Editor’s note: This article was first published in January 2012 during the economic crisis in Spain; its remark about people starting businesses out of necessity because of the current situation refers to that period.
Some say that if you have an idea, you have a treasure. The truth is that if you have an idea, all you have is just that, an idea, although it’s a good start. Analyzing whether a business idea is viable is rarely easy: it takes market research, a business plan and something no less important, the entrepreneur’s own willingness, because many people sometimes decide to start a business when they aren’t really prepared to make the sacrifices that being your own boss can involve.
A few months ago we published Before starting a business, answer these 5 questions. Today we bring a different set of questions, perhaps more focused on whether your project is viable.
That said, there’s a method I recommend trying to validate your business idea in under five minutes. All you’ll need is paper and a pencil.
How do I know if my business idea will work? Answer these questions to find out whether it’s viable
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Will I be 100% committed to the business? Am I willing to sacrifice part of my personal life?
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Honestly… do I have experience running a business? Would I know how to do it?
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Do I know my product or service inside out, along with my competitors, their prices and so on?
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Is my idea easy for new entrepreneurs or existing companies to copy and improve on?
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Could I convince an investor to back my project in under 60 seconds?
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Would I know how to give my product added value that my competitors don’t offer?
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Will it be easy to convince a customer to buy from me instead of their current supplier?
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Is the risk of taking on debt too high? Am I willing to borrow? Will it be easy to recover the investment? Do I have a plan B in case things don’t go as expected?
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Do I have enough capital in reserve to see me through the early days of the business?
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Is my market objectively large, or is it small? If it’s small, go back to question 7: could I take customers away from the competition?
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Will I know how to get my idea known and reach a large number of potential customers?
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Do I need premises for my business at the start? Do I have premises? Could I afford premises in the strategic location I need? Can I start the business without money?
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Am I an expert in my sector, or just one more of the many already out there?
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Do I really want to start a business, or am I doing it purely and simply out of necessity?
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Sincerely and honestly… will I succeed with my idea?
All of these questions are extremely important, because overlooking any one of them can lead you to failure. Still, I want to dwell on number 15, because it may seem like an absurd question, but when you ask a high percentage of entrepreneurs for the first time whether they think they’ll succeed with their idea, they say yes. The second time they hesitate, and by the third they no longer know.
Others don’t really want the burden of their own business but have no choice given the current situation. That isn’t entirely bad, because anyone can learn, as long as, and we’ll say it again, they feel passion for at least what they’re about to start.
So that no one feels discouraged for having doubts about some of these questions: it’s perfectly normal for doubts to arise, because from those doubts you’ll get answers to questions you hadn’t even thought of asking. Once you’re clear on the answers to these 15 questions, move up to the next level: market analysis, business plan, financing feasibility and so on.
See also: Why new businesses fail
Featured image: Brendan DeBrincat, CC BY 2.0, via Flickr.
