Once you have the basics covered and you know that you are the right person to be building your business idea (because you won’t always be), before you do anything, you need to be confident that your business is viable (that it will work and be profitable).
You need to do research to best understand how likely it is that your business will work. Even if you have been working in your industry for years, starting a business is always a risk and you need to look at all of the factors that impact the success of your business.
Here are some factors you will need to consider:
Who Is Your Target Audience?
Have you ever met someone who plays an instrument and when you ask them what they can play they tell you: “I play everything.” Then you ask him to play Mozart and he looks at you funny. Ever had that happen?
We often think that what we do is for everyone. But that is foolish. Your business has a very specific target audience (the people you are advertising to who are most likely to buy from you). You need to identity exactly who your audience is and why they are buying from you. Without that information you are essentially throwing a big expensive net into the ocean that catches very little fish that you actually want.
This is important to remember. As much as you want your business to make money, you don’t want everyone being your customer. The reason for this is because your business’ reputation matters, and a bad customer experience can be damaging. So if you make it seem as if what you are selling is for everyone, you will get people who buy what you are selling and are unhappy – because it wasn’t for them.
So you must decide on the customer you want. You need to understand them and build your business to give those in your audience the most value that you can.
Who Are Your Competitors?
When you begin your business there will be other businesses who are also giving value to your target audience in the way in which you hope to. Firstly, you need to decide whether or not you can compete with the businesses already serving your target market. If you feel you can, then your job is to learn as much as you can from those who are already servicing your clients.
Look at an industry like a book. You cannot start writing a book on page 189, can you? No, you either begin writing it from the first page, or you can continue from page 189 once you have written 188. Business is the same, only difference is that when you begin your business you aren’t starting on the first page (almost ever) and your competitors wrote the first 188 pages.
The good thing is that it might be that your competitors thought the book was finished by page 188, and you might see that there is more, that there is something new to add – but you cannot do that unless you truly understand the first 188 pages. So you have study your competitors, you need to know your industry. You also need to try, as much as you can, to predict how (if your idea is successful) your competitors will react to your success.
When you begin your business you are a small fish in the ocean, and if you want to survive you need to know what the bigger fish are up to.
What Are You Doing Differently?
One of the most important reasons why your business might work is your USP (unique selling point). This is the part of your business that’s new, that is unique to your business, and it is why your customers will choose you over your competitors. It is probably also the reasons why you were able to spot an opportunity for a new business in your industry.
What this means is that you were able to see a problem that no one else could, and you were able to create the solution. That is your USP.
You need to define your USP as early as possible and you need to test that the solution you have (because there are many ways to solve a problem) is the one your target audience is able to understand, use, and get excited enough to talk about.
Are Your P’s In Position?
Product. Price. Place. Promotion.
Those are the four aspects of your business that you need to consider long before you start selling. So let’s break them down quickly.
Product: what are you selling?
Price: how much will it cost and how much are you selling it for?
Place: where will your target audience be able to buy from your business?
Promotion: how will your target audience hear about your business?
If you are clever you can combine each of these in a way that makes your business irresistible to your audience. Your USP could even be one of these. Perhaps you have figured out a way to make things less expensive, or to sell it in a way that’s more convenient for your audience to buy, or you have built a brand that has a great story and your promotion makes people want to buy it.
So that’s it. These four factors are great starting points for you to begin researching and defining whether or not you have a great business on your hands. If you have any questions, you can always ask in the comments below.