Before taking the plunge, evaluate your idea

So, you’ve spent months or maybe even years searching for the perfect small business idea, and now you think you’ve found it. You’re ready to dive right in, quit your job, and dedicate yourself to starting your own business.

Before you make any life-altering changes that can’t easily be undone, take some time to first evaluate your business idea to see if it has the legs you hope it does. The very first step of the process is to do some research and analysis to dig into the potential of your idea.

There are few ways for your smart jumpstart. First of all, you need to identify your target market. The most important step of qualifying a business idea is determining who will be buying your product or service. You need to create a picture of your ideal customer. Consider factors such as age, gender, education level, income, and location. The more you can narrow down the picture of your ideal customer the better. You won’t be able to figure out if there is a market for your product or service until you have a very clear idea of who are selling it to.

Then, you need to conduct a market analysis — research to determine how big the market is, how saturated it is and if there is room for you to add your product or service to the mix. I am not giving you too much to chew but you definitely need to conduct a clear market research and this is great start.

It can also be helpful to create a test segment of your target market and conduct a focus group or a survey to find out who they really are, so called Pilot segment.

Then, you can decide if it makes sense to launch your business to a segment of your market to gauge response before committing fully to your business idea.

Know what makes your Product or Service much different from others. During your research, you will probably discover that there are other businesses already offering the same or similar products and services to your target market.

This doesn’t necessarily mean you won’t be successful if you launch your business, but it certainly means you need to identify what makes your products and services different from the competition. You can do this by creating a unique selling proposition (USP). A USP identifies what makes your business different, and why your target clients should choose you over the competition. Your USP can be a very effective tool that helps you define your brand and make your business memorable. This guide to writing a USP will help you get started.

Thirdly you have to research the Competition. Just as you need to know who your ideal customer is, you also need to know who else us out there marketing to them. This is why it’s really important to get an idea of who your competitors are before you move ahead with your business idea.

Two excellent tools for researching your competition are a competitive analysis and a SWOT analysis, this shall be narrated in my upcoming articles for further amplification.

Another imperative step in evaluating your business idea is to conduct a thorough Financial Feasibility Analysis (FFA). It would be very terrifying and disappointing if you plunge in business only to find in clamp after six months. Better you do a detailed financial analysis and put in place all possible assumptions to preempt most potential risks out of “what if-s”.

Another very important factor that plays into the validity of a small business idea is money. What will it cost to get your business off the ground? Where will that capital come from? What are your start-up and ongoing expenses? What is your earning potential once you’re up and running?

How will you bridge the financial gap between the start-up process and profitability?

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