Starting a business creates opportunities for anyone – freedom, learning opportunities, independence, changes and more. However, developing a business comes with risks and the right preparation to handle challenges that comes with it.
Table of Content
Let’s look at some quick stats…
- One business is set up every minute it the UK.
- 9 out of 10 startups fail (Fortune)
- How many business do people set up to have a successful one – some in their 4th or 5 businesses.
The above statistics are not there to deter you, but they are realities to grapple with when entering entrepreneurship. I remember when I participated in an incubation programme this was the setting stone, to make us familiar with the realities and that’s what I hope to do here too.
I’m sure you’re wondering what are the causes of these challenges and how can you avoid that happening in your business. After all, if it’s that easy to avoid why do many business fall into it?
Idea Validation
Every business stem from an idea. To solve a problem. What is yours?
One of the reasons why businesses fail is because the market no longer needs their product. (Fortunly, 2022). This is where idea validation comes into play.
Idea validation is simply the process of testing your business idea.
Evaluating whether your business idea is viable.
Is there a demand for your product or service in the long-term?
A survey is a good starting point. Validate your idea before you start thinking about branding, location, scaling etc. the others are secondary requirements.
Here are 6 Opportunity factors of business idea validation
6 Opportunity factors of business idea validation
DEMAND
Evaluate whether there is a demand for your product/services. Who and where are your customers?
Do some market research to see who you want to serve with your business. Look at existing and similar businesses and see how they do things.
Work on developing a business that satisfies a market need rather than creating and trying to push your products/services into the hands of consumers.
EXPERTISE
Here is where your expertise comes into play.
It’s easier to develop your idea if it’s something you can do. Especially, if you are starting out with minimal resource – y ou want to gauge your expertise.
No matter how great your idea is, if you don’t know how to do it then it may not be an opportunity for you.
You need the necessary skills to develop your business.
RESOURCES
Identify the necessary resources you need to start the business.
:For products and services: what online resources do you need? For products what equipment do you need?
Money is a crucial factor, do you have the money you need to start?
For finances, consider starting small and scaling up as you grow.
Put things into paper to have a visual check.
PROFITABILITY
Businesses thrive when it is profitable.
Without making profit the business will likely fail in the long-term.
As a small business owner, don’t compete on cost, rather focus on quality. Grow your expertise and you will find the right customers over time.
Don’t compare yourself to big businesses who can compete on cost, because they have economies of scale.
DISTRIBUTION
Here you evaluate how the product/service will get into the hands of your consumers.
For product consider your distribution channels.
For services consider the technology you will use to deliver your services.
PROPRIETARY ADVANTAGE.
This is finding something that is exclusive to your business.
What makes your business unique?
It is not a necessary component but it can add to your business growth. Proprietary advantages are essentially intellectual property – patent, having an exclusive process for creating and manufacturing, trademark which covers your business name and branding. But note that a proprietary advantage takes time to discover and develop.
Market Plan
A market plan is different from idea validation. A market plan is an extension of the idea validation process.
Lacking a business plan is another contributor to business failure. A market plan is a flexible document that covers the component of a business. It is absolutely not necessary to have a market plan, but it help in terms of planning and business vision in the long term.
A business plan allows you to consider the nitty-gritties of running a business.
It provides greater insight on how your business will function.
A lean business plan is a great starting point with the details you need to evaluate your business. Create one.
Test/Prototype
Testing and prototype involves creating samples of your product.
It’s quite easier for a product business to test this: you create samples and get people to test it out. Get their feedback and use their feedback to improve before the final launch. It goes a long way.
You may also consider interviewing prospective buyers to get their opinion. Feedback is crucial at this stage. it helps to evaluate your idea, consider costing with them and gain insight you probably wound’nt have thought of.
Consider having a soft-launch or simply testing the idea within a small group to test the visibility.
Read more…
Top 6 Reasons New Businesses Fail (investopedia.com)
Do remember, entrepreneurship is a process. Failure is a learning curve.
BONUS TIP
DEVELOP YOUR EXPERTISE AND LEARN COMPLEMENTARY SKILLS. Leveraging on your expertise is important. Your expertise is what will keep the business running. Continuously work on
Know that there is not a perfect business opportunity – all requires doing the work.
Till next time…
Ideas and IP 
Well said. The stats are scary though 😦
LikeLike
Oh yes. But it’s not something to be dwelled upon. Rather the lessons of preparation and creating what the market needs before one invests in the business is crucial.
LikeLiked by 1 person