How to Know if Your Business Idea is Viable and if You Should Take a Step Back

There is no shortage of business ideas in the world. In fact, conceptualizing a business idea is probably the easiest thing to do but the chaff is separated from the wheat when it comes down to the viability and execution of the idea.

A good business idea is just the first stage, a sound business plan, and a viable business model are the two most important stages you must get right before thinking of investing a dime. Even with this, you are not guaranteed success in business but you stand a better chance.

So, before you get too excited about your business idea because it looks perfect in theory, run it through our 6-point test to determine if you should go ahead or pause.

1. Is it Unique?

If your business idea is new to the market, that would be great. If not, it’s perfectly fine too. Most ideas are not new, they are just tweaked. So, it’s safe to say you already have competitors. These are tough questions you must ask yourself; why should people choose your business over others? What stands you out? Your uniqueness may be in your pricing, customer service, turn-around time, product, or general business model. You must clearly define how you want your business to be different.

2. Who are your Customers?

You have to know who your target audience is. Do you want to cater to nursing mothers, busy professionals, undergraduates, upwardly mobile millenials, retirees…? You have to also flesh out the specifics – their age bracket, location, persona, social class, etc. This is so vital to the success of your business. If you don’t know who your ideal customers are, how are you going to find them and how would you carve the appropriate marketing message for them?

3. Who are your Competitors?

If you’re the first to come up with such a business idea, you may not worry about competitors initially.  But if you are not the first, it means you have competitors already. You need to know them because your potential customers probably already know them or they will find out about them. You need to know how they price their product or service, the marketing strategy they use, their locations, etc. Then ask yourself, what can I do better than the competition? Here is where the uniqueness you identified in step 1 comes in. Your goal is to outperform your competitors.

4. What is the Economic Mood?

It is important to gauge the economic mood of the country or city you intend to do business in before launching out. For example, starting an interstate transportation business in Nigeria at the moment may be unwise because of the incessant kidnappings and killings going on in the country. Road transporters are ambushed almost daily and passengers whisked into a bush and later released in exchange for a huge ransom. That’s if they’re not murdered.

Here is another instance; starting a nightlife business in the middle of a national security crisis. That may not be a smart decision. While it is not a guarantee that such a business would fail, it would definitely not be as lucrative if there were no security challenges.

The important questions you just ask are; where are consumers’ mind right now? What’s their current spending behaviour? What are they more willing to spend money on? What’s their fear? How do they want their needs met? Etc.

It’s all about understanding the mood of the consumer. An economic crisis can turn out to be an opportunity if you understand the consumer’s state of mind and tweak your product or service to tap into it.

5. Marketing: Where will you find your customers?

No business underplays marketing and survives. If your business is ever going to have a chance at succeeding, you have to develop a sound marketing strategy. And the key to that is to understand your customers to the letter, as explained in step 2. This will enable you to develop the appropriate marketing campaigns that would capture their attention and make them notice your brand. You must know where to find them, how to find them and get the tone of your message right.

Plus, you must also study how your competitors acquire new clients. Do the same and go beyond.

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6. How much Money do you need?

Contrary to general belief, money is not always the first problem to worry about before starting a business. You can have all the money you need but without a sound business model, all your capital could go down the drain. You need to know exactly how much money you would need to start, how you intend to source the funds and have a roadmap to your consistent cash flow.

However, note that things may not always go according to how you have them on paper. The ability to innovate and navigate every challenging phase would be the difference between your success and failure.

Conclusion

This business idea viability test is not an exhaustive list but if have these points clearly spelt out in your business plan, you should forge ahead to the execution stage.