The entrepreneurial phase of small business creation is energizing and invigorating. However, your enthusiasm should be tempered with a healthy amount of pragmatism. Is your idea likely to succeed? Here are five important questions to ask yourself when vetting business ideas and deciding if you should proceed – or head back to the drawing board:
1. Are you specialized enough (or too specialized)?
One of the biggest mistakes entrepreneurs make is targeting an audience that is too broad. A more effective approach is finding a niche that isn’t being properly addressed. That said, your niche shouldn’t be too small, either. Make a realistic assessment of the likely response to your business idea.
2. What’s the nature of the competition in this area?
First, determine if you will have competition. It may seem like having no competitors at all would be the most ideal; however, this could be an indicator that there is insufficient demand for your idea or product. Entering a proven market reduces risk and increases your odds of business success.
3. Is the market growing?
Do research to determine if your market is expected to decline, flatline or grow. Of course, you’ll want to avoid declining or flat markets unless a trend upward is anticipated a short distance down the road. However, ideally you’ll want to enter a market that expects growth for at least a few years. An easy way to research demand and growth for a sector or idea is by searching your keywords within Google Trends.
4. How can I set myself apart from the competition?
Once you have cataloged and become aware of your competitors, make an honest assessment about how your business will compete. How will you set yourself apart from the field? Is there something a competitor is doing that you will do better? Is there a facet of the business or service area that no one is addressing? Ensure that you will be bringing something truly unique and compelling to the field so that customers will have a reason to seek you out above the other choices.
5. Does my idea get a positive response online?
Since your business will likely have an online presence, website and store, it’s wise to test your idea online before proceeding. While Google Trends can show you past interest for your search terms and allow you to extrapolate likely future response, doing some test PPC (Pay Per Click) advertising can allow you to assess current demand for your idea’s top keywords and phrases.
However, you can also use paid focus groups in your niche area to gauge interest. Experiment with different pricing and marketing approaches to see which garners the most favorable response.
The idea phase of entrepreneurship can be the most stimulating. However, it’s important to temper your excitement with a realistic assessment of the viability of each possibility. Use these five key questions to help you screen business ideas and focus in on the best and most likely to succeed.
“Remember, wealth has nothing to do with money, success has everything to do with failure and life is as simple as you make it!” – John Dessauer