    I'm thinking you can answer a lot of these questions by selling your product first on ebay or Etsy. They can pretty much tell you how likely it is your offering is to sell. Commissions are relatively small, as well, compare to the expenses you'd incur by trying to sell something the traditional ways.