Is your business idea feasible?
Hey - want to start a business? SmartaStart2013 takes you through the process
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Once you've gone through the brainstorming stage, it's time to
face reality and work out whether your idea is a viable option. Be
thorough in your assessment: if the figures don't add up, chances
are it's not going to work out. Don't be disheartened, though - if
you've already had one idea, there will be plenty more where that
came from.
What makes a good business idea
- Once you've come up with your idea, you need to make sure
there is a market for it. Do this by conducting
extensive market research - find out how many people would buy into
your idea, what the competition is like and what your customers
will be like. Will they be able to afford your product or
service?
- Do the figures add up? Look at figures from
competitors to work out what sort of demand you will have. What
will your production costs be like, and how much will you need to
charge for your offering to make it viable? Will your target
customers be able to afford it? What will your margins be like? How
much repeat custom will you get?
- A good idea gives the business room to grow. Don't
just latch on to a trend - your business needs to be more than a
one-trick pony if you want it to expand and flourish. Try to
forecast how the market will look in one, two and five years - will
there be as much demand for your product then?
- Your business idea doesn't need to be new, but it does need to
distinguish itself from the competition. Check it's
unique by conducting an extensive competitor analysis, and even if
you're not planning to lodge a patent, make sure it isn't violating
copyright law by checking the Intellectual Property Office's patents database.
Why some business ideas don't work
- One of the major causes of business failures is bad
market research. While you may be enthusiastic about getting
started straight away, conducting exhaustive market research is
absolutely essential. Without it, you won't have the information
you need when you're marketing and pricing your offering.
- When the majority of business ideas fail, it's not because it
was a bad idea - it's because it was the victim of bad
marketing. Make sure you know exactly who your customers
are, what their habits are and how they react to various forms of
marketing. For example, while you may have problems eliciting a
response from toddlers if you market to them by text message,
teenagers are likely to be far more responsive.
- A business which doesn't distinguish itself from its
competitors will find itself struggling. Define strong
unique selling points (USPs) for your business to prevent this from
happening. Look at your competitors' weaknesses and build on that:
is there space for a premium version of their product? Could you
add value by offering a wider range or better customer
service?
- If your costs are too high, you'll find it
difficult to make any money, so start small and keep your overheads
to a minimum. If it isn't absolutely necessary to take office
space, start from home instead - and while having your product
manufactured in the next town may be great for your carbon
footprint, there's a good chance it could hit your bank account
hard.
- If your proposition is badly priced, your
customers will be decidedly unenthusiastic about buying from you.
Make sure you look at your potential customers' spending habits and
earning power to determine how much - and how often - they will be
willing to pay.
- If your business is started purely to make money,
there's a good chance it will fail. To start a successful business,
you need to be absolutely passionate about your proposition so you
are committed to steering it through the good times as well as the
bad.
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