Evaluating a new business concept is one of the least glamorous aspects of launching a new product, service, or enterprise. When you are excited about a new idea, you may not want to take the time to stop and examine it critically. New business ideas sometimes seem fragile, almost as if they might break if handled too clumsily. You may be reluctant to share your idea to obtain other opinions or investigate market possibilities.
But too many entrepreneurs leap into offering a new concept to the marketplace without thinking through all the factors involved. If you don’t examine the practical merits of your idea, you may be setting yourself up for financial failure when it doesn’t sell. Equally important is looking at the personal demands your new idea will place on you. Business requirements can cause conflicts with your lifestyle, values, relationships, and more.
It’s much smarter to fully evaluate your business idea before setting it in motion. Then you can determine if this new direction is the right one for you to take. But even if you are already up and running, it’s not too late to give your concept more scrutiny to make sure you are on the right track. Here are some questions you should consider:
1. Is there a market for your product or service? — Are there enough people or organizations in your target group? Do you know enough about what they need? Can they pay what you need to charge? Do you know how you will reach them?
2. Do you want to serve that market? — Do you like the people in the target market you have chosen? Do you care about their problems and goals? Will you enjoy spending lots of time with them to first market your business, then deliver your products and services?
3. Can you do better than the competition? — Who are your competitors? What are their strengths and weaknesses? How are you going to be higher quality, less expensive, or uniquely different? How will you communicate your competitive advantage?
4. Will your idea earn enough? — What are your expected revenues for the first three years? What are your projected expenses? How much income tax will you have to pay? Is the profit you will earn worth the work you will have to put in?
5. Can you stay afloat until this business turns a profit? — What are your startup costs? How much capital do you have available? Can you get financing? When will you start to break even? When will you start to turn a profit? Do you have enough to live on until it happens?
6. Do you have the time available for your concept to work? — How much of your time will be required to create each product and/or serve each customer? How much of your time will marketing and management take? Will you be able to earn enough with the time you have?
7. Do you have the skills to make your concept succeed? — Do you have all the necessary skills to create your product or deliver your service? Do you know how to market and sell it? Can you manage the money, technology, and people involved? Can you afford to pay for expertise you don’t have?
8. Will the work employ your talents and hold your interest? — What will a typical day look like running this business? Is that a day you would enjoy living over and over? Will this work take advantage of your unique talents? What will be your exit strategy if you choose to leave this business behind?
9. Does the work match your lifestyle? — What will your work hours be? In what surroundings will you spend most of your time? How will the business affect your relationships with loved ones, physical and mental health, and opportunities for recreation and growth?
10. Does your concept honor your values and serve your goals? — What are the values you hold most strongly? Does this business support them? Are there any values it conflicts with? What one- to five-year goals have you set for yourself? Will this business help you reach them?
If you find that some of your answers to these questions are discouraging, count yourself lucky if you asked them before launching a new business idea. Your answers can help you redesign your concept to better align with the marketplace, your talents, and what will bring you fulfillment.
If your business is already in operation, there still may be time to salvage a concept that isn’t right for you. It may be necessary to find a different market, discover what else your market wants, alter your prices, package, or positioning, locate a collaborator, hire help, or make other changes.
Keep in mind that your business should provide you with enjoyable activities on a daily basis, not just be a means to an end. For most entrepreneurs, your business will consume more of your waking hours than any other activity. If you’re working too hard and not experiencing enough satisfaction, it’s probably time to reconsider your direction.