Is your business idea viable? Part 2
Is there room for you?
Is your idea original or are you building on an existing concept? If you are building on an existing you need to ensure that there is room for your idea for another play in the market. You need clear unique selling points (USPs). Similarly, if no-one else is doing it, is there a reason for this? A great way to evaluate the viability of your idea is to carry out a SWOT analysis – this is your businesses Strength, weaknesses, opportunities and threats.
Is there anything about your technology or approach that couldn’t be easily copied by a rival with big buying power? If the answer is no, think carefully before moving forward.
What’s the business model?
It’s what you do with a great idea that counts – you need the right execution. Google wasn’t the first search engine and Facebook wasn’t the first social network, but by finding the right business model and improving the offering, these companies were able to build on an existing concept to become market leaders.
Often there will be different business models and revenue streams to consider; for instance, a web business could charge end users a monthly subscription fee, or make the website free for the user but earn a commission for every ‘lead’ or sale that it generates for another company, or sell advertising space.
Can you fund it?
Do you have the funds in place to get your business off the ground? You need enough to support yourself and to provide sufficient working capital until your company hits profitability.
You must undertake an honest analysis of how much it will cost to set up and you’re your business. How much you expect to sell each month and when you expect to break even. What are your margins? Can you sell enough at the right price to make it viable?
Look at sales figures from your industry and analyse your competition to forecast more accurately and think carefully about all the costs involved. It is better to over-estimate than to find yourself falling short. Ideally, do three different forecasts, covering the best-case and worst-case scenarios, and your likely results. Can you stay afloat if the worst happens?
Have you got what it takes?
Last but by no means least; have you got the right attitude and skills to make your idea a success? Setting up a business is an endurance challenge. The success of your idea is based on your commitment to seeing it through – during the bad times and the good. Your idea needs to be something you’re passionate about, and you then need the skills, drive and belief to make it work.
