For adventurous and passionate entrepreneurs, it’s easy to get carried away with a new business idea. But spontaneously starting one without assessing the idea behind it actually decreases the likelihood of its success.
While passion and risk-taking has its place in business, it’s also important to prioritise strategic decision-making that’s backed by real-world evidence. Gathering information and analysing the data you collected ensures that you prepare your business for success.
Studies show that over 70% of small businesses don’t make it past the 10th anniversary. And there are consistent rates and patterns over time, which indicate that there are common causes for these failures.
Many of the reasons these small businesses fail are rooted in a lack of preparation. It’s things like absence of business vision, ineffective marketing plans, inability to compete against market leaders, and low engagement with the target customer.
It can be tempting to just dive in with a new idea, but it’s important to go through a series of key questions to know whether it will be successful or not.
Every business owner needs to ask themselves these eight important questions before starting a business based on a new idea. These questions will serve as a guide on whether your business idea is ready to be launched or if it needs to be refined first.
While inspiration for a new idea can come from anything, starting a business shouldn’t be a spur of the moment decision.
Thoughtless business ideas can result in ventures without direction or possibility for growth. Having a clear reason for starting your business will keep you motivated and passionate about reaching your goals.
Figuring out your “why” will also help you realise if you’re starting this business idea for the right reasons. Ideally, making money shouldn’t be your end goal; it’s just a goal. Money is only another tool to help you achieve bigger objectives.
Part of your “why” should also include a definite business vision because that will also help you identify the best ways to make that vision into a reality.
Understanding your competitors allows you to understand your market and improve your own business idea.
Studying them gives you several advantages for improving your own business idea. It indicates whether your idea is profitable (i.e. if your competitors are making money or gaining customers by doing something similar).
It helps you establish unique features that will entice your target customer. Seeing your competitors’ weaknesses will also help you develop strategies to prevent having the flaws that they do.
Consider whether collaborations with people and/or organisations will further grow your business idea.
Here are four common types of business collaboration:
When you identify which type of collaboration you need, it can benefit you and your business idea in several ways. It gives you the opportunity to gain more knowledge and experience about the business you’re starting and the industry you’re entering.
It establishes long-lasting connections between you and like-minded peers from the same (or even different) industries. And it can also lessen costs such as money, time, and energy because there’s an equal contribution from all parties.
For your business idea to succeed, it needs to address consumer pain points.
Successful businesses strive to solve problems. Netflix’s streaming service saves the effort of going to video stores, paying late fees, and scheduling shows or movies around your busy day. Uber’s on-demand car and ride-sharing services alleviates expensive taxi fees and transportation problems.
Your business idea needs to be a balance of customer needs and your abilities. If you’re not passionate or knowledgeable about the problem your business wants to solve, then you’ll lose motivation in the long run.
At the same time, a flashy, trending idea can seem great. But if it’s not going to help your target customer in concrete ways, it will fail.
Identifying and strengthening your business idea’s unique features will entice target customers to leave a competitor and work with your brand instead.
Your business idea needs to have a unique selling proposition (USP) so that it’s set apart from your competitors. By identifying your USP, which can be one feature or a combination of them, you can then create a compelling story about what makes your business better. This will create a connection with your customers and give them strong associations about your brand.
Here are some ways to set your business idea apart:
Knowing your target customer will reveal whether your new business idea is feasible or not. Some inexperienced entrepreneurs want to choose “everyone” as a target customer. But this just alienates the majority of the audience because it’s not tailored to anyone specific.
Studying the target audience of your potential business idea can also reveal underserved or untapped audiences in the market.
After you gather information and analyse the data about your ideal customer, you can then create strategic and focused marketing strategies. Providing tailored content through the right channels or platforms will successfully engage your customers.
Marketing is crucial to promoting and selling your products and services.
Using the right content marketing strategies in your business idea increases the likelihood of reaching your target customer.
As an entrepreneur, you need to create compelling content that draws in your audience. Humanising your brand will make it more approachable and personal.
Your marketing strategy will also help you identify the best way of reaching your customer. It can be long-form blogs, impactful videos, or even podcasts. Your content can build a loyal following for your brand, if you do it right.
Assess whether you’ve created a realistic budget for your new idea. Do you have financial milestones and goals? How much value do your products and services have? Do you need to invest personal resources?
It’s important to establish the correct budget for your business idea, as well as the financial framework to keep it going in the long run. This ensures that you have an organised system that keeps track of the money in your business.
Figuring out your budget will also reveal whether you need funding for your business idea. Funding can help you overcome capital requirements (i.e. lack of money to launch a business). It can also be used for product or business development.
Here are some ways to get funding:
Knowing whether your business idea will work or not can be difficult, especially when you’re excited to launch it already. But going through this checklist of questions will help you prepare for success.
It’s also a smart idea to talk with others who have “been there, done that” in business, so find one and organise a time to speak with them.
Share this article
More Recent Posts