While the prospect of being a business owner sounds appealing to some, not all are going to be able to make a profit in a competitive environment. An article written by USAToday.com claims that only 20 percent of new businesses stay afloat after their first year.
Just because you think you have that one in a million idea for a business doesn’t necessarily mean that you are going to be successful. You will have to ask yourself some hard questions to determine if you have a solid business idea on your hands.
First and foremost, you need to look at the service or product that you are going to sell.
Is the product patented, or are you going to be able to use your specific knowledge to give your business the advantage that it needs?
While the work of patenting your product or even trademarking may seem like a long road, doing this with your product will protect your company from others trying to sell your product as their own. Trademarking is similar to patenting, but it applies to words or symbols. When you trademark, it allows only your company to use any branding package that you establish on its inception. Doing this helps differentiation and will enable you to be noticed in competitive industries.
The business expertise that you bring to the company is something that no one can take from you. Are you the only individual who can create this product, or do you have a lot of experience in this field that you can leverage? If this is the case, it may just give you the advantage that you are looking for to stay a step ahead of other companies.
Is the entry barrier easy to push through, or are you going to be hitting roadblocks at every turn? Are there heavy hitting regulations that you need to look out for that could strain your business?
One significant entry barrier for any business is going to be start-up cost. Certain industries are going to be much harder to enter. For example, you may have a brand new idea to make nuclear energy more efficient. When building a business, you are going to need to look at all costs associated with it. This will include, but is not limited to, an appropriate amount of space for the business, hiring and retaining new talent, utilities, and purchasing product or service offerings. The cost of starting up a business in the nuclear energy field is going to be higher than most others.
One fundamental difference in cost is hiring and retaining workers. At a nuclear power plant, you are going to be looking for individuals with countless years of experience in the field, and continually pay for any additional certifications or education that they may need to keep them updated. Not only that, but they will need to be compensated fairly to keep them within the company. If they are offered the same role with a better pay package, it may be hard to retain them. In comparison, if you were starting an ice cream shop instead, you would mainly be hiring entry-level workers. Yes, there are concerns when it comes to serving ice cream, but nothing that would require continuing education.
You’ll have to examine these costs and look at your field. In the nuclear energy field, there are a lot more governmental regulations that must be followed and more procedures that have to be designed for the business. For a restaurant, health and safety regulations will require consideration. Regardless of what standards are needed, learning the laws is necessary for a new company.
Not only that but has another business tried this before and where are they now?
It’s worth doing research and investigating businesses similar to yours. Unfortunately, your idea may have already been tried. If you see another company that has a business similar to your own but failed, examine their life cycle. Look at how they handled the idea and what they could have done differently. Then, utilize that knowledge to better your business model. Don’t make the same mistakes they did, or if you do, try something that they didn’t do when they were in that situation. It may just work in your favor.
These are all the questions that you need to be asking yourself when you look at your business idea and decide if it is something that you want to pursue. And don’t be discouraged! Creating a business takes time, a lot of thought, and in many cases, multiple tries.