New Business Evaluation 101

A reader commented on our post titled “How To Start An Online Business In 1 Easy lesson” saying:

“Many great product and service ideas have gone down the drain though lack of even preliminary evaluation and planning.  There are short-form “elevator speech” type evaluations of the beginnings of evaluating ideas. . . .To suggest “Shoot, Ready, Aim” in the context of a New Business seems irresponsible, to me.”

He’s right, entrepreneurs are notorious for the “Ready, Fire, Aim” approach he alludes to, but that’s exactly what we recommended against in the post. Specifically, we said that until you know who your customers are and what your market looks like you don’t have a business, regardless of what wizbang product you might have.

Business plans and financing proposals are often full of excruciating product detail for the next best thing, but lack even a cursory description of the market, how it segments, and how those customers are going to be convinced to buy.

I think of it this way:

Business Decision

Is It Real?

Is the market real?
Is the product real?

Can We Win?

Can our product be competitive?
Can our company be competitive?

Is It Worth It?

Will it be profitable?
Does it satisfy other company needs?

Each of those second level issues then need to be individually evaluated to determine if the business idea you have will be viable.

At the beginning a lot of the answers are squishy, so a yes, no, or maybe answer is sometimes the best you can do. But if you look at the issues and the yes answers outnumber the nos and maybes then you’re probably on to something.

Then prototyping is my favorite approach. Build one, try it on a small scale. Refine and adjust, try again. You might actually end up in a different business with a different product or service as a result, but you’ll know you’re on firm ground when you start to build.

0 Comment | Add a Comment | Tags:, , | Permalink

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.