Coming up with too many business ideas is a good thing, and it ensures that your mind is healthy and is busy in constructive work. However, not every business idea that comes in your mind is something that you must work on.
Thousands of business ideas never make it past the planning stage, because the to-be founders do not find them workable for them. They do not take such decisions on the go, but actually they test their assumptions through a logical and coherent planning process.
We lately published a short article on how to check the feasibility of a business idea, however, at times you need more details on evaluating your startup idea. This article will discuss in detail, the two important variables against which you should test your startup idea.
1- Financial; everyone wants the business to make money, so you have to be sure that the idea makes economic sense.
2- Your Lifestyle: No matter how rewarding a business idea is, if it involves tasks you hate to do, trust me, it’s not going to work!
So, to test your business idea against above two variable, you need to ask yourself some questions. Here I am going to list all those possible questions that you must answer while evaluating the potential of your startup idea:
Answer These Finance Related Questions to Know the Economic Potential of the Business Idea:
- What initial investment does this business require?
- When will the business start making profit?
- How much of your own money you are going to invest?
- How much will be the investors’ contribution?
- When can investors, including you, expect a return on their money?
- What kind of salary or profit distribution can you expect to take home?
- In case, if you don’t take salary; what will be your main source of income?
- What are the projected profits of the business over time?
- What are the chances the business will fail?
- What will be your liability if business fails?
Now, if the business idea is economically sound, it’s great to go, but it may involve some tasks you are not comfortable at, or maybe you are not good at. Some of such tasks can be managed, however, if you hate to do something that cannot be managed. So answer these questions to make sure that the business idea matches your lifestyle and skills set!
- What kind of work are you going to be doing? (List all the tasks that you would be doing.)
- Will you be working from home or need to travel to outside?
- In case if it’s outside, how many hours of travel it will include?
- How you are going to travel, i.e. drive yourself, or someone else will be driving?
- How many hours will you be working on business?
- Will you be able to take vacations?
- What happens if you get sick or happen to have an urgency due to which you are unable to be present?
- Will you earn enough to maintain your lifestyle?
- If this is not going to be earning good for a specific time, how would you manage?
- What family responsibilities you have? And do they understand and agree with the sacrifices you envision?
Answering these questions honestly will instantly let you know whether or not to pursue a business idea. Be honest to yourself and things will work better!