Wednesday, January 23, 2008

Evaluating New Business Ideas

Chances if you've managed the birth of a successful business, you want to have another. Like a parent, during your start-up phase you'll agonise how your business is going to grow. As it does, you'll wonder if it will ever fulfill the dreams you have for it. You will spend many sleepless nights giving it your all and you'll be happy, ecstatic even, when it succeeds. Like most parents too, you'll soon find yourself wanting another.

At least that's what most entrepreneurs tell me but If it's one thing I've learnt during the hours I spent dreaming of either owning a restaurant or traveling to Italy to buy shoes at trunk shows, it is that when it comes to evaluating a new business idea, research should be your best friend.

For every great business idea there are scores of others that just won't work. I've seen my own friends try to give birth to their own entrepreneurial dreams and for every 1 that makes it, there are nine that don't

If you have a big idea and want to know if to move forward or pull the brakes, begin with the following questions:

1. Ask your friends and associates to help you evaluate the concept. If you know successful entrepreneurs, ask them what they think of your idea. Chances are, they'll think of problems you are likely to encounter. You may be willing to face those obstacles - or you might decide that some of them are insurmountable.
2. Ask potential customers how much they'd pay for your product or service. Their answers will help you focus on your potential market, and will give you a sense of how strong that market is. Once you have some answers to this question, you can begin to estimate your potential revenues.
3. Figure out if you are truly excited about the idea. Will you actually enjoy the work that will be required to make your venture a success?

If not, move on.

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