How to Evaluate a Business Idea! Choosing a Business: Learn How to Evaluate Your Business Ideas

Starting a Business Starting a business is easy! Deciding on what business to engage in is the difficult part. There are hundreds of ideas you might think of that could bring in income. How do you know which of these business ideas will bring you success?

What is needed to be successful? Hard work Positive attitude Offer a quality product or service Utilize strong marketing and management skills. Determine if your business idea is strong and valid.

Criteria to Evaluate a Business Idea Ask yourself the following questions when evaluating an idea for a business venture:

1) Does it satisfy a market need? Conduct Market Research! Find a Need and Fill It! Do Not Offer a Product or Service that is so new or unusual, people will not understand why to buy it!

2) Will the product maintain appeal? Beware of Fads and fleeting trends! If your product is a fad, move quickly to make sure you can capitalize on it before it dies! Is your product or service appealing nationally or just meeting the needs of your local geographic area? Check out the competition

3) How unique is your product? The goal is to differentiate your product from the competition Show how your product is unique, different or superior to the competition Potential customers must find MORE value from your product to capture the market share

4) How useful is your product? Many new ideas and products are successful because their creators identified an unmet need in the market. How will your product be used? How often will your product be used? Some businesses help create a need (desire?) through promotional advertising and promotions.

5) How much competition exists? You will always have competition! Determine the kind of competition you will have locally, regionally and nationally. Look for heavy or moderate competition (the fact that competition exists proves there is a demand or at least a need for the product or service you have to offer). Test for market saturation! Lack of competition could mean that your idea is not profitable to begin with.

6) Have you priced your product competitively? The right price for a product or service is one of the essential elements in a solid business model! The wrong price tag is a ticket for disaster (economic survival is a primary consideration) Your price should meet three requirements: It should match the competition; It should be attractive to customers; It should earn you a profit

7) What is the level of difficulty in the creation or implementation of the product? You need to consider time, capital investment needed, marketing costs, & personnel needed. Do you have the engineering, production, sales, and distribution facilities needed? You may have an excellent business idea, but you also need to consider the economics needed to produce it!

8) What are the growth possibilities? Can the demand for your products or services be expected to grow or change with the economy? Can your product or service survive a major technological surge or obsolescence?

9) Can I get backend sales? Back-end sales are all the products or services you sell and resell to customers or clients after they have made their initial purchase. Will your product or service warrant repeat sales? There is real value in building a pool of repeat customers.

10) Is the product safe? Safety is an important consideration for many customers! You need to be sure that your personnel are properly trained to satisfy customers. Educate your customers on how to best use the product & include clear instructions! Be sure your business is insured against various forms of liabilities.

11) Can my product be promoted with strong advertising? Emotion sells! People are motivated to buy because of emotions: greed, fear, want etc.

12) Will you be left with Inventory? Avoid inventory risk! Would you buy this product or service? Insure inventory against disasters- fire, tornado, hurricane, etc.