Many business minded people get a lot of business ideas but they struggle in making decision on which one to adapt. Actually investing in wrong venture brings up a huge cost in terms of time, money and psychological investment. It is ideal that you take up steps in order to ensure that the business idea you have would really become a success. For instance, you are looking for live chat app market, then what would you do. I have shortlisted many angles by which if you evaluate any business idea than you would gain a fair understanding on either this business would work or not in a long run. Most of the businesses start generating revenue in their first year and if a business has not started generating revenue in its first year then it is a big indicator that you might be working on a wrong product or niche. There are many other signs which can help you in building clear understanding on either you are moving forward on a right course or not. So let’s start
- Revenue Per Person
If your business revenue per person is pretty much high, then it is biggest indicator that in a long run this venture is highly likely to witness success as it has potential to grow and out take its competitors. Market once start getting saturated then it leaves no space for new entrants to make their prominent place. RPP is greatest indicator because it lets you hire great people to expand your otherwise low RPP would not give you space to hire people who can actually change the game for you to charge higher prices against product royalty you offer.
- Business idea of your strength
Success of your business idea depends a lot on either the business falls into your personal strengths or not. At start business is quite futile and in that time you need to sustain. You cannot afford losing of any key person who is skilled at the core of your business idea, without whom you would get stuck. Success of business hugely depends on how much you can sustain on your own in the initial years of your business. Most crucial time is when business is just started especially the first year, most of the startups get wrapped up in the first year.
- Unique selling point/ Competitive Advantage
Unique selling point of your product or service decides that why your product would be preferred over others. Evaluating your product or idea starts from evaluating your competitors. Their sizes, their strengths and weaknesses. Checking competitors’ business model, provides you with fair idea on how much successful you are likely to be. Competitive analysis is one of the most crucial step in any business proposal because it sets your direction and tells you where you have margin to gain from. Knowing your competitors well is strength which can save you from fall outs when faced with stiffer competition.
- Checking market growth
Checking size of the market is also crucial step in weighing an idea on either you are going to be successful or not. Grabbing your competitors share is not easy when they are sitting in the market for quite some time, they have built their strengths which they would certainly utilize against you such as their low fixed cost per product. Many big competitors start giving promotional discounts to offer more value while not bringing their product price down.
If the industry has good market growth then you can at least expect some share of that pie as a natural setting perk.
Even if you enjoy competitive edge, if the market is saturated then big competitors would use extra perks to throw you out of the market.
- Test your business idea
Testing your business idea in general would provide you with honest feedback. Do not go for your friends in testing your product’s potential instead try it in a general setting. Testing at small scale would give you fair estimate that either your product has some real potency or not. Try at sample of 50 because it is closest indicator of actual population behavior. Many business people fail because they do not realize that they have been placing their efforts on a product which is determined to fail from start. Price, product usability and attractiveness all can be factors in making you lose the game. Demand is not just willingness to buy but also purchasing power.
Business model or idea’s success depends heavily upon the environment it is launched into. Accessing your environment and testing the waters ensures that you do not get hanged in the middle of nowhere with no option except closing your business down. Major points like competitors and market research can give you better understanding on if there is possible standing in the market for new startups. Having some ultimate competitive is not guarantee that you would be successful because price disadvantage and perks can mostly overshadow edge you enjoy over your business rivals.
Fazal Hussain is an experienced content marketer with expertise in writing for business and technology related blogs. He always looks for delivering value in his articles so that he can educate more entrepreneurs into making strategic decisions. He is currently associated with SwiftChat which is providing free best live chat software with premium features to help entrepreneurs reduce their online customer support costs.