How to determine if your business idea will succeed or fail with 3 critical questions?

Small businesses are on the rise with over 451,000 submissions in March 2023 alone, according to the US Census Bureau. Despite this, starting a business does not necessarily guarantee success and research is crucial before investing time and money. By identifying the target audience and problem that the proposed business aims to solve, individuals can create a business plan and determine whether there is a market for their idea.

Framing ideas around solutions enables entrepreneurs to explain their business to others and establish their niche in the market. Researching the target audience’s interests, age group, gender, location and income level enables entrepreneurs to calculate potential earnings. However, interacting with potential customers and suppliers directly allows for the identification of competition and differentiation strategies such as discussing their products and figuring out what they like and dislike about their business. Feedback plays a significant role in identifying how to make the business unique and valuable in the market.

A useful technique for calculating potential revenue is by estimating monthly income and expenses. Individuals should calculate their projected monthly revenue by estimating monthly sales and multiplying them by the selling price of their product or service. Other expenses to consider include materials, inventory, packaging, shipping, labor, rent, utilities, equipment, marketing, licenses, insurance and business expenses. It is advisable to create several different forecasts based on adjustments to revenue and expense estimates as this affords more accurate calculations.

The next step is to create a business plan, which involves combining market and competitor research, identifying typical customers and creating basic financial projections. For those with no business background, it may be necessary to consider seeking help from SCORE Business Mentors, Small Business Development Centers, Veterans Organizations for Women or Minority Business Owners who often offer free assistance when starting a small business. Everett recommends having two to three mentors from her business organization or through LinkedIn and Facebook groups, as this allows entrepreneurs to receive support and gain insight from people who have already experienced success.

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