Three things to consider while testing the sustainability of your business idea.
We are living in a time when sluggish economy and innovation disruptions by emerging technologies are leading organisations to change their business strategies and also adopt cost cutting models.
While some organisations are laying off workers, others are restructuring their business models while some have gone to an extent of closing down. This means that organisations and individuals are therefore looking for ways to enhance their survival by coming up with business ideas that they can implement as future businesses or products that can offer them a competitive edge.
Though idea generation is an important stage in business development, not all business ideas that exists in our mind will have a business opportunity and therefore validating your business idea before spending your money on it is an important stage in business development. A story is told of a student who wanted to solve farmers’ problems of identifying crops in their farms that were mostly infested by pests. He therefore had a great idea of developing a drone that would have mounted cameras to take photos while flying above the farms.
But before embarking on the drone development, he approached one of the target farmers for idea testing and getting more feedback. He later realised that all what the farmers needed was a camera mounted on their aerial sprayers to collect the same data during spraying and fertilizer application.
This saved him the hustle of developing a drone which would have cost him an arm and a leg to develop and not useful to the target customer.
Many soon to be entrepreneurs fail to test their business ideas leading to huge loss of money and time which is avoidable.
A business model which is a summary of how your business idea will create, deliver and capture value will help you test the desirability, feasibility and viability of your business idea as follows.
First desirability entails understanding whether your business idea is worthy or valuable to the target customers. This entails examining the value you intend to offer to the customers or what will motivate them to buy your products or services.
Second, feasibility entails testing whether the business idea is practical or doable by examining whether key resources needed to start the business are available, the key activities you will undertake in your business and the key partners needed in order to launch your business.
Thirdly, viability entails understanding whether the idea is able to survive financially and its long term sustainability. This is done by examining the revenue streams and the cost structure of the business. Revenue streams will entail examining any activities which will generate money in your business while cost structures will indicate the cost of key resources and any other important expenses to be incurred during the start-up process.
In conclusion, though these may be important concepts while validating your business idea, many more factors such as business idea timing and the team of partners who will be part of your business will play a great roles towards your overall success in your start-up.