Good entrepreneurs always evaluate a business idea before taking a plunge in the industry. Creating one can be fairly simple or complex depending on the structure of the business. Often, the success of a company relies on the framework, brand image, and action plan – and it’s upon to evaluate a business idea.
Usually, people act upon the popping up of a new idea, and that’s just scary at the same time. Risk is a trait something a business wants to have, but jumping blindly into a void of uncertainness can break your business. Risk is fine, but making calculated risks is better.
So, when you have a new entrepreneurial notion, it’s best to evaluate a business idea, to assess what steps to do and risks to take.
Ways to evaluate a business idea
To evaluate a business idea, you must write down all aspects that can affect your company. This goes by brand image, product development, marketing plan, customer service, delivery, and more. What’s more, you need to identify a couple of factors such as your unique selling point and whichever that separates you from your competitors.
Let’s start with these questions:
- What can I offer to my customers?
- What makes your product unique?
- What benefits your customers the most?
- How can you deliver that product?
- What services can you offer to customers?
- How can you solve the problems of your customers?
- What motivates people to buy your products over your competitors?
Understanding your value proposition can increase brand awareness and boost marketing strategies. It’s a compelling way to recognize your business system and act on it.
Define your product or service
Are you running a restaurant? Find out how your tiramisu is different above everyone else! Are you using a special ingredient for a stronger kick? How about running an AI management software for digital teams? How can your features help in collaboration among task management? Do you have an app for it?
Also, create a detailed item list on its benefits and uses. Talk about its specifications. For instance, you’re selling cameras. Specifications like 24.3 megapixels or UHD 4K won’t create a customer base in the long-run. Perhaps it will cater to a specific technical crowd.
- Name of product
- Type, size, color, and physical properties
- Its unique selling point
- How people can benefit from it
- How to keep up with the production – suppliers, manufacturers, or partners
Take a holistic approach to defining your products or services. That way, you get to see all the people working, resources needed, and the logistics behind every creation.
Know your customers
Do you know your customers? Probably, not as well as you should have – if you’re like the rest of us. The more you know your target group, the better you can reach them with your message. Identify your target market and understand their backgrounds, experiences, likes, and dislike to the environment that speaks to them directly.
People receive thousands of ad campaigns every day. So, how to stand out from the competition? Your best approach to producing content lies on how well you know your target customer.
Practically speaking, a customer persona is a comprehensive description of your target audience. You will need to take those data from your target consumers to create a detailed persona. Start with the following questions/template:
- Age, Educational Attainment, Married Status
- Income and job title
- Country or location
- Are they in social media? How have they heard of you?
- Hobbies, interests, and dislikes
Effective customer personas are based on observation, market research, and insights from surveys, focus groups, and interviews. You can always start with one persona if you’re new to creating one. You can always create more customer profiles later.
Research your competitors
There are key operations you need to identify and track from your business rivals. The more you can detail their activities, the more you can tune your marketing tactics. Here are valuable insights you can take down notes of:
- Brand identity, design, and values
- Products and services
- Distribution channel
- Marketing activities, channel, and devices
- Media activities
- Annual report
- Number of employees
- Business owner
- Their partners
- Where they get their resources
- Strengths, weaknesses, opportunities, and threats (SWOT)
After identifying your competitor’s activities, make a similar note on your business. Ask yourself:
- Where do you stand out as a small business owner?
- What are your available resources?
- What is your SWOT?
While articulating your own business operations, be honest, authentic, and original.
Now that you’ve put the two lists together, make a comparison between your rival’s activities. It will be hard for you to look at some weaknesses and threats for your business. But it’s necessary to make adjustments for your business operations.
Conduct a market analysis of your business
Market analysis is the method of tracking down information about your industry, niche, customers, and competitors in the same trade your business operates.
While it usually takes part of your business plan, a market analysis can be conducted on an ongoing basis to help small business owners make smart decisions, justify risks, and strategies to grow the trade.
To do a market analysis:
- Define your objectives
- Look at real-time industry trends, data, and outlooks
- Target market and the market in need
- Make a competitive analysis
- Create a SWOT analysis
- Create a plan
- Repeat regularly
Define a concrete reason to execute a market stud. For instance, you might want to create an analysis for industry opportunities, customer retargeting, or strategy review. Analysing past failures or success allows you to generate action steps viable for your situation.