5 Ways of Evaluating Your Business Idea

A business idea according to Wikipedia is a concept that can be used for financial gain that is usually centered on a product or service that can be offered for money.

A business idea is a reason for setting up a firm. It drives everything about the company, from what products and services are offered to how these products are marketed, as explained by Workspace Group.

3 Ways of Evaluating Your Business Idea

Often times we speak about generating magnificent business ideas but rarely explain what it truly. So if you're thinking about starting a business or probably are in business already and are wondering if you've made the right choice, you can consider the following: 

Demand

Is there a demand for what you're offering? Is there someone out there who is willing to pay for your product/service? No demand means no sales and you know that would mean no revenue. 

So it’s important to check if there is demand and if this demand is sufficient to actually sustain a business.

 Suitability

Is it suited for your strength, passion, or expertise? Sure you will get better with time, but you'll have a greater advantage if you get into a business that is suited to your strength, passion, experience, and expertise. 

This is why you find two people doing the same business in the same environment, one is wildly successful and the other is struggling. It means one is well suited to the business while the other is not. 

Profitability

Is it profitable? Everything involved from creating to delivering your product/service to your customer will cost you, but the revenue you make from it should exceed the cost for it to be worth your while. 

With these, you can begin crossing off some ideas which may not be as good as they seemed. 

Serves A Purpose

Products must solve a problem or serve a purpose or there’s unlikely to be any demand. Customers must feel there is long-term value in your products or will be unlikely to buy from you. Also, this value must be clear – murky benefits will be difficult to sell. 

Unless you can quickly and clearly prove your products not only solve a problem but also do so more efficiently than products supplied by your competitors, you’ll have a hard time selling your services.

Commercial Viability

Your business idea must work within the constraints of a start-up business. Conceptually, ideas may look like money-makers but unless they’re able to be made and sold profitably and linearly then it will be next to impossible to commercialize the idea. Likewise, inventions may require such large amounts of start-up capital to render them untenable. 

If your business idea focuses on a product, speak extensively to manufacturers before starting up to ensure you can get the product produced cheaply enough in the early stages. If you can’t, it’s time to rethink.