Sometimes, when chatting with friends, you might think you’ve found the idea of the century that will allow you to start your company and bring you prosperity.
Be careful: a good idea doesn’t automatically turn into a business opportunity. Most ideas are developed without fully considering the market, competitors, and consumers. Your idea may be useful for meeting one of your needs or solving your brother-in-law’s problem, but you’re still very far from knowing its commercial value.
Here are a few questions that can help you determine whether your idea can move to the business opportunity stage. You should be able to answer YES to all these questions.
1. Does your product generate enthusiasm among the targeted customers?Apart from you, will your idea be seen as attractive for a type of customer who will show strong interest in obtaining this product?
2. Will your idea meet the needs of a significant number of potential customers?Once you’ve identified who will buy your product, you need to assess the pool of potential customers. For a company to be viable in the long term, it must appeal to a large group of potential buyers.
3. Is cost and distribution control possible?If you can’t answer yes to this question, your project will be very risky from the start. When you launch a product on the market, customers perceive a price change on the shelves shortly afterward very negatively. Also, distribution can represent a large share of the retail price in some cases. It can therefore be risky to launch a product without a long-term agreement with a raw materials supplier and a distributor.
4. Can the return on investment exceed the returns of your current investments?If you decide to move forward with your idea, you’ll need to invest a certain amount to start your project. You’ll be taking a financial risk. Because that risk is higher than your current investments, it makes sense that the expected return must be larger. The riskier the project, the higher the expected return must be.
5. Are the people in charge of the project experienced?While not a guarantee of success, studies show that people who start a project in a field they know have a higher chance of succeeding. If you lack expertise, that doesn’t necessarily mean you must abandon your idea. You can undergo training to make up for your lack of experience or partner with someone who has the experience you’re missing.
Is your idea a business opportunity?
Even if you answered yes to the above questions, it’s impossible to answer this without completing a business plan that will push you to explore these questions more deeply.
Would you like to learn more about starting a business, or do you want FREE support in carrying out your business plan? Contact an advisor at SADC Arthabaska-Érable—they can guide you and offer practical solutions!
