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How to Evaluate a Business Idea!

How to Evaluate a Business Idea!. Choosing a Business: Learn How to Evaluate Your Business Ideas. Starting a Business. Starting a business is easy! Deciding on what business to engage in is the difficult part. There are hundreds of ideas you might think of that could bring in income.

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How to Evaluate a Business Idea!

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  1. How to Evaluate a Business Idea! Choosing a Business: Learn How to Evaluate Your Business Ideas

  2. Starting a Business • Starting a business is easy! • Deciding on what business to engage in is the difficult part. • There are hundreds of ideas you might think of that could bring in income. • How do you know which of these business ideas will bring you success?

  3. What is needed to be successful? • Hard work • Positive attitude • Offer a quality product or service • Utilize strong marketing and management skills. • Determine if your business idea is strong and valid.

  4. Criteria to Evaluate a Business Idea • Ask yourself the following questions when evaluating an idea for a business venture:

  5. 1) Does it satisfy a market need? • Conduct Market Research! • Find a Need and Fill It! • Do Not Offer a Product or Service that is so new or unusual, people will not understand why to buy it!

  6. 2) Will the product maintain appeal? • Beware of Fads and fleeting trends! • If your product is a fad, move quickly to make sure you can capitalize on it before it dies! • Is your product or service appealing nationally or just meeting the needs of your local geographic area? • Check out the competition

  7. 3) How unique is your product? • The goal is to differentiate your product from the competition • Show how your product is unique, different or superior to the competition • Potential customers must find MORE value from your product to capture the market share

  8. 4) How useful is your product? • Many new ideas and products are successful because their creators identified an unmet need in the market. • How will your product be used? • How often will your product be used? • Some businesses help create a need (desire?) through promotional advertising and promotions.

  9. 5) How much competition exists? • You will always have competition! • Determine the kind of competition you will have locally, regionally and nationally. • Look for heavy or moderate competition (the fact that competition exists proves there is a demand or at least a need for the product or service you have to offer). • Test for market saturation! • Lack of competition could mean that your idea is not profitable to begin with.

  10. 6) Have you priced your product competitively? • The right price for a product or service is one of the essential elements in a solid business model! • The wrong price tag is a ticket for disaster (economic survival is a primary consideration) • Your price should meet three requirements: It should match the competition; It should be attractive to customers; It should earn you a profit

  11. 7) What is the level of difficulty in the creation or implementation of the product? • You need to consider time, capital investment needed, marketing costs, & personnel needed. • Do you have the engineering, production, sales, and distribution facilities needed? • You may have an excellent business idea, but you also need to consider the economics needed to produce it!

  12. 8) What are the growth possibilities? • Can the demand for your products or services be expected to grow or change with the economy? • Can your product or service survive a major technological surge or obsolescence?

  13. 9) Can I get backend sales? • Back-end sales are all the products or services you sell and resell to customers or clients after they have made their initial purchase. • Will your product or service warrant repeat sales? • There is real value in building a pool of repeat customers.

  14. 10) Is the product safe? • Safety is an important consideration for many customers! • You need to be sure that your personnel are properly trained to satisfy customers. • Educate your customers on how to best use the product & include clear instructions! • Be sure your business is insured against various forms of liabilities.

  15. 11) Can my product be promoted with strong advertising? • Emotion sells! People are motivated to buy because of emotions: greed, fear, want etc.

  16. 12) Will you be left with Inventory? • Avoid inventory risk! Would you buy this product or service? • Insure inventory against disasters- fire, tornado, hurricane, etc.

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