Before investing in any business idea, it is important to determine its potential and market prospects. For this, it is necessary to take into account a number of important parameters and criteria.
Why it is necessary to determine the potential of a business idea
Opening any new business, or expanding the scope of an existing one, should begin with an assessment of the potential of a business idea. This should be done not only to provide a business plan to a bank or a potential investor, but, first of all, for yourself. After all, competent planning and forecasting is one of the keys to a successful business.
The potential of a business idea is a predictable assessment of the maximum production and consumer potential of the market.
Often a lot of money is at stake and in order not only not to lose, but also to increase your capital, it is important to comprehensively determine the potential of a business idea. And if a business is opened for credit or borrowed money, the burden of responsibility is even greater, because in case of an unsuccessful investment, the business will have to be urgently closed, and the debt will remain.
Criteria for assessing the potential of a business idea
It may well happen that the idea that has arisen seems to you quite interesting and promising, but in fact it will not be in wide demand among consumers. Therefore, any novice entrepreneur should look at his idea from the outside to answer a number of important questions:
- what problem will your product solve, who is the target consumer, is this problem really important to them and there is a market need for your offer;
- what is the demand for the products that you are going to offer and whether it has points for potential growth;
- whether the production of your product is economically viable and whether it can bring significant income.
The potential of a business idea is a predictable assessment of the maximum production and consumer potential of the market.
If the answers to these questions were not difficult, you can approach the evaluation of the business idea in more detail.
Of course, the main criterion for assessing the potential of an idea is its profitability. Therefore, it is important to evaluate such parameters as sales volume, projected profitability, payback periods. To assess potential income, it is necessary to understand the current total market volume and its dynamics (sales are growing or decreasing), as well as try to predict your own market share based on production capacity or competitive advantages of a given product (service). If this idea is innovative for Russia, you can try to assess its prospects based on the analysis of the world market.
To assess the prospects of the market, it is worth comparing the real volume of consumption and its potential capacity.
Market potential differs from real consumption (market volume), this is the upper limit of sales, which is achieved under favorable conditions.
It is also important to understand your own advantages in relation to similar products and competitors. You need to draw up a unique product offer that will briefly formulate the competitive position, distinctive features of the product and its uniqueness in the eyes of consumers. It is optimal to choose unsaturated market niches.
Finally, it is worth deciding on the forecast consumption indicators, taking into account the complex of influencing factors. This can be done either on the basis of the previous dynamics or using expert assessments.
