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You have a Business idea What are you looking forward to, but are not sure whether it can be reached? You need to test the concept and see how it answers a number of tough questions.
“They always test,” says Andre Marquis, director of the Lester Center for ship at the University of California. “What you start with is rarely the same as what you end up with.”
But where do I start? We give you 10 basic questions to ask yourself to evaluate your business idea before starting an entrepreneurial adventure:
1. What is your consumer’s profile?
Maybe your product or service idea seems to be the perfect solution for you, but can you identify a consumer base that goes beyond you? Ask yourself what your consumers’ problems are and how your product or service can help them solve them, says Alexander Osterwalder, co-author of Generation of business models.
2. What do I replace?
Whatever your idea, someone out there buys something instead, says Jim Pulcrano, director of IMD, Switzerland’s best business school. Ask yourself what makes your product attractive enough to replace what is already on the market.
This shouldn’t be limited to products with similar purposes, says Pulcrano. You can also take a look at your target’s shopping habits and consider how you can make it buy your product instead of what it currently spends.
3. How can I demonstrate this idea to others?
It’s possible to make your idea tangible, says Steven Stralser, professor of entrepreneurship at the Thunderbird School of Global Management in Arizona. This can mean creating sketches or working on a prototype. If you think about how you can easily present your idea to others, you will see how solid it is.
4. Who do I need in my team?
At an early stage, you need to figure out who to turn to for honest and informed advice on your idea, Strasler says. And soon you will also have to think of those whose intelligence and skills you would like to have with you, be it for product development, marketing or any other area. Find out how these people can be interested in dealing with you.
5. What resources do I need?
How can you implement this idea? To answer this question, you need to consider what resources you need, including from manufacturing factories to office space. Make a list of key resources and how you can get them before you spend a lot of time and money testing and developing the product.
“What you start is rarely the same as what you end up with,” says Andre Marquis, director of the Lester Center for ship at the University of California / Image: AbsolutVision via Unsplash
6. How long will my buying cycle be?
You need to know the purchase cycle of your product or service so that you can estimate your cash flow needs. The longer the cycle, the more money you have to keep before making a profit. For example, if you sell technology to a hospital, the purchase process takes about 18 months. When you sell a mobile application, the purchase is instant.
7. What is a reasonable sales forecast?
You should analyze business operations sufficiently to get a solid sales forecast, says Strasler. For example, if you want to open a restaurant, you base your forecast not only on the annual turnover of the restaurant in your city. For a more accurate estimate, consider your restaurant’s size and capacity, average number, and hours of use.
8. How much growth potential does my idea offer?
Think about how big your company should be and analyze whether your idea meets your expectations. For example, when creating software, creating simulators, or doing something by hand, you should be aware that you cannot grow as if you were mass-producing. “Are you selling your limited time or selling a product that millions can sell for?” Says Marquis. “Often this is not obvious to some people.
9. Do I have the skills required?
Having an idea and implementing it are two very different things. Be honest when assessing whether you are qualified to turn your idea into a company, says Pulcrano. If an idea requires highly technical skills or experience that you lack, can you find someone to take care of it?
10. Can I imagine doing this for the next two years?
Having an idea can be exciting, but are you ready to spend your life or at least the next two years? Do you have the support of your family, friends and mentors and are you ready to make the necessary sacrifices?