How To Evaluate A Business Idea
But attracting your new business ideas may appear at first glance, make sure to spend your time on the evaluation. Become a success, your product must be unique, overcome real problems, and offer incentives for customers. These incentives can represent prices, or improve the quality of functionality, for example
Ask yourself the following questions before investing in your idea to test true market feasibility.
Does your idea complete real needs?
A good product is not just a material concept but a combination of problems and solutions for that. When a customer buys your product, they plan to entrust it by doing certain tasks for them. Therefore, the product value must be sufficient so they want to pay. After all, your product is developed not because the engineers want it, but with the aim of addressing certain needs of end users.
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Many entrepreneurs believe that implementing a successful company model (eg. Uber, Facebook, Airbnb, etc.) to the local market will be enough to start a growing business. However, this approach rarely handles real needs. The best ideas usually come from two ways. The first is when the founders themselves face the problems they tried to complete. The second way of successful ideas is the result of a long study of user experience.
For example, take the financial application. One aspect that affects user satisfaction with the application is onboarding procedure. Everyone wants to spend a little time on registration and do a safe operation with their funds. However, such types of software must comply with certain legislative requirements. Developers choose a proven way, ask users to enter various data at a few steps. This approach allows users to achieve goals – do operations. However, it is clear that reducing the amount of data that must be entered by users for accurate identification is a way to solve the existing problems.
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Go through SWOT analysis (strength, weakness, opportunities, and threats) of your idea to see a greater picture of your product and potential risks that might be needed.
Is there a market for your product?
It’s not enough to just have a cracked idea – if you want to make your business big, it must have a market.
Analyzing potential requests and buyers for your product: social status, age, location, buying habits, and disposable income, internet presence, and channels to reach them. Will your customers be willing to pay the price that can give you an acceptable profit margin?
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Market size – or number of users who face certain problems – are the main factors that indicate whether your idea is worthy. If your solution is only relevant for a small market segment, your idea is destroyed. In turn, if you can attract a big market group interest, there is a possibility that the niche already has many competitors with similar offers.
It is also important to understand that the problem faced by users changed slowly, so it was almost impossible to find unbreakable problems. If the gap between problems and solutions is large, there is room for new products. Think of examples of financial applications: no one has proposed a fast and safe aragaman.
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Depending on the way the product is implemented, it may be better or worse with replication. For example, it is more difficult to replicate homemade food delivery products, causing the “food” section requires recruitment staff, rent, buy materials, etc. Meanwhile, shipping independent food through the application is easily replicated on Google Play and application stores. It is recommended to startup to make products that are easy to replicate.
Conduct analysis and benchmarking competitors to see how similar business works: marketing strategy, price setting policy, functionality function, etc. Think about what you can learn from their experience and competitive advantage what you have. Your product can be stronger, visually attractive, cheaper, or easier to use. Novelty is one of the most important factors. Understanding your unique sales propositions will help you promote your product effectively to target markets.
What financial burden involved with the product?
It’s no secret that you will need business capital to launch a startup. Whatever source of funding – personal savings, financial institution loans, crowdfunding, or their combination – create a small business plan (or not too small) that describes how you intend to spend money and how much you expect from investment. Maps of all expected advantages and disadvantages include beginner fees, projected growth milestones for the next few years, the cost of developing and maintenance and sales target to see how like your idea is on paper.
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Think of the life cycle of your product. The life cycle of technology products tends to be shortened as a new technology that allows stronger solutions to grow. If you plan to attract third party investments, you must show your readiness and ability to update and enhance the product to ensure the longevity.
Dependence on other products or systems (such as software that requires certain hardware to run) can affect the market. Market failure and unexpected technological changes from products or systems that have been linked can damage your financial well-being.
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Product security can also affect the technical feasibility and market of your ideas. If your product has a security related problem, it will be difficult for you to attract investors and market your product. Therefore, check whether your idea meets industry standards and comply with all relevant laws and regulations.
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