Five Steps to Validating Your Small Business Idea
Statistics gathered from time to time reach the general consensus that something like 90% of all new businesses will fail within fewer than five years. Discouraging, but it reflects the fact that creating a profitable venture is much more challenging than it at first appears. Here are five fast keys to establishing a successful business model.
#1. Developing a sensible economic model.
Remember, that what you’re really charging for is your time. Whether it’s retail or fast food or consulting or creative design - your biggest overhead is the hours on the clock. You will have to charge enough to make that time worth your while. You also have to be realistic about setting prices. Charge too little or too much and your business dies.
#2. Let the competition be your benchmark.
Usually, your business idea already exists in some form or another. Look for the company with the closest business model to the one you want to start and look at how they’re doing. If there isn’t any company doing what you’re doing, ask yourself why. Maybe you’re on the brink of revolutionizing the market with your fabulous inspiration, or maybe a dry-cleaning service that delivers a singing telegram along with the pressed suits door-to-door just isn’t something the consumers are clamoring for right now. Look for the closest possible business you can find, anyway, and if you see them going down and you can’t figure out why, you’d probably better wait for a different idea.
You have to walk before you run and crawl before you walk. Can you start out with a simple garage operation and produce the product for a few select customers? Can you start providing your service to a few customers yourself locally? Perhaps you can rent a stall at a flea market or throw together a beta-product web page to dip a toe in the market without risking too much. If you get mobbed for business, you’ve found a market in need of an entrepreneur.
#4. Modify where necessary.
If at first you don’t succeed - maybe you don’t have to try, try again, but trying something slightly different might work. Many successful businesses you see today didn’t start out with a smashing success on their opening day. They had to experiment and try different things before they found the sweet spot in the market. Maybe the boot store didn’t work, but a general shoe store would. Maybe the Goth oxygen bar didn’t make it, but a Goth night club would.
#5. Roll it out.
There is a crucial point between discovering a market niche and filling it, when somebody else can move in and quickly exploit the niche you were looking to fill. Remember that synchronicity exists; the idea that occurred to you is almost definitely occurring to somebody else. This is why international awards like the Nobel science prize often get split between two or more recipients - two independent scientists on opposite sides of the world can follow the same path and get the same results, all without knowing about the other!
Tag: Validate your business idea
