Updated: 17 May 2015 05:24. By, Melkisedeck Shine.

Assessing the Viability of the business Idea

An Idea is not necessarily a Business Opportunity: There is one crucial difference between an idea and an opportunity. An opportunity is based on what consumers want. Many small businesses fail because an entrepreneur didn’t understand this.

Definition of an opportunity: Need, want, problem or challenge that can be addressed, solved and /or satisfied by an innovative venture or program.

Definition of an entrepreneurial idea: A specific, new way to satisfy a need or want, overcome a problem or meet a challenge.

A business opportunity is an idea PLUS the following qualities:
• It is attractive to customers.
• It will work in your business environment.
• It can be executed in the "window of opportunity" that already exists.
• You have the resources and skills to create the business, or you know someone who does and who could start the business with you.

How to evaluate a business idea

While nothing will guarantee the success of a business, a viable idea based on good research is certainly a factor for success. In order to know whether the business idea is a good one the following guidelines should be used:
~ Is the idea directly related to a market trend? Is there a target market?
~ Does it satisfy a need, want or overcome a problem?
~ Has the idea been tried before? Has it been successful?
~ What risks are associated with your idea?
~ How confident do you feel about this idea as a business venture? Why?
~ Is this the best idea available for you to pursue?

Personal Assessment

Scale of entry

Ideally, inexperienced entrepreneurs should start new businesses with the least risk, which usually means the least investment and the smallest scale of entry into the market. Following this principal, many inexperienced entrepreneurs try to start their first enterprise on a part-time basis from home premises.

A preliminary assessment of the required scale of entry into the market can be made on the basis of three factors.

• Volume of sales required to get started
• Numbers of persons needed for that level of business (relevant for estimating wages and working capital requirements)
• Amount of equipment and space needed for the required level of sales turnover

Once these three factors are determined it is possible to become more definite about the feasibility of the idea.

Personal appraisal (Is this business idea ‘doable’ by me?)

The next step will be to consider the entrepreneurship and management requirements and your own capabilities. In short, is the idea as it is developing still ‘doable’ to you?

This is what you need to think about when assessing yourself.

• The entrepreneur is responsible for finding finance for his or her business idea. There is no shortage of finance for investment in proposals that combine a market opportunity, well-planned business idea and a competent, reliable management resource

• Starting, running and developing a business means forming and managing relationships with all kinds of professional people, officials, customers, suppliers and competitors outside of the enterprise. The relevant entrepreneurial competencies here are networking and relationship management, negotiating, effective communication and persuasion.

• Running the business also means managing the internal workforce, if there is one – providing leadership, motivating, developing and maintaining administrative systems.

Your options for assuring that the proposed enterprise will have the required entrepreneurial and management resource are to offer yourself as the competent person or to take a partner or employee with the necessary experience and competencies. When making this decision you will have to take into account the most likely response of anyone from whom it is hoped to obtain financial support.

Is the Business Doable?

However assessing the feasibility of a business idea goes beyond factors the mentioned above. Assessment of feasibility establishes whether or not the business you propose is ‘do-able’ before going on to the more detailed task of collecting information required to write a business plan to show how it can be sustainable and negotiating the start-up phase. There are four fundamental areas to investigate: IDEA, MOTIVATION, ABILITIES, and RESOURCES.

1. THE IDEA: The first stage of assessing whether a business idea is doable is to describe the process of producing the products or service. Is it do-able in the general sense that it requires know how and technology resources that are or could be reasonably available?

• Describe the service or products and the basic operational (for example production) process.
• What legal regulations will apply to the product, service or operation of the business?
• Will there be any problems with trade names, patents or intellectual property?
• What kind of people are your potential customers; why will they buy what you intend to offer them?
• How many potential customers are there; are they easily accessible?
• Will your product or service be new to the market, or is there already a supply of similar goods or services?
• Is the current supply of goods or services adequate for the level of need or demand?
• How much competition is there, and why should people buy from you?
• Are the goods or services being supplied of a suitable quality and price for the customers you will be targeting?

2. MOTIVATION: Is your motivation strong enough? Are you prepared to face the uncertainty and learn quickly from the experience of mistakes as well as successful decisions?
• Why do you want to start this business?
• What psychological demands will the business put on the person who starts it?
• What are you prepared to sacrifice to be successful?
• Who will give you moral support when things get tough?

3. ABILITIES: Is the idea do-able by you? With your experience, know how and character, are you the right person to start and operate this scale of business? What are your weak areas and how will you overcome them?
• What skills does the business demand?
• What can you offer as relevant experience and skills?
• Do you know your limitations as an entrepreneur in this type of business, and what you can do about them?

4. RESOURCES: How do you propose to resource the idea? Will you be able to manage the appropriate scale of entry into the market? What scale of investment and resourcing is required?
• What level of technology and operational skill is required by your business idea?
• What other types of resources are needed?
• What kind of premises is required?
• Explain if the business idea involves any special or innovative concepts or technology?
• Is the required technical know how and equipment available?

So the first task is to write as much as you can about what you already know about the idea.

Why is identifying a business opportunity important?

