I HAVE A GREAT IDEA!!
Is it a viable business concept or not?
“So I’ve got this great idea!”….. a phrase often used by entrepreneurs around the dinner table! But how do you ensure that your business concept is a viable one?
This is a very difficult question to answer as not all business ideas are new ideas, many are improvements of ideas that are already in the marketplace while most are copies of existing ideas with the promise of better service wrapped around them.
Every entrepreneur wants to be the proud owner of a “sure thing”, but unfortunately “sure things” are not launched fully formed on day one, they are often the result of many years of hard work and massive investments of both time and money.
With this said, you’re probably wondering…… is there anything I can do to improve my idea’s chances of success?
Well here, the simple answer is YES!! There are many things that entrepreneurs can do to improve the success of their future venture. The list below should get you started in the right direction:
MARKET RESEARCH
It is very important to conduct market research on the business idea you wish to launch, fortunately this is much easier today, thanks to the internet, than it was just a few years ago.
When doing research, you need to bear the following in mind:
Uniqueness – this can be both be a positive as well as a negative for any new venture. Unique but simple to understand is generally seen as more positive that unique and difficult to understand as this will require additional funds to educate your clients of the benefits.
Need – is there an obvious need for your product? The more clients desire your product the easier and cheaper it will be to launch.
Competitors – is there competition for your product? If so, where are they located? Is the market big enough for both or all of you?
Target Market – Who is going to buy your product or service? Are they easily defined and is the market large enough to warrant the money you are going to spend?
BUSINESS COSTS
Once your research has verified that there is a market for your product, you will need to run various costing scenarios to ensure that launching the product will be viable.
Start-up Costs – Every business will incur some form of start-up costs, just make sure you have accounted for all of them in your planning.
Cost of Sales – this is important as you will need to know what it costs you to produce your product. Generally, as your volumes grow, these costs per unit should come down.
Operating Costs – It is very important to know what it costs the business to keep its doors open, remember these costs are generally fixed and will need to be paid for even if no sales have taken place.
Turnover / Sales – Once you know what it your cost of sales and your operating costs are it becomes very easy to work out a mark-up that will generate sufficient gross profit to cover all you costs and produce a market related profit.
Once you have satisfied yourself that you have conducted thorough research and accounted for all the possible costs, you will be in a better position to make a success of your new venture.
Apart from knowing your market and your costs, it is also very important that you secure all the start-up money that you require as our experience has taught us that most businesses take twice as long to get off the ground than originally estimated and tend to cost three times more than planned.
Good luck! Being an entrepreneur is not easy, but with the correct planning it will be considerably easier.
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