01 Feb How to decide if your business idea is viable
Starting a new business can be exciting and nerve wrecking. Many new business owners will have moments of doubt where they worry about whether their venture will work, and it’s normal to be hesitant before taking the step from having an idea to actually going all in.
In this article I have listed some questions that I usually ask clients when they come to me for advice on how they can make sure that their business is really going to work out, and how they can decide if the business idea is viable. At the end of the day, there are many aspects to consider, and this article is only meant to give you some ideas to help you get started.
Why do you want to start this business?
I always give this advice to any new business owner: know your motivation and why YOU believe your business idea will succeed. Why do you do what you do? Is it a temporary motivation, or one that will last?
It’s also worth knowing why you believe that your idea will work. There’s a big difference between wishing your business will succeed because you’d love to be a successful business owner, and feeling confident that it will work because you believe in your products or services, and genuinely think that people would benefit from them.
Have you done market research?
Market research includes researching your potential customers as well as your competitors. It’s considered an essential part of starting a business, and a great way to see if there’s a market for your product or services.
Market research can also help you discover key competitors you were not previously aware of, find openings in the market, or decide to target an audience you might not have originally thought of.
Do you have a business plan?
Your business plan should detail your goals and ambitions for your business, along with a specific plan for how you will achieve these goals.
We have an excellent guide on how to write a business plan, which you can use to get you started.
The process of writing a plan can unveil problems that you had not yet considered, or help you understand what you need to prioritize in order to reach your immediate goals and get the business up and running.
Do you have enough funds or finance?
Most businesses require some start up funds, whether it’s only a few hundred pounds, or several hundred thousand. You should have some idea of how much funding you need for your business, and a plan for how to get this money.
I have previously written about how to raise money to start a business, which includes a lot of helpful information.
Do you have any industry knowledge?
Having a great business idea is one thing, but being able to execute it is another. You will most likely need some kind of industry knowledge or experience, or the ability to hire someone who has.
For example, you might come up with a great idea for a mobile app. However, to make this app, you will either need to have experience in app development, or be able to get help from someone who does. If you want to start a marketing agency specializing in construction, it’s helpful to have some knowledge about the construction industry and how the businesses operate.
It’s also important to know that certain businesses will require licenses or certifications to operate. Many industries are also heavily regulated. It can be helpful to do some research, so that you can know what to expect. For example, data protection laws, alcohol licensing laws or regulated professions could set a stopper for your plans.
Are you prepared to put in the work?
Most people can understand how stressful and demanding starting a business can be, but for many entrepreneurs it can be quite a shock. Business plans, marketing, hiring and training employees, buying equipment, writing contracts, dealing with finances, and following legislation can be overwhelming to say the least.
It can be helpful to be aware of this, so that you can decide if the entrepreneur life is really for you. For those that have rich social lives, families and other obligations, it’s a good chance that the road to success might include making some sacrifices along the way. Having a great support network can also make life a little easier as you go through a stressful, but hopefully rewarding time in your life.
Do you have any evidence that your idea will work?
Having an idea and a plan is a great start, but the safest way to gauge whether your idea is viable is to gather evidence. Do you already have potential customers lined up, such as social media followers, or clients you have worked with before? Have you done a study on your potential customer base, and has this study proved that people are in fact interested in your products or services?
Conducting research to find evidence that your business is very likely or guaranteed to succeed is a great step to prove that your idea is viable. This information is also very helpful if you need to secure funding from banks or investors to help you get started.
Alan Davidson is a Chartered Accountant, director and founder of Pentins Business Advisers, entrepreneur and author of the Amazon best-seller “Achieve Your Business Vision”. With over 25 years of helping businesses succeed, Alan knows how to build a business with real value, while avoiding costly mistakes.