HOW VIABLE IS YOUR NEW BUSINESS IDEA?
XX explains that inspired business ideas are only the beginning of a potential business venture, and before taking the entrepreneurial leap there are a few steps to consider in order to establish whether the idea is viable.
“Every good business plan begins with research. When new business ideas fail, it is often not because of the idea itself, but because insufficient research was conducted by the entrepreneur. There are many ways to conduct research, and a few of the aspects to consider during the due diligence process include product/service supply and demand, customer insight, competitors in the market place, financials and funding availability.
For example, one of the best tools to start the research process with is a SWOT analysis, says Mjadu. A SWOT analysis is used to define a business’ strengths, weaknesses, opportunities and threats.
“Taking the creative idea into the research and planning phase is often the most daunting part of the venture, but budding entrepreneurs shouldn’t become despondent during the process as it one of the most important phases of starting a successful business,” says Mjadu.
Mjadu provides the following tips for individuals trying to convert a creative business concept into a lucrative business plan:
1. Idea central: Your idea seems perfect to you, but just how unique is it? Any good business needs a unique selling point (USP), so spend some time researching whether the idea has been done before; what the USPs for competitors are; whether there is a legitimate need in the industry for another provider; and if the idea is based on trend or has long-term sustainability.
2. Defining the market: Spend enough time analysing who the target market for the product / services is, as well as who the competitors are. Establish what your customers want and how they communicate. Also ensure that you research your competition, including their strengths and weaknesses, as it will give you an indication of where to position yourself in the market. The more you know about your market, the more defined your business model can be.
3. Calculate the figures: Calculate your running costs, cost of sales, pricing structures, profit margins (both gross and net) and cash flow forecasts. It is also a good idea to conduct two different forecasts with as accurate figures as you can get to provide realistic reflections: forecast for the worst- and best-case scenarios. Once you are aware of your figures, it works in your favour if you start researching potential sources of finance for your business and start preparing to approach the financiers, if external finance will be required.
4. Persevere: New business ventures take up an incredible amount of perseverance, and entrepreneurs should not be disheartened by the need to constantly re-think, re-tool or re-define. Re-focusing should not be taken as a sign of failure, but rather as an indication of future success. If all your research leads to the need to redefine the idea or business plan, take a closer look at the concept and create road-map to achieve your ultimate goals.
“Taking the leap of faith and starting a new business venture need not be a terrifying experience, and entrepreneurs should not hesitate to ask for guidance from industry experts. The BUSINESS/PARTNERS Entrepreneurs Growth Centre – which offers free mentorship and support service to entrepreneurs – is a good starting point for budding entrepreneurs seeking guidance.
“Entrepreneurship is a constant work-in-progress, and success takes many relentless hours of researching, planning and hard work. Those willing to go the distance have the opportunity to turn an idea scribbled on a napkin into a successful, viable business,” concludes Mjadu.