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Validating your new business idea: Some questions to ask yourself

Validating your new business idea: Some questions to ask yourself
Currys Business
Currys Business
Taking care of business
 

Posted: Wed 6th Jul 2022

The process for checking your new business idea should help you identify that everything is in place to start your project. This means confirming you have the right skills and abilities, as well as the right personal circumstances to launch your business. Of course, this will be based on a brilliant idea in a market you've closely assessed!

This exercise requires dedicated time to ask the questions that will help you work out whether your new enterprise is viable. Here are a series of questions you should ask yourself when determining whether your new business idea is viable.

Your business area

You need to define your business area properly. This means explaining your concept and how you think you'll launch your business before taking it further.

How would you best describe your product or service?

Define the characteristics of your product or service as precisely as possible. Include what you're going to distribute to your marketplace. Are you launching something new, or is your product an add-on for something that already exists?

Who are your ideal clients?

Before studying your target audience more closely and getting deeper insights, divide your market into segments. Can you identify your clients? Are they scattered around different areas, or are they within your district?

What's the exact need that your product or service meets?

This is a fundamental question. The gap could be too wide between your product and your customers' exact needs. Is there a real and defined need? Is the solution you're providing valid for those customers you're targeting?

How will your product or service be used? 

To show how you intend your product or service to work, you need to know if it meets your customers' needs. Consequently, put yourself in their shoes to understand their expectations.

What methods will you use to market what you're selling?

You need to be confident about selling your product. For example, are you selling to an online (virtual) market or a real one? Are you a shop or selling from another setting?

Are you being innovative?

Is your project offering something new and different or simply an improved version of what's already out there? Being creative is critical to making sure you stand out from your competitors.

What are the strengths of your product or service?

Noting your strengths means you can gauge your competition better, so always analyse them with a critical eye. This will help you find out if they're enough to make your new business appealing against the backdrop of the competition.

What are your business's limitations?

It's essential to study and assess the issues you might face with starting your business. Depending on the features of your product, these will vary. They could, for example, include production and distribution issues. There's also a risk that your product or service may be misunderstood due to poor communication on your part.

Are there various regulations governing your business and its sector?

You need to understand any particular laws that apply to launching a new business. In the UK, this includes laws around tax, registration and other administrative steps.

 

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Your intended market and your target audience

What type of market do you intend to serve? What size is it?

Is the market you plan to target local, regional or national? Have you segmented your potential customers? Are you working in a business-to-customer (b2c) or business-to-business (b2b) market? Is your market seasonal? Can you tap into a new niche?

Who are you targeting?

You need to define your potential audience and then those customers who will form your key target group.

What are the market trends?

Are you part of a booming market, which means your competitors will be quick to react? On the other hand, perhaps you're in a mature market where you need to visibly stand apart from your competitors?

What are the barriers when entering your market?

Launching into your intended market means you'll need to study it thoroughly and have a good network of contacts. Also, you'll need a suitable capacity for production, which is really important, depending on your position.

Personal projects

What motivates you?

Entrepreneurs need motivation. This is an absolute requirement for creating a new business. Motivation is a true pillar in business, but you may lack the right drive and determination on the flip side. Also, this could backfire on you and lead to you making mistakes.

What are your goals?

Make sure you (and any co-founders, if you have them) have a well-defined vision of your intended new business.

What are your main strengths? 

Ideally, you should be competent in your business, including in marketing and management.

Are you resilient?

Consider possible setbacks as springboards for growth and progress rather than threats to avoid at all costs. Facing problems and making tough decisions are opportunities to prosper.

Are you a good communicator?

It goes without saying that you need to make the most of your communication abilities. Communication is an essential aspect. You're a creator, so don't be afraid of the little challenges that cross your path.

What concerns might you have?

Think carefully: the life of an entrepreneur is no walk in the park, especially at the start. Remember to make time for your personal life. Failing to prepare correctly for this can upset your business's progress.

Check and test your idea

We've now reached the final stage. Review your answers to the questions above and identify your strengths and weaknesses. After your analysis, you'll be able to look at your new business idea, given the reality of your situation. Now, you need to decide whether your business venture is worth putting into practice.

Not working on your marketing plan

Having a marketing plan is critical for your business's long-term strategy. Don't wait to start planning your marketing until you finish developing your product or service. Then, finally, be ready to launch it on the market.

Not choosing the right product

Many new companies are too diverse and offer a range of products or services as a way of ticking all the boxes. Instead, focus on your strengths before you diversify. A vision that's too comprehensive in the beginning can cause problems early on. Consequently, it will waste your time, energy and money.

Heading in the wrong direction

If your project doesn't go well right from the start and you get negative feedback, you're the one to blame. You need to react and adapt since your potential customers won't adapt to suit you.

It's like the story of the driver going the wrong way down the motorway, wondering why all the other cars appear to drive in the opposite way to him.

Lacking a plan B

A character in a famous 1980s American TV series often said: "I love it when a plan comes together". Unfortunately, in real life, this rarely happens. Even if you believe in your idea, you need a plan B (and even a plan C) for your project. In this way, you won't get stuck as soon as you meet the first unforeseen hurdle.

Dealing with incompetent colleagues

Just as choosing the right business partner is essential, you must know how to select a team to trust to be competent. Devoting too much time to supervising or even correcting the mistakes of an incompetent team can be a source of problems over the medium term.

Underestimating your financial needs

Launching your product or service will always lead to some unforeseen situations. These will automatically involve more costs. So, you need to set aside reserve funds within your budget in case such problems arise. It's crucial at the start!

Having too tight a schedule

Starting and launching your new company is likely to take more time than you anticipated. As a result, you need to think about flexible terms and adapt timings in case of unexpected circumstances.

Believing you can do everything on your own

As an entrepreneur, being too proud (which is a typical human trait) won't serve you any purpose. So, get support from the very start. Share your idea with business mentors, experts, business advisers or experienced entrepreneurs.

Failing to manage your time well

Leading your time is one of the main mistakes that entrepreneurs make and isn't easy to correct. However, it's possible to lessen the impact. For example, a common error is devoting too much time to developing your product or service while neglecting your sales. Without sales, even if you have the idea of the century, you won't make any progress.

Not getting any training

So, are you convinced that becoming an entrepreneur is your destiny? That's great! Indeed, having this conviction is essential. But do you have the training and knowledge to meet the criteria essential to any good business owner? For example, you need to be trained in basic financial management and accounting to avoid confusing a sale with a profit.

Being too conservative

An entrepreneur is a creator who continuously needs to express themselves through their entrepreneurial activities. Building a solid base is good, but you need to develop it to look for new opportunities and proposals to grow and not stagnate.

Neglecting your network of contacts

Having a network of contacts is essential. It should include potential partners, mentors for support, and customers. As you can see, an entrepreneur needs to have a good number of contacts to succeed.

 

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Currys Business
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Taking care of business
 

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