How to evaluate the potential of a business idea.

Your business idea addresses a genuine need.

The foundation of any successful business lies in its ability to solve a problem or fulfil a need. Take a close look at your idea and assess whether it addresses a pain point or fills a gap in the market. Are there existing products or services that fail to meet the needs of consumers? Can your idea offer a better solution? Identifying and understanding the problem you’re solving is crucial in determining the potential of your business idea.

Your business idea makes sense, financially.

Evaluate the financial feasibility of your idea, a.k.a can you afford or can you raise the money to get it off the ground? Do you have enough financial headroom to see you through that danger period between starting up and the arrival of income? Consider potential revenue streams and how you’ll approach pricing. Calculate projected expenses. Figure out what you need to live well, and therefore, how much revenue your business will need to generate in order to support your needs.A good business and financial advisor can help you to determine whether your business idea is financially viable.

Your business idea speaks to a defined customer and target market.

Who are you targeting with your product or service? Define who your customer would be and ensure your business idea actually meets their specific needs or preferences. You may wish to take it a step further and do some market research, engage with a focus group or use what’s at your disposal (like friends and family, social media followers and community groups on Facebook) to gather insights. Knowing if your product or service will sell starts with knowing who you’ll be selling it to.

Your business idea is realistic with your resources.

Be honest with yourself and consider what resources you have available. This includes the time and money you can commit to the project. Assess whether you have the skills you need to bring the idea to life or will you need to acquire them through training or hiring. Determine how you will leverage your resources to execute your business idea effectively. Being realistic about what you can achieve with the resources at your disposal (and ensuring you’ll avoid feeling burnout) is key to the viability of your business long-term.

Your business idea (and you) are adaptable.

Are you open to feedback? Be willing to adapt and iterate on your business idea based on what comes out of your evaluation as well as feedback. Seek advice from mentors, advisors and reach out to people you may know in the industry or other entrepreneurs for guidance. Staying true to your idea is important but not at the sacrifice of being able to pivot and evolve. Being adaptable will enable you to navigate challenges and jump on opportunities as they arise.

Summing up: how to evaluate a potential business idea.

Deciding whether your idea has the potential to evolve into a successful business takes both instinct, insights and a whole lot of legislative hoop-jumping.

Taking an idea to market and starting a business is a big deal. Having the right support and guidance around you can make a huge difference.

Aaand there’s nothing more we love than hearing big and bold business ideas. So reach out!