Once you have finished your business brainstorm session and have looked at the business concepts you’ve generated it is time for a business concept assessment. The secret in this step of the business startup and planning phase is to quickly check, rate and scrutinize the business opportunity to see if it can be a practical and profitable possibility.
The key hurdles that your new business concept(s) will need to jump during this business assessment process are: your personal capabilities, viable market and finance, SWOT (Strengths, Weaknesses, Opportunities and Threats). Finally as you line up each opportunity, how do they compare with one another?
Business Concept Assessment: You
The first step of a business concept assessment is you. You will be the heart and core of the business. It is important to consider whether if you have the business and other skills required in your business concept. As the leader and CEO you will need critical business skills which you can choose to study via reading books or through courses of study. You can also learn on the job which may expose you to the risk of making costly mistakes which could have been foreseen with some education.
As the critical part of the business you will be required to be knowledgeable about the many aspects of your business across the fields of law, sales, marketing, operations, tax and finance. You will also be knowledgeable about industry-specific information, technology and laws.
The final test of You in your place in the business is your interest in the business. You will need to be passionate about the business as we have previously examined in looking into your external and internal personal purposes. There you will come to understand yourself and your motivations. It is also in looking at your external purpose you will also come to understand if you will receive support (either moral or otherwise) from family and friends.
Using SWOT in your Business Assessment
A SWOT analysis is an important acid test to assess a business concept which tests and quickly assesses the strengths and weaknesses which are controllable factors within the business and the opportunities and threats which are outside the control of the business. During the assessment phase of your business, the SWOT analysis will be bare bones – only assessing the key factors required in the success of the business.
The Strengths and Weaknesses of the SWOT equation are controllable internal factors within the business. Aspects of the internal business can be called a weakness or a strength depending on the level of control you have over internal aspects such as staff, finance, operations and management.
The final two of the SWOT equation are Opportunities and Threats which are external to the business and are part of the economic environment. Such factors include tax treatment of your business type, economic cycle (boom or bust?), industry strength and reputation, technology, social trends and the size of the target market.
Business Assessment: A Viable Market? Viable Financials?
Remember, the goal is to find a target market. The less specific you make your target market, the worse off you are since you will need to cater to too many needs and add too many unnecessary features. Examine your target market, whoa re they? why will they want to buy your product or service? How large is this target market and how much of it can you get (market share)? What are the needs of these people and how can you satisfy them?
Next, you need to examine if the business can be financially viable. Business viability can be assessed if you can extract the amount of income you want from your business. You need to pay yourself, and you need to plan ahead for it. According to your initial estimates, can your business generate enough cash to cover your business expenses and also turn a profit? Do you have access to enough capital and/or finance to sustain your business? What is the time period until your business can break even?
Compare Different Business Concept Assessments
Know it is time to consider all your business concept assessments which you have gathered and compare each business opportunity. It is wise to focus on one business concept at a time: focusing your time, money and energy on one venture at a time will limit any possible distractions. So how do you assess these business opportunities?
To assess these business opportunities you must examine the following aspects: Once the business is up and running – can you sell the business via a trade sale or public listing? how much capital is required by each business? How about the fixed costs? How much are they? Is there potential for high return? How much competition is present in the market space? Finally consider the cost of failure: What can you lose from a failed business?