How do you Know your Idea for a business is any good

"How do I know my Idea is any good"
I was posed this question by one of the students last week and I said I would put a frame work together to allow you to decide if your Idea is the next Google or Microsoft. Let me know what you think.

Having an idea and having one that will actually succeed are two very different things. Evaluate your concept and take a quick look at a few financing options.

The Twenty Questions
The first step toward success is asking yourself a rigorous set of questions about your business idea. Below is a list of 20 questions about your business. Don't panic if you don't know all the answers just yet. You're just getting started. However, these questions do provide a great framework for beginning to think realistically about turning your brainstorm into a functioning enterprise.

• 1. What type of business are you starting?
• 2. What is its purpose?
• 3. Who will it serve?
• 4. What is your product or service?
• 5. How does your product or service fulfill customers' needs?
• 6. Can you articulate one sentence that describes what your business does, who it serves, and how it does that?
• 7. What are three unique benefits of your product or service?
• 8. Why are you going into business? (Remember the lesson we learned above!)
• 9. How did you come up with your business idea?
• 10. Who is your competition?
• 11. How is your business different from your competition?
• 12. What are the top three customer objections to buying your product or service immediately?
• 13. How does your pricing compare to the competition?
• 14. When will your business be up and running?
• 15. Is this product or service used in conjunction with other products?
• 16. Will you make special offers?
• 17. What plans do your have for advertising and promotions?
• 18. What data sheets, brochures, diagrams, sketches, photographs, related press releases, or other documentation about your product or service do you currently have?
• 19. How will you finance company growth?
• 20. Do you have (or need) the management team needed to achieve your goals?

You don't need to have all of the answers right now. The important thing is to begin to think strategically about your business idea. Asking the right questions will serve as a launching pad for your research, and ultimately the writing of your business plan.

Now let's look at one of the most useful tools you'll find: The SWOT analysis.

SWOT: The Strengths and Weaknesses of Your Idea
Once you've considered some general questions, you can begin analyzing your business prospects a little more deeply. To do that, you'll need a business tool called a SWOT. SWOT stands for:

• Strengths
• Weaknesses
• Opportunities
• Threats

The purpose of a SWOT analysis is to review the internal and external factors that may affect your company. The information will give you a better understanding of your business potential, the unique selling proposition you offer, and the competitive landscape of the industry you plan to enter.

Once you go into business, the SWOT is a tool you'll use over and over to readjust the course of your plans as you go.

Strengths and Weaknesses: The Internal Factors
Internal factors such as personality traits, employees, cash flow, and expertise will all play a major role in the success of your business. An objective look at your internal strengths and weaknesses gives you a good picture of where your company will begin, and it provides a blueprint for where you want it to go. Your SWOT should consider three main types of resources:

• The people on your team
• Your available finances (both cash and credit)
• Your manufacturing or production capacities

Looking at each of these areas, make a list of your greatest strengths. Now make another list identifying your potential weaknesses. This list will help you leverage strengths and compensate for weaknesses. To succeed over the long haul, you need to acknowledge and plan around macroeconomic conditions including unemployment, cost of money, inflation, and competition. How you handle the ever-changing external conditions is key to the long-term success of your company.

Using Your SWOT
A good SWOT analysis allows you to hone in on potentials and risks that might otherwise have remained vague. Cross-reference the four lists that you have created to see:

• The points where your opportunities intersect with your strengths. This is where you will find your greatest potential for profit. When your strengths match a potential opportunity, you have a strategic window to grow your business.
• The points where your internal weaknesses intersect with external threats. For example, if you are highly leveraged (that is, you have a lot of debt) and interest rates are increasing, you are facing a big threat. A slight increase in the effective interest rate can mean significant additional expenses.

Once your business is up and running, the SWOT will prove a valuable assessment tool on an ongoing basis. As the market and economy shift, as you hire new employees with certain skills and deficits, or as you acquire or lose customers, a SWOT analysis can help you identify areas that will benefit from increased focus, as well as areas where you have shored up your strengths.

Consider doing a SWOT on at least an annual basis -- possibly a quarterly one. Your business is a living, breathing entity with ever-changing needs. The SWOT is one way you can understand those needs and attend to them.


Slainte

Gordon