It can get confusing. How often if you come up with a new business idea but don’t really know whether it is going to fly in the market? The trouble is you may fall in love with your new idea, think it’s so important and necessary for a potential market only to become disappointed when you find that others don’t share your enthusiasm.
On the upside, a new business idea for product or service can bring in great reward. But the downside is that anything new carries risk. How are you going to determine how much risk is involved in your new business idea and how are you going to manage that risk? It’s a fact that new product failure is high. Depending on who you ask? Failure rates can range from 75% to 90%.
From the white hot excitement of discovering or coming up with a new idea, you will feel excited, even elated. But that’s when you need to get perspective and let your idea “cool off” so you can evaluate it with a cold, logical, left-brained approach. The evaluation stage in idea generation and development is important because it gives you an opportunity to decide for yourself whether your new business idea will work in the real-world marketplace.
Here are three key questions that you need to ask yourself and use to scrutinise your new business idea:
1 Does my new business idea solve a customer problem? You need to think about what benefit or advantage your product or service will provide to potential customers. Also think how they are addressing this need presently.
2 What is the size of the potential market I wish to aim for? Without a big enough market setting up and developing your new product idea may not be worthwhile financially. Is there a segment or niche in the overall market that is big enough for you to target?
3 How will my new product or service idea make money? The answer to this involves your business model. It would include your revenue model. Essentially what you need is a good story on how you are going to make or generate income. Will you rely on a straight sale, a subscription income or rental?There are more than 30 such revenue models and you need to find out which one or which combination will work for you.
These three questions can help you speed up your product or service idea screening process. Yes, there are other questions that are important too but if you don’t ask these ones and are able to answer them first then you’re not out of the starting blocks. If you give yourself the green light to move to the next, then you can do a more in-depth business viability and analysis.