Being in business is tough. So if you are thinking of setting up a business make sure you do everything you can to maximise your chances of success. Below are seven ways to tell if your business idea will succeed.
1. A strong point of difference
To maximise your chances of survival in business, your product or service needs to be compelling and different from what is already available in the marketplace. The dangerous thing about being a ‘Me too’ business is that you start off from a weak position where it is very hard to compete on anything apart from price; this makes you very vulnerable.
If your idea itself is not unique then think whether you can improve upon what others are offering. Try to identify customers’ main complaints with your competitors and see if you can overcome these to add a point of difference to your product.
2. The WOW and WANT factors
An instant ‘wow’ response when you tell people about your product or service idea is a good sign – but this in itself does not guarantee your idea is a winner.
You need to know if they’ll actually buy it. Most people love the look of a Ferrari, but few will ever be able to buy one.
Try asking people three key questions about your product or service:
- ‘What do you like about it?’
- ‘Would you buy it?’
- ‘How much would you pay for it?’
Focus on asking your target customers and other business owners who understand the challenges of starting a business.
3. Hard to copy
Let’s say your idea’s hot and successful – but it’s also easy to copy. You can pretty much guarantee the sharks will move in for the feast sooner or later.
Try to identify and build barriers against competitors trying to enter the market. Take safety precautions and get expert advice on how you can protect your idea through patents, copyright or design protection.
4. Hard evidence of demand
When you start a business, you need hard evidence of demand. Take the time to conduct careful market research to check whether a market for your business idea really does exist. You can also conduct research online, use census data, study customer buying behaviour, talk to customers directly, research your competitors and talk to other business owners. The more you understand your market the greater your chances of success.
5. The market is growing
All markets go through cycles: emerging, mature and declining.
How would you categorise the market for your product or service? What evidence do you have to back this up?
What could affect the market potential and make your idea less viable? Document in your business plan all the evidence that shows your market is both growing and sustainable.
6. Acceptable price
Can you get your product to market at a price that will be accepted by customers whilst still making you a profit?
Remember: There’s always a limit to what people are prepared to pay for a product, as there are always alternatives.
Competitor pricing can give you an idea on the price range you need to shoot for. An accountant can also ensure your pricing calculations include all costs AND still allow you to make a profit.
7. Ability to convert the idea into a business
This can be a tough one, as just being really good at what you do is not enough. When you run your own business, there are other skills you need to take into account: administration, planning and management, to name just a few. If you want to succeed in business, these are just as important as having a great idea.
This does not mean you have to learn how to do everything yourself – just understand what you can and can’t do and then find professionals who can help you in the areas where you lack experience.
To learn the more about your market and how you can successfully compete in it, you can download our free guide, “Market Research Made Easy.” You can also speak to our friendly team of professionals for assistance on business planning.
We would be happy to catch up for a free no-obligation coffee and help guide you in the right direction, saving you both time and money. Call us today – dial 9380 3555.