An objective assessment of your business idea is essential for success. This is the part that many people get wrong and many businesses actually fail from this point. If the foundation is wrong then the structure is unlikely to survive. Rather than looking for information that supports your idea, however flawed it may be, it is essential to hear as many opposing views as possible. Put your idea through the crucible and let the heat either purify it or destroy it.
Assess the idea from its technical and practical feasibility
The first thing to assess is the product or service itself to see if it does actually work as intended and if it does actually deliver the benefits that were envisaged. This may involve testing the product or service in a private test, a laboratory setting or on the potential market itself. The results of the test will often lead to product or service improvements.
Assess the idea from person and team feasibility
The entrepreneur also has to ask themselves the question: ‘is this idea right for me?’ Some ideas are great but just not for you. They will work well for someone else because of their personality, skill set or other attributes. Just because you have come up with a brilliant business idea does not mean that you are the best person to implement it and secondly, just because the idea is brilliant, does not mean that it will succeed. Brilliant ideas are one thing and execution is another thing altogether. At the same time, it is important to assess if you can assemble a team with the right skills to handle various aspects of implementation. This is not as easy as it may first seem. Getting reliable people to commit deeply to an idea and a company that is unknown and has not been proven is quite a challenge. In addition, securing enough funds to compensate the team until such a time that the revenues of the business can support the team is also a challenge that should not be under-estimated. For these reasons an idea may need to be modified, postponed or abandoned.
Assess the idea from economic and financial feasibility
It is important to assess if the idea is well-aligned to prevailing economic and cultural realities. Some ideas will work well in Europe or USA but not in Asia or Africa and vice versa because of economic and cultural realities in those environments. Many entrepreneurs ignore market realities choosing to believe that a depressed market, or certain market beliefs, or the mood of the market etc. are less important than the benefits delivered by the product or service. This is a bet that they lose every time. In addition, the idea may be attractive to a small segment of the market and therefore, while there will be demand for the product or service, the volumes will not be sufficient for the business to be viable from a financial standpoint. Over-estimation of market demand based on positive results from limited market tests is a major cause of business failure after full-scale product or service implementation. For these reasons, it is often wise to have third parties researching the economic and financial feasibility of the idea or for third parties to critique the idea from an economic and financial feasibility perspective and that way make the necessary adjustments or abandon the idea if it really has a fatal flaw that cannot be altered to meet existing economic and cultural conditions.
Assess the idea from its temporal feasibility
Some ideas are brilliant but come at a time that the market is not yet ready for them. In these instances the business tends to fail because it runs out of runway. That is, it runs out of funds to carry on operating until the idea takes off in the market. On the other extreme, the idea may be well-established in the market that an additional player in the market may not be attractive to the market. The most successful ideas tend to be those whose time has come and that meet consumers at the point of need and at the price that they are willing to pay. Timing is everything. Enter the market too early and you fail. Enter the market too late and you fail. Therefore, one needs to be able to read the market well and either introduce a new product or modify an existing product at just the right time.
At the end of the idea assessment processes the questions that the entrepreneur needs to answer honestly are:
- Does this idea actually work from a practical standpoint?
- Is this idea really suited to you and what makes you believe that you are the right person to execute it successfully?
- Do you have the right people to execute the idea successfully?
- Is there strong enough actual demand for the product or service & from what evidence?
- Is this an idea whose time has come and why?
If after an honest idea assessment, the entrepreneurs are satisfied that these questions have all been addressed positively then they can proceed with their idea. However, if there is any point that has negative results, then, it is wise not to proceed with the business until a solution has been found to address the negative aspects. Business failure is expensive and should be avoided if at all possible by not entering into a business that has red flags all over it. It is important to resist colouring a bad business idea with positive colours because it will fail ultimately regardless.