4 key questions to evaluate your business idea
Today's challenges have forced businesses big and small to pivot and appeal to the new needs of their customers. Businesses that fail to clearly demonstrate value to their target consumers are destined to have short shelf lives. And in the economic downturn, reduced spending power means a business idea that might have worked a year ago may be less successful, or vice versa.
Aspiring founders need to find a balance between catering to consumers during the crisis and making sure their product will still be valuable five years from now. So, if you are starting your business, you should think about whether they are just starting a business for the problems of today, or whether the product will extend beyond the crisis. You have to understand the long term potential of their business.
These four questions can help you assess if you truly have a lasting edge, and how best to use it to gain a definitive advantage over your competitors.
1. Am I solving a new problem?
As market dynamics change, you want to concentrate on where consumer needs are heading. To determine whether or not your product can offer a solution to one of these new problems, test yourself: Can you clearly explain your business idea and why it’s valuable in today’s market? If you’re struggling to articulate the value of your product, it might be because you haven’t yet made it fit snugly into a defined niche.
You can refine your business proposal by putting yourself in the shoes of your target market. Empathize with your potential customers, consider how your idea would improve their lives and whether people would miss it if it stopped existing. When it comes to articulating your business's value to others, don’t be afraid to draw from your personal experience. You might want to explain your own journey and how the product has helped you through certain scenarios.
And remember, some of the best businesses were founded by people who really suffered a problem.
2. Am I solving an existing problem in a new way?
Some companies will gain a competitive advantage by tackling an existing problem with a novel approach. Many consumer problems that were around pre-quarantine still need to be addressed, but the way they expect businesses to do so may have changed.
For example, most consumers believe they will now have to reduce their spending on most goods. Pricing is a time-old pain point; you could solve this problem in a new way by bringing lower or more flexible pricing to the market without compromising on product quality. Already during the pandemic, pricing has been used to establish an advantage across multiple industries.
For business-to-business products, choosing who you pitch your solution to can be key to demonstrating its value. Multiple people are involved in a buying decision, and each may view the problem through a very different lens.
Ask yourself who you’re solving the problem for.
3. Do I have a head start?
Just because you have a solution doesn't mean you have a head start against your competitors. You need to be able to pioneer your idea and, importantly, avoid others duplicating your model. It can mean becoming a market leader while everyone else is still figuring out a strategy.
Can your competitors easily catch up with your product, or will you be the only one with a working model for several months? If your core competitors are big, well-funded businesses, the development time will be much shorter, so you should focus your resources on refining development and production. Whatever the playing field looks like, you’ll want to protect your idea legally.
The longer you’ve been developing your idea, the better you can tailor it to be relevant, especially in the new normal.
You should embrace the importance of continually validating results and garnering feedback (especially negative feedback) from the very start of your journey. Whatever research you have built up over time will become your best weapon in finding product/market fit in ever-changing waters.
4. Am I bringing something new to the table?
You have unique value that your other competitors lack. If you need to draw out what gives you an edge, first ask yourself: Why am I the best person to bring this idea to life? What has prepared me for this moment?
Look at the experience, connections and resources you've built up over the years. Make a list of the people and tools you have that your rivals don't. Start a conversation with them, update them about your product and harness their expertise to find the best way to break the mold and really innovate in the industry.
Entrepreneurs who launch before fully recognizing their competitive advantage will struggle to gain real momentum. Start your journey by determining the unique value that only you can bring to consumers.