Is Your Business Idea Worth Pursuing?

You’ve hit upon a business idea. It looks quite nice to you; maybe it even bears all the hallmarks of a market disrupting, once in an era hit, in the league of Mark Zuckerberg’s Facebook or Bill Gates’ Microsoft. Perhaps your friends and family also think it’s the best thing since sliced bread.

But how can you be certain that it’s actually worth pursuing?

This question assumes great significance when we realize that SMEs and startups have very high mortality rates. You don’t want to put tons of precious resources into an enterprise only to see it sink due to challenges you should have foreseen.

There probably isn’t any fit-for-purpose answer to this question- at least, not when it’s supposed to be comprehensive. This is because there’s always at least a streak of uncertainty about business. You’ll always have things happen which you could never have forecasted; things that could fire your business up the growth path very rapidly, or push it down the dark descent into failure. There’s a risk tied to anything that’s truly worth doing.

Thankfully, we can at least sketch a fairly good outline of what a business idea worth bringing to life would look like. Here are five things to look out for when you’re turning over a business idea that’s dancing about in your head.

1. The problem it solves

Your business should revolve around satisfying customers’ needs- and getting paid for doing so. If your idea isn’t solving a real problem that’s bugging people, you should ditch it.

Note that some problems are hidden in plain sight, i.e. most people don’t even know that they have the problem in the first place. In such an instance, you should definitely prioritize the opinions of your probable typical customer. Explain your solution to them, and see if they would value it well enough for you to make a business out of it. Do this before deciding whether to make the leap into the venture or not.

2. The market it will sell to

Let’s say your idea does solve a real, perhaps significant problem. Do your potential customers value your proposed solutions well enough to pay well for it? And will they be purchasing the product at a frequency high enough to guarantee a steady flow of revenue, one you can build your enterprise with?

In summary, it’s one thing to come upon a solution to a challenge; it’s quite another to ascertain that the solution is worth something in the eyes of those who could be buying it.

3. Founders’ skills and experience

The chances that you’ll successfully captain a ship without any prior knowledge or experience of seafaring (talk less the technicalities of steering a ship) are rather slim. The same goes for business. You might raise the roadside micro scale trader as a large exception to this rule, but then you’d be wrong because it takes some degree of knowledge about what you sell to keep such a business alive for years.

Assess your skills, and decide if you’re good enough to tackle the challenge that your business idea leads you to deal with. Of course, you can get yourself trained in the areas in which the business will require you to be technically competent. You may also join up with partners or co-founders who are skilled in the aspects of the job in which your abilities are deficient, so that you all complement each others’ efforts.

4. Resources needed at the start

Your idea won’t get off the ground without the materials needed to make it work. Before launching out to create something concrete of your lightbulb moment, be sure to take stock of what start up resources you have, and know whether they’ll do for the period before you break even.

Accounting projections come in handy here. You’ll have to draw up a list of things you’re going to be using in the early months of the business, and attach their market prices. These sorts of calculations aren’t always straightforward, but they can make the financial demands of a business fairly clear before it becomes functional. This in turn saves many from collapsing under the weight of an otherwise undetected burden.

5. Revenue generation model

How do you intend to generate revenue from the business? What aspects of your venture will yield the money you’re expecting from it as a whole? What revenue sources should you emphasize?

It’s important to identify this from the outset. It may be refined as you go along, but it must be clear from the start that the idea can gross good sums.

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ikenna-nwachukwu

Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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