Entrepreneurs starting a business or making an investment always have one major question running through their minds: Will my idea work? Unfortunately there is no foolproof test to check if your idea will work or not. Some business ideas hold a lot of promise but do not work out while others look shaky but become big businesses.
While there is no way to say for sure whether a business idea will work or not, there are tested and trusted methods that give you a relatively fair assessment of your idea and can help you determine whether to pursue the it further or not.
- Your idea solves a problem: If your idea is a solution to a problem that people have battled with for long, you can be sure you are unto something. Take for instance UBER. The idea solved the problem of walking to the road and standing under the sun or rain to hail a taxi.
- There are enough people with the same problem to constitute a profitable target market: Your idea might be genius but if you don’t have people who are willing to pay for it, it won’t work. The number of people willing and able to pay for your product should justify the efforts you are expending. In some cases your product might be solving a problem people didn’t even know they had; in that case, you should be able to estimate that you will have a good number of converts and users within a short time period.
- You have an edge over the competition: Your business idea must have something to offer the target market that your competition is not currently offering. This unique advantage must also be something that cannot be easily copied such that the competition cannot get wind of the idea and throw you out of the market before you even come in.
- The idea is profitable: This factor can be a bit subjective because you won’t really know till you get into the game. However your business plan, which should contain forecasts based on market and industry data will provide you with a decent picture of the market and what you should expect.
- Test your Minimum Viable Product (MVP): Most ideas can be translated into a minimum viable product, which is simply your product or service in the barest functional form. So for example if you want to start a bakery, you don’t have to buy industrial ovens, rent a kitchen space etc. You can start from baking in your kitchen and if the demand for your baked goods rises significantly and more than you can handle in your little space, that could be a sign that your business can be scaled.
Starting a business is about taking risks. You can never say for certain what the end will be but with good planning, you can minimize your chance of making a wrong decision that could lead to failure and loss of investment.