The decision to launch your own business is an emotional one. You’ll feel a range of emotions; from excitement about your concept and the ability to control your own future, to extreme nervousness about your financial stability moving forward. As you take the steps toward establishing your new business, don’t forget to set aside some time to evaluate the quality and feasibility of your idea before launching your startup.
In the following paragraphs, six questions will be posed to you that should help you evaluate your startup and determine whether or not you should follow through with your dream, or hold off on taking such a big step.
How is it Different?
You’ve got a great idea, and you’re ready to make your product or service available to local, regional, national, and/or international consumers. The biggest factor to consider is the freshness of your idea. Is your idea different from other products or services already available to consumers in your target niche? Are there a lot of similar options for consumers?
Success rests in the ability of your product or service to succeed. Solid financial footing and a great business model don’t amount to much if there are countless alternatives for consumers. You need to determine whether or not your offering is truly unique and different.
What’s the Market Like?
Piggy-backing off the first question, it is imperative to assess the market for your business. Your product can be vastly different from other options in the industry, but is there really room for your company to succeed. Is the market big enough to allow your business to become established, attract customers away from other brands, and turn a profit?
What’s Your Business Model?
Before you get too far with your startup idea, make sure you devote equal time to the development of a business model. A great idea will only go so far on its two feet. You need a solid business model to support the development and future growth of your company. Your business model will dictate everything from finances and production to company structure, the hiring of additional employees, and growth forecasts.
Do You Know Your Customer?
Hopefully you can answer this question without sweating too much. Ideally, when you created your new product or service you had the consumer in mind. If you haven’t given much thought to the consumer base your product/service will target, it’s time to do so. Do you have something that attracts young millennials or Baby Boomers? Is it geared towards men or women? Does it appeal to tech-savvy shoppers or not? Accurately identifying your customer niche will help you evaluate the potential of your business.
Can You Turn a Profit?
Profitability means success now and growth in the future. If your product struggles to turn a profit, your business will struggle to stay afloat. Analyze production costs, the cost of supplies, shipping fees. Analyze any financial factor that impacts the pricing of your product or service. When that’s done, analyze your target consumer (as covered in the previous question) to determine if the market you are aiming for can even afford your product or service.
Is There Room for Growth?
Last, but certainly not least, it’s time to look into your crystal ball. As you look at the market you hope to establish your business in, is there room for growth in the future? Will your product simply capitalize on a current trend that doesn’t have long-term potential, or does your product meet a need that has been neglected for a significant period of time?
A successful startup is a lot like a farming operation. In order for your business to succeed, you need to plant the right seed (your concept), in the right soil at the right time of season (market conditions). If you can answer these questions successfully, you are ready to move forward with your startup. If not, it might be time to go back to the drawing board.