Developing a business plan is a prerequisite for promoting a startup. The following are the processes of financing and implementing the prepared project. However, the effort expended at these stages can be in vain if the idea is in principle unviable under given conditions.
The practice of translating many startups into practice has shown that their authors had excessive optimism, which did not allow them to objectively assess the chances of success. And most importantly, noteworthy signs for doubts about the viability of an idea in real competition can occur even before the creation of a business plan. The reasons for such doubts may come from the 5 questions below.
1. Is there a demand for the product?
Many startups think in conditions of unlimited freedom of ideas, which is their indisputable advantage. It is the freedom of creative thought without limits and limitations that ultimately gives the world unique inventions and valuable products of mass consumption. However, a viable idea should also have one more important characteristic - market demand. Derivatives of a business project in the form of goods and services should be of practical use to a certain audience. If the product itself is liked by its creator and he wants to saturate the market with it, but there is no sufficient consumer demand, the idea is doomed to failure.
To verify the presence of such demand in a particular segment will help market research. At least by products close to the niche being developed, one can evaluate how justified the implementation of a particular project will be.
2. Is the product competitive?
Even if the market has a target audience that may be interested in the product, this does not mean that the idea will be successful. One of the main reasons for the collapse of many companies in the early stages is the inability to withstand competition. If strong players with a similar offer are already present at the site where it is planned to promote and sell products, a young company may not have any chance at all.
Again, you should turn to market research or simply study a specific platform for the sale of products in order to assess the level of competition. It is important to determine whether the product, due to its advantages and distinctive features, can cause more interest than the alternative on the market.
3. What is the financial potential of the idea?
This is the most problematic question to answer, because even at the stage of developing a business plan it is extremely difficult to assess the possible commercial return. And yet, many ideas, by analogy with implemented startups, at least approximately, but give some information. First of all, starting from the production side is based on how much resources will be required to produce the target product? Comparing these indicators with the potential interest of potential customers and in general with the situation on the market, it will be possible to draw up a general idea of the financial viability of the enterprise.
4. Are there insurmountable obstacles to the realization of the idea?
Even if all the conditions on the market favor the emergence of a new company with its product and financial indicators promise to meet the most positive expectations, do not rush to create a business plan. Perhaps such attractive conditions with no competitors have fairly simple explanations that lie in a completely different plane.
The fact is that the implementation of many startups remains in the plans of entrepreneurs because of legal or technological restrictions. For example, in one case it will be impossible to obtain a license to produce products with a certain set of characteristics, and in the other case, already logistic obstacles will not allow technically organizing production in a specific region.
5. Are there enough resources to implement the idea?
The first stage of the implementation of the planned project is the most difficult and problematic. Not only material investments of a very different nature will be required depending on the type of product, but also psychological forces. There must be confidence that the project will not be abandoned in the first days of work due to lack of results. Indeed, startups often bring their first profit only after years. Even if you can find financing, you should not overestimate your personal qualities as a leader. Only a firm and well-founded faith in achieving the set goals will give a chance of success.
Of course, the positive answers to the questions discussed do not mean that the idea will be viable. It may be such, but only if a whole array of other, indirect and secondary conditions are fulfilled. In a completely different way, the idea will appear in the form of a ready-made business plan that details the project and identifies, perhaps, other insoluble barriers. You should also be prepared for this, evaluating the possibilities for making adjustments.