How To Tell If You Have Got An Excellent Business Idea
We all think that our idea for business domination is just the best thing ever but very few business ideas actually bear fruit despite our best efforts.
What we need is a Checklist to assess the potential of the idea to see if it will actually fly and generate income.
Consider the following points to refine and further develop your concept.
- Is there a clearly and easily identifiable market need or gap? Have you identified where the pain lies for your potential customers and can you fill that space?
- No or few competitors; the more innovative your product the less competition you will have. This also means that you can charge a high price for your good or services. No competitors might mean however there is no actual market!
- A growing market? Make sure that you launch into a growing market and not one that is slowing down or declining.
- Are there customers out there that will buy? You MUST know, in great detail, the makeup and features of your customer. Always be looking out for different market segments that exist alongside your original customer base.
- How much funding do you need? The lower your funding needs the easier it will be to launch and start delivering. High cost launches need certainty about the market!
- Sustainability: is your business idea built upon solid and reliable foundations? You need to be looking for longevity.
- High profit margins: the more innovative and creative your idea the more likely it is that you will generate high profits. A mediocre business idea generates mediocre returns!
- How good is your communication strategy? Know who you are selling to and why they should come to you rather than anyone else. Good communication builds an effective customer base.
- Not easily copied: protect your idea and guard your intellectual property.
- Identify and assess your risks: monitor the risks that you face and always be ready to deal with them so that their impact can be controlled or minimised.
- Have low fixed costs: low fixed costs means a lower risk set for the business. This also gives you some flexibility to deal with unexpected emergencies and developments.
- Have strong controls: robust methods of operation and financial accounting are very important and will increase your chances of survival.
- Practice good managerial skills: be clear on your strengths and weaknesses working hard to develop where you need to and plugging gaps where your area of expertise is not so strong.
- Can the idea be scaled up? Small projects are easier to launch than big, complex models of operation. Wherever possible break the idea down into manageable chunks that can be controlled and monitored easily.
- Be clear on your sources of finance: know exactly how much this is costing you!
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