Within a couple of months, the business world has changed significantly. Lockdown measures rolled out to help healthcare services cope with the COVID-19 pandemic have left numerous companies unable to operate and many more struggling to adapt to remote working. Entire industries — such as hospitality and air travel — are fighting to hold out until things improve.
This struggle has obviously filtered down to individuals where jobs have been lost or furloughed with no clear notion of when they might be resumed.
As a result, the allure of self-employment currently shines brighter than ever before. Many are turning to entrepreneurship as the alternative to control as much as they can in a world that is unclear. You can set your own hours, choose the conditions, and work as much — or as little — as you want to. That said, coming up with a viable business idea is far from easy.
Let’s say you’ve hit upon an idea you think might work, but you’re not fully convinced, and you don’t want to waste time trying to launch something that has no realistic chance of succeeding. How can you tell if your idea is worth pursuing? Here are some suggestions.
Search for Comparable Companies on the Market
The very first thing you need to do is take a look around to see what other businesses are already in operation, because there’s a decent chance that there are big brands already doing what you’re contemplating. If that’s the case, does that mean there’s no value in trying to compete? No, certainly not — but you need to know what’s currently available.
There needs to be something unique that you can bring to the table. Maybe you’re sure that you can make money from lower prices than others can charge, or you have an innovative product concept, or you see a gap in the market for a company in your niche with a focus on support. If there’s nothing exceptional about your idea, go back to the drawing board.
Launch it On a Limited Scale as a Test
When I talk about launching here, I’m not referring to your prospective brand: I’m referring to the kernel of your idea. Testing it by seeing what interest you can find (and what money you can make) through a limited trial will yield a lot of valuable insight without taking up too much or your time or draining your resources. In the end, the goal of this test is to get proof of viability.
One of the best ways to proceed is to get a basic operation set up (whether it’s a store or just a business website) and run some social media ads or paid advertising. To borrow phrasing from entrepreneur Tim Kock talking about dropshipping mistakes, “paid ads are a magnifier” — he positioned it as a warning, but I think it’s a huge positive because you want to magnify your core concept.
A PPC campaign will quickly show you whether people want to know more about what you’re bringing to the table. And since the PPC model means you only pay for clicks, it won’t cost you anything if your budget isn’t even met.
Drive awareness, increase customers and share your story among a highly engaged audience with Instagram. Generate leads, drive website traffic, and build brand awareness with LinkedIn or Facebook ads.
There are two possible outcomes: either you get some decent results (or end up with good reason to think that you would get good results with better framing), or you determine that your idea is a non-starter.
Consult Anyone You Know With Relevant Expertise
Maybe you have some friends or acquaintances who’ve launched their own businesses before, or simply work in the industry you’re trying to join. If so, you should ask them for advice. Run your plan by them (at least, the parts of it you’re willing to divulge) and see what they think. There’s a great chance that they’ll be able to spot issues that you’d never have seen.
This doesn’t mean that you’re incompetent or oblivious: it’s merely a reflection of the frustrating truth that everyone is bad at judging their own output. Some people always think their ideas are fantastic, while others tend to think they’re terrible. Getting some kind of group consensus will at least shape your expectations for how the wider world would view your business.
Tally Up The Realistic Costs of Full Investment
Let’s say that everything has gone well so far: you’ve confirmed that you have something unique to offer, proved that the business model is viable through launching on a limited scale, and had reassurance from seasoned entrepreneurs that there’s real long-term potential. What’s next? Well, knowing that you could establish a full business is one thing, but actually doing it is another — and the core difference at this point is the money required.
If you went all-in on your business idea, what would it cost you? Would you need to give up other work opportunities, thus losing you some income? Would you need to buy a new laptop and pay for new software tools? Would you soon need to hire some employees? This isn’t about whether your idea is worth pursuing in general: it’s about whether it’s worth pursuing now.
Supposing you conclude that you just don’t have the resources to launch your business now, that doesn’t mean you can’t launch it one day. Focus on building up your savings through other lines of work and any profitable projects you can pick up, and wait until the time is right. Timing a launch correctly is a big determining factor in how well the business does.
It's important to understand that even if your business idea passes the above viability tests, there are still many steps to build your foundation for a successful business.
Are you ready to start your business? Learn How to Start a Business in 9 Steps.