7 Ways To Know If You Have A Great Business Idea

A business idea can pop up from nowhere, invoking images of owning a profit-making entity. It drives passionate individuals to build new ventures from scratch and bring their innovations to the forefront. Whether it is remodelling an existing product or developing a prototype that can pioneer industry transformation, solid business ideas are the foundation of every successful organisation.

However, they can also backfire if they are not tested before they get materialised. Aspiring entrepreneurs in New Zealand must check the viability before putting money into the venture to safeguard their savings and loan amount. Here are seven ways of identifying a great business idea that works and generates the desired return on investment. These tips will help to save your resources and efforts from getting wasted and reduce the risk associated with entrepreneurship.

1. The Business Idea Must Fulfil Customer’s Unmet Needs

Whether you are starting-up or buying a business for sale in New Zealand, you need to evaluate the profitability of the venture. The first step in determining this is checking the practicality of the idea behind the venture. The product or service will ensure demand if it solves a problem for the target buyers or resolves a pain point that other products cannot.

Entrepreneurs must conduct market research to understand the needs of the buyers and check how the competitors are trying to fulfil them. If there is dissatisfaction among the customers related to the existing products that can be satisfied with your idea, it will surely work.

2. The Business Idea Must Permit Expansion in Future

Every business owner plans for the future and annual growth. However, the sales can become stagnant after reaching the saturation level in the same market. Thus, entrepreneurs take the route of diversification or enter new markets to boost sales and increase profits. However, the business idea should allow the scale-up.

Therefore, entrepreneurs should check if the venture can be expanded in the future or not. They need to assess if it can generate funding and maintain its growth momentum in bigger markets with a solid supply chain in place. Also, it must be flexible to be remodelled or ready to adopt a disruptive innovation that is the need of the hour. The pandemic made many businesses pivot, and those that maintained rigidity had to bear the brunt of worsening market conditions.

3. The Business Idea Must Survive the Technological Advancements

Technology has become an indispensable part of businesses. However, the latest developments have proven detrimental to many traditional models and products. For example, the advent of mobile phones has reduced the sale of digital cameras, and smart watches are replacing conventional analogue watches.

Thus, the product should not be expendable. It must have a timeless value that can make it work for decades. Although businesses can transform and adopt technology, it requires exceptional funding and up-skilling. Therefore, banking upon products that have stood the test of time makes more sense, such as starting a restaurant or a construction business that will always be in demand.

4. The Business Idea Must Offer High Value At a Low Price

Another way of maintaining supremacy in the market is through pricing strategy. Buyers are always looking for cost-effective products that offer the same value as high-end ones. If you can offer a lower price while generating substantial profits, you have a winning strategy in place.

However, you need to ensure that you can offer the same high quality at a reasonable price to the target audience to attract them. The entrepreneur must conduct market research to check the price sensitivity of the buyers, competitors’ prices and the cost of manufacturing, promoting and distributing the products. If the customers show the tendency to switch to other brands for discounts, you can go ahead with the idea.

5. The Business Idea Should Not Be Easily Duplicated

The marketplace is filled with products that are similar or copies of each other. It increases competition and can sometimes lead to lawsuits if the copyright is infringed. Thus, entrepreneurs should focus on finding rare opportunities that help carve a niche in the market.

It may have a smaller audience, but it has the competitive advantage of being unique. For example, a secret recipe of a restaurant that is never leaked to the public and makes it popular. It helps restrain competitors from swaying your buyers and sustains your position in the market. So, make sure that you have an idea that cannot be duplicated by others easily.

6. The Product Must be Easily Differentiated From Competitor’s Offerings

An easy way of predicting the success of a business idea is by checking its value proposition. If the business has a unique selling point (USP), it can easily create demand and continue its winning streak. Distinctive identity helps customers believe that the brand is better positioned in this category because of its exclusive qualities. For example, Fonterra is known for its long history of pasture-fed dairying that offers nutrient-rich milk for good health.

Creating a USP helps to position the brand in the cluttered marketplace and associate a high recall value with it. Buyers can turn into loyal customers if they find the qualities appealing. These are also beneficial in persuading competitor’s customers to choose your brand over them. Thus, ideas that offer something different get noticed and picked up easily.

7. Determine the Cash Flow for the Business Idea

The business idea must be realistic and achievable. An accountant can help in estimating the financial projections for the entity for the next three to five years. However, they must be based on attainable funding and expected sales for a start-up or a recently acquired business for sale in New Zealand.

They must evaluate the costs and the working capital and check the predicted income through cash flow forecasting. It will help to understand whether the business will generate the profits it needs to stay afloat and operate without deficits. The expenses should not be higher than the income, and it must be easy and affordable to market the business. Financial management is the most critical aspect of entrepreneurship, and it must be carefully inspected.

Wrapping Up

A great business idea will generate interest among investors and promise a bright future with growing sales. The entrepreneur must be passionate to take it forward and position it distinctly in the marketplace. The ways mentioned above can help in testing the likelihood of its success.