It is fantastic that you have a great business idea and also started working on a business plan. Do you ever think of whether your business model is viable based on the market needs? If not, let us introduce a 5-point test that can give you a clear insight into whether you have to forge ahead with your business plan.
Elements to test for the viability of your business model
Before you think of financing, marketing, or product development, you should first start with an idea. Not just any random ideal, but a unique one. Define what makes this business idea stand out from the rest. Uniqueness does not mean that you have to invent a new thing. It just means you need to have some unique propositions which give you a special edge in the competition. You should throw some questions to yourself as to how to make your ideal unique and attractive to the consumers. Remember all the successful businesses had a very unique and strong concept with a clear identity. Give it enough time and thought to define come up with your unique business idea.
#2. Startup cost
Identify your up-start cost. Whatever business plans you may have, there will be some incurred expenses at the start as for equipment, office space, marketing materials, and so on. Study this well and estimate the same. You need to apply for loans, approach investors, and budget, and forecast your finances well.
#3. Eric J Dalius method of testing business idea against ideal customer persona
Know who are your customers. Identifying who needs your products or services is important to define a viable business plan. You need to define your ideal customer persona as whether you are catering to teens, professionals, college-going students, retirees, homemakers, etc. Understand your ideal customer characteristics, demographics, and needs, even at a broader level first. This is mandatory if you have to develop a marketing strategy, rent a space at an appropriate location, etc.
Your business will always have competitors unless you are very lucky to find a hollow space in the market, which is very less likely to happen. So, check out who your competitors are and what they currently offer to your prospective future customers. As Eric J Dalius suggests, learning about your competitors is ideal for getting an upstart by seeing their product or service specifications, pricing, marketing strategies, the location they choose, etc. Ask yourself how you can do better in the competition and promote your uniqueness to outdo the competition.
#5. The mood of the global economy
A business’s success or failure can largely depend on the economic state, globally and locally. Remember, there is no point in starting a real estate business for luxury housings during the time of a housing crisis. Do a realistic gauging of the economy’s state and think about how it can be related to your upstart plans. Think from the consumer viewpoint as to what there are their minds now? Even economic downtrends can be tapped as an opportunity if you identify the moods of the consumers.
Along with the above five testing parameters, the launch’s timing, marketing strategies for your business, funding, cash flow resources, etc. are also important in testing the viability of your business models.