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Putting your business idea into action: Part 2

Posted: 23rd May 2019 by Clair Watmore Business Advice General, Cloud Accounting, Making Tax Digital

In the second part of the series we show you how you can test your new business idea before you put it into action.

Testing business ideas

To help organise your earliest thoughts, think about starting a business from three angles.

1. Customers – Who are they? How will you reach them? Why will they choose you, and what will they pay?

2. Resources – Can you get the supplies you need? What tools will you need? Will you need contractors or staff?

3. Finances – How much will you have to charge? What will it cost to launch? Where will that money come from?

Keep an eye on the future too

When will you break even? Could competitors undercut you in the meantime? Will there be enough after-tax profit to reinvest in the business? Don’t focus solely on how to start a business. Think about what comes next.

Customers are the most important thing

Unless someone will pay money for your goods or services, then the rest doesn’t really matter. It’s vital to find out if there’s a market. Market research needs to include your customers and competitors. You don’t have to do full-scale studies straight away, but it pays to start testing the waters as soon as you can. Check out these guides on How to define your target market, How to do competitor analysis and How to do market research.

Why you’re not the best judge of your idea

Coming up with an amazing idea for a business might feel like you’ve hit the jackpot, but beware of overconfidence. We’re all naturally attached to our ideas and we have a hard time accepting their flaws.

A study at the Gustavson School of Business and Washington University found that people are hung up on their own ideas and become emotional when faced with negative feedback.

The value of good business advisors You don’t have to go through all this thinking on your own. In fact it’s not recommended. Find yourself:

Business viability checklist

To help you remove your own biases, work through this checklist.

What if my business idea doesn’t seem viable?

You don’t have to give up just because your idea fails some of these tests. You might be able to resurrect it with a few tweaks. Maybe your target market is wrong. Or your price. Think creatively. If it still doesn’t stack up, then file away your notes and move onto something else. But don’t throw anything away. You might come up with the perfect way to make it work in a year, or 10 years from now. Ideas are never over.

Source: Xero