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Research your business idea 

Research your business idea

The biggest risk and threat to your business idea is not researching and backing up your assumptions.

Performing comprehensive due diligence including:

1. Make sure there is a need and demand
2. Test if people are actually paying money for your solution
3. Make sure you don't just make copies of existing, established businesses
4. Find out who your competitors are
5. Determine how large your total addressable market really is
6. Feelings for possible prices, costs, etc

There are also many important points to clarify before moving on to the next stage of creating or implementing a business plan.

Starting a business is like buying a car: you need to do your research before taking the plunge. First, find out if there is a demand for your product or service. Perform a competition analysis. Find a place to open your business. And create a plan to differentiate your offerings.

Doing your due diligence can mean the difference between success and failure and it won't cost you a dime. Networking, online research, informal focus groups, and other do-it-yourself methods can often help.

Before you start researching, you need to create a solid business case. Once you have a concept, you need to determine if it can be implemented. To know if you should proceed with your business idea, you should ask questions like these:

• Is the market saturated? Does your town really need another hardware store or florist? How much money is spent in your industry each year in your area? Is there room in the market for other companies?

• Does the market want your offer? If you offer a dog sitting or facility where people in a group can cook a week's worth of meals, does anyone care? Or if you're developing a new online service for day traders, they can't do without it?

• What does the competition do? What are they good at? What are they doing wrong? What's so special about them? Can you offer something different that encourages customers to choose you over a more established company?

• Can you reach your target group? If you sell skates, are you opening in an area with the right age population and disposable income?

As soon as you are confident in your business idea, dive deeper. You need information that will help you develop a unique business proposition that will give you a competitive advantage. The best sources of information will vary depending on the type of business and circumstances, but the choices are:

• Commercial Information. In the wedding website example above, the wedding planning industry association provides direct links to the information the venue is looking for. You can also find more specialist information in print or online specialist publications or while walking through the trade show aisles.

• Demographic and economic data. Get the latest economic census to get information such as age range, income, number of businesses by type in a geographic area, and total sales in your category. For more information, the reference librarian can refer you to other subject databases.

• company group. Your local chamber of commerce may be able to help you find the information you need. Also, try government sponsored small business development centers that help entrepreneurs and small business owners.

• Local university. Sometimes business school faculty are interested in having their graduate students complete market feasibility studies for credit.

• Local competitor. If you are starting a local business, shop from competitors and take a look at their websites. Or find a similar business in a similar city and ask to speak to the owner. Also look for similar businesses for sale and contact the broker for information such as: B. why they are selling and what their finances are like. You may be interested in acquiring this company yourself.

• National competitor. Do an online search for companies in your industry and evaluate their offerings to refine your idea.

• Potential customers. Share your ideas with informal focus groups. Talk to friends of friends - but not your own friends or family, as they may not be telling you the truth - and to existing or existing customers if you're already in business. This is a test run to see if your prime-time schedule is ready or needs to be changed.

All that detective work will pay off by helping you validate your business plan, sending you back to the drawing board, or convincing you to put it aside altogether. And don't worry if that happens - inspiration will come back to you.