Many of us have thought about starting a business. The idea may have come about as a result of lengthy reflection or sudden brainstorming. Whatever the idea came from, the most important thing is to consider whether your business idea is profitable in the long run and whether it builds profitable business.
That’s why we’ve put together a series of questions to help you determine if a business idea is a good idea and whether you should go ahead with it.
Consider these when thinking about how your business idea works:
Is the business idea clear?
It is important that the business idea has a clear red thread and purpose. You can test this by trying to explain your idea to outsiders. If they understand the brief explanation on the top of your idea (and you can tell it yourself), the idea is probably good. Many budding entrepreneurs make the mistake of simply turning their idea around in their heads and focusing on the flower stems, which easily overlooks the very purpose of the whole idea.
Do you have customers for your business idea?
Perhaps the most important thing to consider when considering a new business is the potential customer base. Do you have customers for your business idea? It had whatever your business idea was, someone had to be willing to pay for it. You can approach it by wondering if your new business idea will solve a problem?
You can identify the customer base of your business idea by talking to other people and finding out if they would be willing to pay for your product or service. It’s a good idea to use people other than your loved ones and your closest friends here, as they may be too polite to admit they aren’t convinced of your idea.
Who are your competitors?
It is a good idea to map your competitors right from the start as you will know how you can stand out from the crowd and what your competitive advantage may be. It is important to know the competitive field and how others operate in the market. A defined competitive edge will help you stand out from the crowd and thus attract customers.
What is your earnings model?
Businesses do not run with negative cash flow for very long, so it is especially important to look at what your idea is to earn. In other words, how did you think your idea made money? The earnings model includes the sources of income for the business idea, value generation, pricing model, and who pays and where. It is a good idea to outline your earnings model clearly on paper or even in an excel spreadsheet so you can easily outline your income flow.
What are the costs of your business?
When mapping your earnings model, it would also be a good idea to identify what costs your business requires. For example, you might want to map your business cost estimates to an excel spreadsheet, so you can clearly see how much you need to sell to customers to cover all your expenses. Or how much money you need to start a business, for example. If you are applying for financing for your business, many people want to see clearly where the money is going and where it comes from. For example, at Mugridge, we often call our customers and personally discuss the company’s earnings model and cost, and we also provide tips for entrepreneurs. You can also use our Corporate Loan Calculator to chart the costs and repayment times of a potential corporate loan. Corporate credit is a good solution if you need more financing to implement your business idea.
Why do you want to be an entrepreneur?
Perhaps the most important question to think about when starting a business is why you want to become an entrepreneur and why you want to realize that particular idea. The reason for the importance of this question is that entrepreneurship requires hard work and can be difficult at times, especially at first. So, you really need to believe in yourself and your business idea in order to move it forward and convince others of your idea. But don’t be scared – think of Elon Musk and Bill Gates, who have made great strides, although not everyone has believed in their visions. Entrepreneurship is also very rewarding, you can work for yourself and success often works better with your own hands.
Why are you still hesitating?
Many wait in vain for the right time to become an entrepreneur and rarely wait for it to come. If you are looking for inspiration to start a new business, the Entrepreneur Handbook has compiled a list of business ideas that could help you start a business right away. So if you believe in your dreams and you really want to push them forward, now is the time. So don’t be afraid of the point, but get on with the action!