Because you have an entrepreneurial spirit, you likely have more ideas for businesses than you do time to develop. Every new consumer problem, every new bit of tech, and every emerging sales trend all seem to be the spark that ignites an entirely new, audacious, and seemingly fail-safe company concept. Even though you’d love to pursue each of those ideas simultaneously, the reality is that you just do not have the capacity.
So, in this roaring sea of various company ideas, how can you tell which ones are viable enough to pursue, and which ones are doomed to fail? There are always going to be exceptions to the rule, but the following are five very good indications that a company idea isn’t all that amazing.
There is Currently No Demand for the Product or Service
It doesn’t matter how hip, cutting-edge, or fascinating you believe your idea to be; if there isn’t an existing need for the problems that this business will address or the pleasures that it will provide, then it’s unlikely that it will go very far.
According to a report from Forbes, some of you may remember when Steve Jobs gave an interview in which he famously stated, “Several times, individuals don’t understand what they want until you demonstrate it to them.” Jobs was correct in his assertion that it is sometimes necessary to develop a product before buyers are aware that they want it. Who among us, for example, could have wished for something like an iPhone before it was even manufactured?
A case study regarding a currently unmet demand — In a meeting, Alexander Mamasidikov, the Chief Marketing Officer of Isina, added to what Steve Jobs had said by speaking about the preexisting need that even a completely novel and hitherto unimagined product must satisfy. Jobs had said that “innovation is the relentless pursuit of better mousetraps.” Isina is a web-based platform that enables Grammy Award winners to serve as mentors to up-and-coming musicians. The program has unquestionably been successful since it alleviates a problem that already existed.
As Mamasikov noted, “Before we started, nobody had made what we’re trying to accomplish with performers and mentorships. However, from conducting interviews with young musicians, we quickly figured out that our big idea was a winner: Young artists want to achieve their big break, and we assist them with that by generating a global music talent hunt that introduces opportunities for performers in all corners of the world.”
In addition, the chief executive officer stated, “Even if it’s in a way that our market couldn’t have envisioned before we presented it to them, the jumping-off point was pain and want in our market.” If we didn’t have that, we wouldn’t even have a company.”
Customers Are Unwilling to Pay the Price That You Asked
When it comes to running a successful business, the math is straightforward: more money should be coming in than should be going out, and if that isn’t occurring, the negative cash flow should be temporary to maximize the long-term wealth of the organization. Even while arithmetic is straightforward, that doesn’t mean the business side is simple. According to the 2015 Hiscox DNA of Entrepreneur research, a lot of entrepreneurs are having trouble finding funding for their small firms. According to the survey, 21 percent of entrepreneurs have borrowed money from their credit cards, and 11 percent have plans to do so within the next year.
It is possible that running your business will not constantly bring in a lot of money for you; it is normal to experience shifts in both revenue and expenses. However, if the calculations don’t have any logic at all — for example, if your continuing overhead expenditures are higher than what your market has the financial capacity to pay — then things most likely won’t work out. Therefore, you need to either locate a product with a lower price point or a target market that can pay your high-ticket pricing.
Interested Parties Who Could Become Investors Will Ignore You
Every type of business requires cash flow. A company that does not have sufficient cash to run its operations is analogous to a car that does not have any gas in the tank; it may still exist, but it is not going anywhere. According to a study carried out, an unfortunate 29% of small businesses are unsuccessful because they run out of money. For this reason, describing your business idea to possible investors before beginning the business might be an excellent way to discover how good your idea is. After all, if your company is unable to persuade investors to supply the necessary capital, there is a good risk that it won’t even have a chance to compete.
The Demand for Your Product or Service is Contingent on a Trend That is Now Popular
Remember fidget spinners? Those tiny spinning toys that don’t have any patents on them, but Generation Z went crazy for them? In Google Trends, the search lifetime for the toys looked something like this at various points in time.
The most interest in fidget spinners was seen between the 30th of April and the 7th of May in 2017. Then, just as suddenly, it fell into disuse and was forgotten about. Toys ‘R’ Us didn’t even begin stocking fidget spinners until either the first or second week of May. This was done so that the company could hedge its bets that the product was more than simply a craze. The executive vice president of the company, Richard Barry, was quoted in the Chicago Tribune as saying, “We think the general fidget trend can be highly sustainable. There is no way to know how long or how short the life cycle of any one product will be; only time will tell. However, new items will be introduced, and we anticipate that they will continue for at least a year.
Luckily for the toy retailers, a single mistake of this nature was not going to bring their company to its knees. However, if a new business had begun selling fidget spinners as its primary item, as many did, it would not have been able to stay in business for very long. If something is only a passing trend, you shouldn’t waste your time trying to establish a sustainable business around it. Instead, you should center your company’s operations around long-term patterns that can provide support well into the foreseeable future.
Several Other Companies Have Attempted… But Have Been Unsuccessful
In all seriousness, there is a good reason why savvy entrepreneurs are afraid to develop their empires in an area where numerous others have been unsuccessful.
If you wish to develop a product that another firm has already attempted to develop but has been unsuccessful at doing so, you should ask yourself why you will be the one to succeed. What sets you apart from others? What have other businesses done incorrectly in the past, and how do you intend to ensure that you do not replicate those mistakes?
The fact that other companies have attempted and failed to develop a previously launched product or service does not necessarily indicate that the item or service will fail again, but it is a reminder — to be cautious, to research your market, and to discover a unique selling point.
Regardless of whether or not customers can conceptualize themselves as wanting a product, a business needs either alleviate an existing problem or satisfy an existing want to be successful. People might not have been able to visualize an automobile before they saw one, but they were certain that they desired a mode of transportation that allowed them to travel to their destinations more quickly than horse-drawn carriages. That is a valuable piece of information to keep in mind.