Unfortunately, not all great ideas translate into a successful startup and, eventually, extraordinary businesses. Even if you’ve thought of a fantastic service or product, you need the appropriate business model, marketing, funding, pricing, and good people to make it work. Enough potential customers are willing to pay for it.
Like every other entrepreneur globally, the challenge isn’t the lack of ideas but figuring out which ideas are worth spending money and time on.
This is a fact that whether you are a bootstrapped startup that is funded with credit cards and loans from friends and family or the next darling of Silicon Valley that is sitting on a war chest of millions in venture capital funding. No matter who you are or how big you hope to grow your startup, figuring out what product to build and what services to offer is a considerable challenge.
Of course, you may rely on your gut; sometimes, it is not a bad option, but making a good guess at what your startup should do can just as often lead to failure. And, since most businesses fail within five years of opening, why not consider a few extra measures to discover if you have a unique idea before you risk your time and money following your hunch.
So how do you know if your idea is worth pursuing? Here are some points to make sure you are a winner before diving straight in.
Fortunately, you can carry out research yourself at no cost. Market research is categorised as primary, which you conduct yourself and secondary, analysing data published by secondary sources. The research can be quantitative, i.e. based on numbers and statistics or qualitative, based on opinions. Ideally, you want a mixture of both to gain a reliable picture of the market.
Remember, the goal is to acknowledge as much information as possible about your market’s size, state, and needs. Be prepared to change your idea according to your customers’ wants instead of what you prescribe as the best solution.
Before you worry about business location, upstart financing or marketing, you should begin with an idea. Not just any idea, but a unique concept. What makes your business stand out from the rest of the competitors?
Uniqueness doesn’t necessarily mean you have to invent something; it just means that you have to set yourself apart from the crowd. The most successful businesses have a robust and unique concept and a clear identity. Take the time and define yours.
Is there a Market for it?
The first step towards determining if your business idea has legs is to carry out extensive market research. You need to figure out if there is a market for your business and if this is big enough to make the venture a success. A lack of research has scuppered many great ideas, and this should never be overlooked. You need to determine whether there is sufficient demand for your offering and what marketing, pricing, and business model will work for your target market.
What will your startup cost be? Every business has some expenses initially, whether you’re paying for rent, equipment, or basic marketing materials. Make a businesslike estimation. You will need these figures to obtain a loan or budget if you’re paying these expenses out of your pocket.
Look at sales figures from your industry and analyse your competition to forecast more accurately about all the costs involved. It is better to overestimate than to find yourself falling short of funds. Ideally, do three different forecasts, covering the best-case and worst-case scenarios and your likely results. Can you stay afloat if the worst case happens?
Economic Mood and Timing
Your startup’s success can significantly depend on economic mood: consider starting a luxury real estate business at the start of the housing crisis. Gauge the state of the economy and think of how it relates to your upstart: where are consumers’ minds right now?
Even an economic downturn can be a great opportunity if you can meet the mood of the consumer. If your business idea doesn’t fit the current trends, think of ways you can tweak it to tap into today’s requirements.
Timing is crucial, especially for a startup. Opening an ice cream shop in January is a bad idea, but opening it in June can be a great idea. Do you expect your business to be seasonal? If so, time your opening to the most robust consumer demand. You’ll come out of the gates with a flood of new customers, customers who will come back for more.