How To Evaluate Your Small Business Idea

Does Your Small Business Have The PROMISE To Succeed?

Let’s accept that you’re in love and therefore a bit out of your mind. You’re in love with your dream. You’re thinking all day about independence, great income, being your own boss. This is no time to think you can evaluate the numbers. If you’re talking to a franchisor, you probably have accepted almost every number they’ve given you, right?

Since you’re in a serious crush, all I ask is that you consider the fundamentals of your small business idea. Does your small business idea have the P-R-O-M-I-S-E to succeed?

P – Can it be PROFITABLE by year three? First, double the expenses you have projected. No franchisor ever tells a potential franchisee what it really costs to run the business. Multiply your product cost by 3.5 to get an idea of what price you’ll need to charge the customer.  Will they pay this?

R – Is it REMARKABLE? Does your small business idea solve a problem for the customer in a new way? What are the unique benefits you will offer the customer? Truly unique or are others doing it too?

O – Is it targeting an OPEN position in your market area? If your business will be selling to a local market, draw a five mile radius around your intended location and count the number of competitors you have now. Then remember you will probably have more later. Is this marketing area crowded, or truly open for your idea?

M – Is your small business idea MARKETABLE? Can you afford to give away free samples, lots of free samples, to buy your way into some market share and get your audience talking about you? You need to win  raving fans right from the start. These customers will be your evangelists. Find your fanatics and empower them to sample your free products into their various circles.

I repeat, giveaway free stuff as part of the basic offer. Everybody goes nuts over free stuff. For example, if you’re opening a sub shop (really?) give a free bag of chips with every sub. This will be more important than advertising. Don’t waste your money on total market advertising on TV, radio or newspapers. You must win the battle in a five mile radius.

I – Is your unique benefit truly IMPORTANT to customers? Be absolutely clear on why customers should want to buy from you. If it’s important to their needs and wants, they probably will. And the measure of importance is how emotionally appealing your benefit is.

S- Is your business revenue SUSTAINABLE for at least five years? Are there enough fish in your pond to keep your sales high, or will you and your competitors fish it out by year three? Will customers return to you for more? If you solve a customer’s problem, does that mean they won’t need you again? If so, that’s not a good business model.  You want a business that will build loyalty and repeat business. Don’t fall for a one-and-done concept.

E – Does your business idea have an EMOTIONAL appeal? I mentioned this already, but it’s perhaps the most important factor in success, so it’s worth repeating. If you’re not sure of the answer to this question, then you must be sure to add-in emotional appeal. Without it, I fear for you!

All business is emotional. We like to think we’re rational creatures, but we’re not. Look at you, you’ve fallen in love with a business concept. Make sure your customers will fall in love with you. Evaluate the PROMISE of your business and you are halfway to success. Good luck!

What tips do you have for someone evaluating a small business concept? Share a comment below.

One thought on “How To Evaluate Your Small Business Idea

  1. Pingback: What Business Should You Start? | SizzleWonk™

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.