How do You Know you’ve got a Good Business Startup Idea?
It seems like the business world is heavily saturated with start-ups right now. The Small Business Agency estimates that around 543,000 new businesses get started each month – and every founder thinks they’re on to the next big thing.
So the big question is this: how do you know if your business or startup idea is any good? I’ve put together a quick guide to assessing your startup or business idea.
Identify Your Market
In the words of Mark Zuckerberg, “start with the problem you’re trying to solve in the world.” Figure out why your product is important, and to whom.
Not only will this help you see where your business would fit in in the real world, it will help you develop your idea into the most efficient solution possible.
In order to narrow down your potential customers, think about who your key target audience will be. Create a customer profile to help you better understand your average consumer, and then make your decisions with that persona in mind.
You can use this information also to help you decide which advertisers you should be approaching, what your image should look like and who your potential investors might be.
You also have to think about the type of market you want to enter into. While niche markets will likely mean less competition, they also mean less potential customers.
On the other hand, by targeting a broader market you lose some of the authority that you could gain by positioning yourself as an expert in one area.
It’s up to you to figure out which model will be best suited to your particular business – and your skills and expertise.
Check Out Your Competitors
After you’ve identified your market, it’s time to dive right in and see what else is out there. Find out who the industry leaders are and figure out what makes your product different to theirs.
By looking at what your competitors have to offer, you’ll be able to better identify your unique selling point, or USP.
This could be a more advanced product, it could be a lower price tag or it could simply be a unique company ethos.
It’s important to remember to look at not just the most widely known or the most profitable companies, but also the companies with a memorable brand and a loyal following.
When setting your expectations, you should also try and seek out companies of a similar size and standing to yours; there’s no point pitting your start-up drinks company against a corporation like Coca-Cola.
Scoping out the competition is also a great way to gain valuable insight second-hand. See what you can learn from them: what have they done right and what could you do differently – and more importantly, better?
Have a look at their social channels, their marketing campaigns, their websites and their storefronts. Public corporations will also have quarterly or annual reports available as public information, which can be useful when doing research.
Once you’ve got your idea, found your USP and figured out who your audience are, it’s time to see what they think.
Getting feedback from the right people early on will be instrumental in developing and improving your business.
You can choose to outsource this research to a dedicated market research agency, or you can conduct it yourself.
Agencies will save you a lot of time and they can be an invaluable resource – particularly when you’re looking for large quantities of information – but market research doesn’t always have to be grand scale – especially in the early stages.
Get opinions from family and friends who you trust to be brutally honest with you, and preferably who fit into your target market.
Once you’ve got your feedback, your next challenge is to listen to it. When you’re passionate about an idea, it can be tempting to block your ears when someone points out problems with it, but your market research will be your best indicator of how your product or idea will be received by the public.
It doesn’t matter how much you like it if your consumers disagree. Take feedback on board and don’t be afraid to make big changes according to what you hear.
Crunch the Numbers
While you might start out with the idea, you want to end with a profit, which means that you need to ensure your business idea is going to make you money. Sit down and write out a detailed business plan. Work out your overheads and weigh them against your projected takings and then ask yourself the tough question – is it worth it?
If it looks like your business might cost you more than it’ll make you, there’s no need to give up straight away. Instead, think about what you can change. Which costs can you cut out?
What can you put off until later, when your business will hopefully be in a more comfortable position? Could you increase your prices to account for your costs?
You also shouldn’t be disheartened if you’re not seeing results straight away; very few businesses make a profit in their first year.
You do, however, need to think about the future and when you do expect to be turning over a profit – both for your own benefit and to present to potential investors.
Of course, markets (and a number of other variables) change, so you’ll have to continually re-evaluate your projections as you go.
Seek Advice, Mentors and Partnerships
When trying to figure out if your business idea is any good, some of the best feedback you can get is from other business people who are invested – or considering becoming invested – in it.
Many successful entrepreneurs maintain that having the right people surrounding you is the most important key to starting a business.
Approach people who you trust and respect to become involved in your company – either as business mentors or as partners. Pitch them your idea and take their advice on board, even if – or should I say especially if – it’s negative.
Listening to constructive criticism is essential to developing your business, particularly when it comes from people who really know what they’re talking about.
You can also gauge the popularity of your idea by the response you get from potential investors.
If you have a lot of interest from serious investors, you can be confident that you’re onto a good thing. If you’re struggling to find investors willing to come on board, don’t be afraid to ask why.
You might be surprised by their answer, and their feedback could help you improve on your original idea.
Test the Waters
You’ve got your idea; you’ve found your market; you’ve got your business plan; you’ve got your team – now’s the time to put it all into action. Ultimately, there’s no substitute for real world experience.
Start with a small launch or a trial run in order to gain real customer feedback. For example, soft openings are a great way for restaurants and other hospitality businesses to introduce their brand to new customers while still leaving room to make last-minute changes or improvements.
It’s also an opportunity for new staff to practice their roles and get familiar with processes and procedures.
Similarly, app companies or other businesses in the tech sector might have a trial evening, where a select group of customers are invited to try out a new game or product.
As well as giving developers a chance to gain valuable feedback and make any edits before the product goes live, these events can be a great way to generate publicity and get your audience talking.
Trial & Error
Of course, even once you’ve entered the market, there’s still plenty of work to be done in order to maintain your business’ quality.
And the old adage “don’t fix what isn’t broken” doesn’t apply here; sustainable businesses are ones that continually come up with new ideas and improve on old ones.
With technology constantly changing and new start-ups always entering the market, it’s important to stay agile and to be able to keep up with the times.
Don’t be afraid to test out new ideas, because even if they aren’t successful, you can learn from them and use that information to come up with your next idea.
And if an idea is successful, don’t be afraid to develop it further. Remember, just because your original idea is good, it doesn’t mean that it couldn’t be better.
So, what do you think? Do you believe in the light-bulb moment, or do good ideas take a lot of pruning? Share your thoughts in the comments.