How do you ascertain the profitability of a business idea? How do you turn a business idea into an opportunity? How do you decide if an idea or opportunity is worth pursuing? Well, the answer to the questions above is a “Feasibility Research or Study.” Do you want to learn how to research a business idea? Then read on.
It is no longer a hidden fact that the the economic climate for new businesses is never and will never be certain. That is why entrepreneurship is viewed as being risky. Now despite the risk associated with starting a business, many people are still going ahead to start an enterprise and few of these individuals succeed. How and why did they succeed?
One of the reasons some entrepreneurs succeed in business is because they researched or conducted feasibility study on their idea. Now researching an idea is just like doing a preliminary feasibility study.
I want you to know that carrying out your research on your business idea can drastically improve your chances for success in your business. By thoroughly investigating all aspects of your business idea, you will know what to expect and how to tactically execute your strategy. So without wasting your time, below is the exact step to researching a business idea.
How to Research a Business idea – A Step by Step Guide
1. Critically Analyze your Market
Okay, so you have an idea that looks good but you want to know if there is demand for it? Or better still, to know if a demand can be created? The first step to take is to analyze your marketplace and a good way to start is by asking yourself the following questions:
- Is there any individual or company currently exploiting your idea?
- Is there a market for your idea?
- Is the competition stiff or non existent?
- If there is a market for your idea, then who are your customers?
It is crucial that you conduct a market analysis to as to determine the potential demand for your idea and the level of competition you will face. However, if after doing your market research and you discover that the market is already saturated with similar product ideas and customers are not in need for additional option, the best thing to do is to pass on such idea and move on.
2. Dig up all industry information about your business idea
If you scale through the step one and you have ascertained that a market exist for your product idea, the next step to take is to research the industry you will be operating in. It is of so much important for you to research everything about the product and business itself by going through trade publications, searching online, reading the news papers, talking to others in the industry and contacting your local chamber of commerce. Also, it is important you ask yourself the following questions:
- Who is the market leader in your industry?
- What percentage market share does the market leader hold?
- What is the success rate or failure rate of startups in that industry?
- Is the industry strictly regulated by the government?
3. Carry out a SWOT analysis
What is SWOT analysis? SWOT stands for weaknesses, strengths, opportunities and threats; while SWOT analysis is simply the process of uncovering and understanding these factors. Weaknesses and strengths are internal and stem from the company itself (e.g quality service, a flawed product design) while opportunities and threats are factors that are related to the external sphere, including the economic climate of the marketplace, your customers and your competition.
4. Research and check if a franchise opportunity exist for your idea
Instead of going through the painful process of starting a business from scratch, you can jump start and increases your chances of success by buying a franchise; that is if you are financially strong. So you must research and find out if a franchise exist in your industry.
5. Research and find out if their is manpower availability
What is the essence of starting up a business in an area where there is no manpower availability; or you setup a business whose daily operations require technical skills that cannot be sourced locally or the labor cost is too expensive. So you must research to ascertain that there is availability and affordability of labour. You should estimate the salary and wage costs along with payroll taxes.
In conclusion, you must also research and figure out the best place to site your business or office; while taking the cost of renting an office space into consideration. You must also endeavor to get professional advice from attorneys or lawyers, accountants, etc.
Once you can take these steps highlighted above, you have just concluded a preliminary feasibility study. You can then proceed to conduct a full scale feasibility research and the report of your research will be very vital in the writing of your business plan.