All new ideas are not necessarily viable options. An entrepreneurial idea is necessary but not sufficient for a small business. Every idea needs to address a specific need, want or problem. It is clear that the business, while it must have commercial merit, is perhaps not the key ingredient, but rather it is the entrepreneur who can identify the market opportunity that is large enough to support a business venture

If insufficient numbers of people experience the need, want or problem, then the idea will not have enough customers or clients for it to be successful. Therefore, most new and developing entrepreneurs start with identifying an opportunity, clearly defining the opportunity and then trying to generate specific idea to respond to this opportunity.

To summarize, not all ideas for a new business have a large enough market demand to make them viable businesses.

How to assess business opportunities?

When assessing opportunities for a new business venture, consider the following questions:

1. Is this really an opportunity that would lead to a viable business venture?
2. Has it been identified by others? Have they acted upon it?
3. How long will the opportunity last? Will it support a long-term venture?
4. Do you have sufficient information to properly assess the opportunity? Is it accurate?

Once you have uncovered a business opportunity, there are two key factors to consider:

(1) Could that be a viable business for me?
Only further investigation, such as conducting a feasibility study or writing a business plan, will answer this question.

(2) Has anyone else done this before?
Your research will uncover whether or not this opportunity has been discovered before. If it has, investigate who is successful at it to find out what they are doing right and if there is any room for you to do it better. You need something to differentiate your business from the competition. This is a critical part of deciding whether or not this idea will make a viable business.

Read more on;

a.gif Where to look for business opportunities

(1) They can develop/evolve as a result of your personal background including your previous jobs, hobbies and personal experiences, or
(2) From opportunities in the external environment or general market place.. read more

a.gif Developing Business Ideas and Opportunities

You may have considered the prospect of starting your own business many times before. The thought of being your own boss – calling the shots, being responsible for your own financial rewards – is very alluring. You may have had the drive, the experience, and the financial resources necessary to succeed. The only thing stopping you were figuring out what type of business you should start… read more

a.gif Stages in the development of a business career

Scanning for opportunities, idea generation, and innovation/creativity… read more

a.gif ENTREPRENEURSHIP THEORIES AND MODELS

Recent studies suggest a multitude of entrepreneurial influences, grounded on a number of theoretical paradigms. As a starting point, entrepreneurial outcomes are viewed as lying along a continuum which separates low and high performances in entrepreneurship, which are then envisioned to be associated with high and low barriers… read more

a.gif Where to look for business opportunities

(1) They can develop/evolve as a result of your personal background including your previous jobs, hobbies and personal experiences, or
(2) From opportunities in the external environment or general market place.. read more

a.gif Developing Business Ideas and Opportunities

You may have considered the prospect of starting your own business many times before. The thought of being your own boss – calling the shots, being responsible for your own financial rewards – is very alluring. You may have had the drive, the experience, and the financial resources necessary to succeed. The only thing stopping you were figuring out what type of business you should start… read more

a.gif Stages in the development of a business career

Scanning for opportunities, idea generation, and innovation/creativity… read more

a.gif ENTREPRENEURSHIP THEORIES AND MODELS

Recent studies suggest a multitude of entrepreneurial influences, grounded on a number of theoretical paradigms. As a starting point, entrepreneurial outcomes are viewed as lying along a continuum which separates low and high performances in entrepreneurship, which are then envisioned to be associated with high and low barriers… read more

a.gif Stages in the development of a business career

Scanning for opportunities, idea generation, and innovation/creativity… read more

a.gif Dress proper ladies

Two young ladies arrived in a Meeting wearing clothes that were quite revealing their body parts. Here is what the Chairman told them: He took a good look at them and made them sit. Then he said something that, they might never forget in their life. He looked at them straight in the eyes and said; "ladies, everything that God mande valuable in this world is well covered and hardly to see, find or get… read more

a.gif Forms of Business Structure

There are several legal forms to choose from when selecting the best means of structuring your business. Carefully considering the various options before start may save time and money later. There are several forms of business structures including:.. read more

a.gif It doesn't matter how people see you

Jacob looked at Joseph and saw a good son!.. read more

a.gif Where you wait for the bus 🚌 doesn't matter but your relationship with driver does

There's an old story of the boy who stood on a sidewalk, waiting for a bus. A man walking by spotted the boy and gave him some gentle instruction. "Son," he said, "if you're waiting for the bus you need to move to the street corner. That's where the bus stops for passengers.".. read more

a.gif 12 Tips for Break up with your boyfriend or girlfriend when You Are Already Dating Someone Else

You need to do the following;.. read more

a.gif How to be charismatic

Relax Your Way To The Top If you are looking to be charismatic, then the first and foremost thing that you have to do is to actually learn to relax. Some people try too hard to be charismatic, but only end up making a fool of themselves. This is not something that you would want to do. So, in order to work on your charisma, learn from the mistakes of others and relax. When you master the art of relaxing in a social setting, you automatically exude charisma. It's a known fact that people love to be around people who are calm and composed. Learn to channelize peace and tranquility to everyone you know and meet. This will help you seem extremely calm and a lot more attractive… read more

a.gif Business Concept and Idea Development

In order to market your product or service, you will want to be very clear about what it is that your business actually does or has to offer. You should be able to quickly and accurately describe your business concept in just a few sentences… read more

Other interesting posts;-🙉