Do you want to know the answer to why businesses fail? Well, business owners aren’t equipped with the right tools and strategies to analyze the viability of a business startup costs and ideas. A well-established escape route is to blame the market situation. This isn’t the right approach, this is the prime reason why important pieces of business training provided by platforms like Datacreative helps to save on big losses.
To start with the evaluation of your business idea, you need to conduct in-depth market research. The Market Research for the new Business idea should cover these 8 points:
- Is the new business idea proposed viable to proposed customers? Engage with potential customers and ask them if they would be interested in buying your proposed product or service you intend to introduce.
- What should be the pricing of the new product/service introduced? – Analyze the pricing of existing products or services. Compare what value will be added by your business idea and set a price range according to that.
- Discover the likes and dislikes of potential customers – This will be essential in determining what your product or service should include.
- Estimating the demand for product/service – It will be helpful in planning the stocks, human resource capital required, and financial capital.
- Estimating specific times or periods when Demand will be high – All businesses have peak times during certain times of the year when their demands of product or services are high, in order to fulfill all the orders, you’ve to plan before time.
- Understanding Customer Expectations – Customer has certain expectations from Brands. If you need to set up a brand for your company then you will need deep insights into customer expectations and meet them.
- How will the customers be motivated by your Business? – This will help in predicting what will be the Marketing and Adverting costs of your Business.
- Cost of Customer Acquisition – This is the formula to calculate how much average amount a company spends to acquire a new customer.
Now we have to put effort into evaluating the costs of doing business. There are multiple dynamic run time factors and external environment that stays crucial for the business viability. Estimating costs of Doing Business includes:
- Fixed costs
- What will be the variable costs of running a business?
- Expenses to comply with Government Regulations
- Taxes that will be imposed
Selecting the business model
Selection of Business models and implementing it can be a trickier part of Entrepreneurship. Based on your passion and all the market research including estimations of costs involved you’ve to select a Business Model and make a Business Plan.
First, you’ve to make sure, all the costs you’ve estimated fall within your business startup costs budget, and you are also able to sustain a few month’s cost of costs of doing a Business.
Double-check if you are ready to take a risk and bear all the costs that are estimated already. When the business model selected, start collecting resources to implement the business model. The Business Resources you need to collect for starting a new business are:
This is most important in determining your business scalability. If financial resources are high in amount, you can survive in the competing market. A business should have a backup of at least 6 months at startup to be successful.
2. Human Resources:
When starting a business, you’ve to connect with like-minded people, and hire professionals relevant to your industry, partner with those who are able to match your work frequency. Human capital is an asset for a company and you need to build the right assets.
3. Technology support:
Without technology support, businesses can’t thrive in this competing world. You will be needing Customer Relationship Management Software, Inventory Management, and custom software development if you need customized technical support.
4. Business Location:
Placing your business office in the right market is essential for new businesses to become successful. You should consider 3 following factors in determining Business Location:
- Reachability of Potential Customers
- Reachability of Vendors
- Proximity to an existing market
Continuous Evaluation of Your Entrepreneurship Activities
Make yourself accountable for your business activities and evaluate continuously your company’s performance.
Your Business Evaluation should consider these 7 points:
- Calculation of total weekly/monthly sales
- Growth percentage of sales
- Evaluating your customer service and if customers are happy with after-sale service
- How many new customers acquired?
- Calculation of Margin of Profits
- Calculation of operating expenses and how they can be reduced
- Making a Strategy to Scale Business Profitability
This was a basic framework for how you can set up and run your business. Markets are becoming competitive and saturated with each coming times. Nevertheless, opportunities are still identified by the ones who have developed a keen eye and are equipped with the latest business tools and practices. Now try out some analytical and creative work before you plan to do any business in a real-world environment.