“I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not trying.” – Jeff Bezos, Founder and CEO, Amazon
A business idea is mostly an impulsive thought, which strikes and then never fades away. There are plenty of ideas that people come up with before the one which gave them their ‘EUREKA!’ moment. At the end of the day, it’s not just the idea or its uniqueness that attracts funding but the overall execution and feasibility instead. Thus, a business idea undergoes considerable testing before finally being rolled out in the market as a full-fledged business.
Here are some methods and factors you can keep in mind to test your own idea:
Before investing in any business idea, it is vital to conduct a market research and survey. The analysis of the same will reveal important information about consumer behavior and preferences. In the case of a survey, the questions shouldn’t be rigid or close ended as they fail to elicit all the facts. Multiple choices and open-ended questions help dive deep into the customer’s expectations from the business concept. If the vision of your business doesn’t align with customer expectations, then the idea might not work out.
There might be many firms which do not directly operating on a business idea similar to yours but still end up engaging your potential customer base. To understand the feasibility of your idea, it is important to identify such competitors as well as those which compete directly with you. Further, you also need to be aware of the strategies they use to engage their consumers. Porter’s Five Forces Model, although apparently underrated and something referred to only in MBA textbooks, might actually be good idea for industrial analysis.
Trend analysis is another statistical tool which helps procure information about the changing customer preferences using historical data. If the results are not convincing enough, retrospection of the business idea becomes important.
An idea needs to be unique to attract investors but it isn’t sufficient enough to convince them to invest in it. If you don’t have the financial clarity on each stage of execution and the amount required to acquire a customer, it is a loud and clear sign that you need to reconsider your business idea. For an idea to be feasible, the financial projections should indicate a breakeven point and scope of profitability.
Business is never operated with a short term objective; several strategies are considered to make it profitable in long run. Therefore, the feasibility of a business idea also depends on the long term sustainability of the business. Further, it can be said that there should be scope of scalability in order to sustain in the dynamic market conditions. If an idea isn’t promising enough to offer scalability, than it is wise forego it at the right time.
The ultimate aim of everyone associated with a business is to become profitable. Therefore, if the business affects any of the stakeholders (shareholders, employees, creditors, government, suppliers, community) negatively, then it is a clear indication that the business idea needs reconsideration.